While insisting that very specific, localised knowledge is essential to economic decision making, Hayek clearly recognises that the ``man on the spot'' needs to know more than just his immediate circumstances before he can act effectively. Hence there arises the problem of ``communicating to him such further information as he needs to fit his decisions into the whole pattern of changes of the larger economic system'' (Hayek, 1945, p. 525) How much does he need to know? Fortuitously, only that which is conveyed by prices. Hayek constructs an example to illustrate his point:
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Assume that somewhere in the world a new opportunity for the use of some raw material, say tin, has arisen, or that one of the sources of supply of tin has been eliminated. It does not matter for our purpose and it is very significant that it does not matter which of these two causes has made tin more scarce. All that the users of tin need to know is that some of the tin they used to consume is now more profitably employed elsewhere, and that in consequence they must economize tin. There is no need for the great majority of them even to know where the more urgent need has arisen, or in favor of what other uses they ought to husband the supply. (Hayek, 1945, p. 526)<#90#>
Despite the absence of any such overview, the effects of the disturbance in the tin market will ramify throughout the economy just the same.
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The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. (<#68#>ibid<#68#>.)<#91#>
Therefore the significant thing about the price system is ``the economy of knowledge with which it operates'' (Hayek, 1945, pp. 526--7). He drives his point home thus:
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It is more than a metaphor to describe the price system as a kind of machinery for registering change, or a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials, in order to adjust their activities to changes of which they may never know more than is reflected in the price movements. (Hayek, 1945, p. 527)<#92#>
He admits that the adjustments produced via the price system are not perfect in the sense of general equilibrium theory, but they are nonetheless a ``marvel'' of economical coordination. (<#72#>ibid<#72#>.)