L'information et sciences économiques:
Une critique de Hayek

Allin F. Cottrell et W. Paul Cockshott

Octobre, 1994


De nouveau à l'cIncrément

Abstrait

L'état présente Hayek, arguments de s au sujet de l'utilisation d'information dans les sciences économiques et les asseses leur adéquation. Ils sont critiqués en ce qui concerne leurs bases philosophiques de subjectivist, et en appliquant les techniques de la théorie de l'information. Nous employons la théorie de l'information pour prouver que Hayek sous-estime les coûts de l'information impliqués dans le fonctionnement du marché et surestime les coûts de l'information de la planification de détail.

1.  Introduction

Ni les arguments théoriques proposés dans l'ouest, ni le fait de l'effondrement du socialisme soviétique, borne limite historique pendant qu'il est assurément, ne justifient la croyance que la cour socialiste de tout de planification économique est une notion untenable dont l'heure a passé. En effet, les développements modernes en technologie de l'information ouvrent la possibilité d'un système de planification qui pourrait surpasser le marché en termes d'efficacité (dans les besoins humains de réunion) aussi bien que des capitaux propres. Telles sont les réclamations que nous avons défendues en un certain nombre de publications récentes, conçues pour rouvrir une discussion au-dessus des sciences économiques socialistes.1 nous ne comptons pas que nos idées rencontreront le succès politique immédiat, mais nous essayons d'espérer que les économistes ouvrir-occupés considéreront nos arguments économiques sur leurs mérites.

Nous n'avons pas l'intention de réitérer nos arguments généraux en faveur de la planification ici. Notre objet est de réfuter les objections à la planification socialiste proposée par Hayek dans sa utilisation classique de l'article `The de la connaissance dans la société ' (1945). La pertinence d'un tel argument avec le lectorat de ce journal pourrait être remise en cause. Est-ce que le mensonge de Hayek en dehors de du courant principal (de plus en plus, Anglo-American) des sciences économiques professionnelles britanniques, avec ses racines duelles dans le pragmatisme mashallien et la théorie générale formelle d'équilibre de Lausanne instruit? La défense de Hayek du marché n'était-elle pas toujours un bit trop strident et du doctrinaire pour convenir aux susceptibilités d'une profession que (en Grande-Bretagne en tout cas) a traditionnellement eu des perspectives largement social-démocratiques? **time-out** peut-être ainsi, mais notre impression que Hayek étoile sur élévation dans post-Communist monde, et que même ceux qui baulk son extrême enthousiasme pour sans entrave marché souvent tout à fait prêt pour voir son argument utiliser pour enterrer tout forme complet socialisme.

Et ainsi aux affaires. Nous offrons au-dessous d'une exposition et nous dirigeons par la contestation de point des idées en Hayek (1945). Nous devrions indiquer clairement qu'une partie, bien que nullement toutes, nos critiques de Hayek soient anachronique-qu'est, elles dépend des avances en technologie de l'information qui ont eu lieu depuis que Hayek a écrit. Nous pensons que ceci est justifié pour deux raisons. D'abord, Hayek a clairement pensé qu'il proposait un argument très général, qu'il n'a pas compté voir miné par le changement technologique. En second lieu, les palpeurs de Hayek (par exemple Lavoie, 1985) continuent à supporter ses arguments il y a de plusieurs décennies, et à affirmer que les développements en technologie de l'information sont en grande partie près du point.

Dans notre exposition de Hayek nous essayons d'équilibrer le concision avec la nécessité de produire un compte suffisamment plein et juste pour obvier au soupçon que nous pouvons attaquer un homme de paille. Nous commençons par un bref sommaire des vues philosophiques qui informent l'argument de l'utilisation de `The de la connaissance dans la société ', qui sont définis plus entièrement dans le Counter-Revolution de la Science (Hayek, 1955).

2.  L'argument de Hayek a tracé les grandes lignes

2,1  Le fond philosophique

En contre- révolution de la Science Hayek est concerné à contrastez le normal et les sciences sociales, dont la relation à leurs thèmes, il réclame, est fondamentalement différente. En sciences normales, les avances impliquent d'identifier que les choses ne sont pas ce qui semblent elles. La Science dissout les catégories immédiates d'une expérience subjective et les remplace par fondamental, souvent caché, des causes. L'étude de la société d' autre part doit prendre en tant que sa matière première première les idées et la croyance des personnes dans la société. Les faits ont étudié par la science sociale

**time-out** différer fait physique science dans croyance ou opinion tenir par particulier personne, croyance qui tel que tel notre donnée, indépendamment si vrai ou faux, et qui, d'ailleurs, pouvoir non direct observer dans esprit personne mais qui pouvoir reconnaître ce qui dire ou faire seul parce que avoir nous-mêmes un esprit semblable leur. (Hayek, 1955, p. 28)

Il argue du fait qu'il y a un élément subjectif irréductible au mater soumis des sciences sociales qui était absent en sciences physiques.

**time-out** [ M]ost objet social ou humain action non ``objective fait " dans spécial étroit sens dans qui limite utiliser dans science et contraster ``opinions ", et pouvoir non tout définir dans physique limite. Autant que des actions humaines sont concernées, sont les choses ce que les personnes temporaires pensent qu'elles sont. (Hayek, 1955, pp 27-27)

Son paradigme pour les sciences sociales ou morales est que la société doit être comprise en termes d'actions reflétées conscientes des hommes, c'étant supposé que les gens constamment choisissent consciemment entre différentes lignes de conduite possibles. Tous les phénomènes collectifs doivent être conçus ainsi de comme résultats fortuits des décisions de différents acteurs conscients. *** TRANSLATION ENDS HERE ***

This imposes a fundamental dichotomy between the study of nature and of society, since in dealing with natural phenomena it may be reasonable to suppose that the individual scientist can know all the relevant information, while in the social context this condition cannot possibly be met.

2.2  The basic economic problem

From this philosophical ground Hayek (1945) poses the question: `What is the problem we wish to solve when we try to construct a rational economic order?'

He continues:

On certain familiar assumptions the answer is simple enough. If we possess all the relevant information, if we can start out from a given system of preferences and if we command complete knowledge of available means, the problem which remains is purely one of logic. That is, the answer to the question of what is the best use of the available means is implicit in our assumptions. The conditions which the solution of this optimum problem must satisfy have been fully worked out and can be stated best in mathematical form: put at their briefest, they are that the marginal rates of substitution between any two commodities or factors must be the same in all their different uses. (Hayek, 1945, p. 519)

He immediately makes it clear, however, that the `familiar assumptions' upon which the above approach is predicated are quite unreal.

This, however, is emphatically not the economic problem which society faces The reason for this is that the data from which the economic calculus starts are never for the whole society given to a single mind which could work out the implications, and can never be so given. (ibid .)

Hayek then spells out his own perspective on the nature of the problem:

The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form, but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. (ibid .)

The true problem is therefore ``how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know'' (Hayek, 1945, p. 520, emphasis added). That this is not generally understood, Hayek claims, is an effect of naturalism or scientism, that is ``the erroneous transfer to social phenomena of the habits of thought we have developed in dealing with the phenomena of nature'' (ibid .).

2.3  Against centralisation

The point at issue between Hayek and the proponents of socialist economic planning is not ``whether planning is to be done or not''. Rather it is ``whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals'' (Hayek, 1945, pp. 520-21). The latter case is nothing other than market competition, which ``means decentralized planning by many separate persons'' (Hayek, 1945, p. 521). And the relative efficiency of the two alternatives hinges on

whether we are more likely to succeed in putting at the disposal of a single central authority all the knowledge which ought to be used but which is initially dispersed or in conveying to individuals such additional knowledge as they need in order to fit their plans in with those of others. (ibid .)

The next step in Hayek's argument involves distinguishing two different kinds of knowledge: scientific knowledge (understood as knowledge of general laws) versus ``unorganized knowledge'' or ``knowledge of the particular circumstances of time and place''. The former, he says, may be susceptible of centralization via a ``body of suitably chosen experts'' (Hayek, 1945, p. 521) but the latter is a different matter.

[P]ractically every individual has some advantage over others in that he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation. (Hayek, 1945, pp. 521-22)

Hayek is thinking here of ``knowledge of people, of local conditions, and special circumstances'' (Hayek, 1945, p. 522), e.g., of the fact that a certain machine is not fully employed, or of a skill that could be better utilized. He also cites the sort of specific, localised knowledge relied upon by shippers and arbitrageurs. He claims that this sort of knowledge is often seriously undervalued by those who consider general scientific knowledge as paradigmatic.

2.4  The importance of change

Closely related, in Hayek's mind, to the undervaluation of knowledge of local and specific factors is underestimation of the role of change in the economy. One key difference between advocates and critics of planning concerns

the significance and frequency of changes which will make substantial alterations of production plans necessary. Of course, if detailed economic plans could be laid down for fairly long periods in advance and then closely adhered to, so that no further economic decisions of importance would be required, the task of drawing up a comprehensive plan governing all economic activity would appear much less formidable. (Hayek, 1945, p. 523)

Hayek ascribes to his opponents the idea that economically-relevant change is something that occurs at discrete intervals and on a fairly long time-scale, and that in between such changes the management of the productive system is a more or less mechanical task. As against this, he cites, for instance, the problem of keeping cost from rising in a competitive industry, which requires considerable day-to-day managerial energy, and he emphasises the fact that the same technical facilities may be operated at widely differing cost levels by different managements. Effective economical management requires that ``new dispositions [be] made every day in the light of circumstances not known the day before'' (Hayek, 1945, p. 524). He therefore concludes that

central planning based on [aggregated] statistical information by its nature cannot take direct account of these circumstances of time and place, and the central planner will have to find some way or other in which the decisions depending upon them can be left to the man on the spot. (ibid .)

Rapid adaptation to changing circumstances of time and place requires decentralisation-we can't wait for some central board to issue orders after integrating all knowledge.

2.5  Prices and information

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:

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)

Despite the absence of any such overview, the effects of the disturbance in the tin market will ramify throughout the economy just the same.

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. (ibid .)

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:

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)

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. (ibid .)

2.6  Evolved order

The price system has not, of course, arisen as the product of human design, and moreover ``the people guided by it usually do not know why they are made to do what they do'' (ibid .). This observation leads Hayek to a very characteristic statement of his general case against central planning.

[T]hose who clamour for ``conscious direction''-and who cannot believe that anything which has evolved without design (and even without our understanding it) should solve problems which we should not be able to solve consciously-should remember this: The problem is precisely how to extend the span of our utilization of resources beyond the span of the control of any one mind; and, therefore, how to provide inducements which will make individuals do the desirable things without anyone having to tell them what to do. (Hayek, 1945, p. 527)

Hayek generalises this point by reference to other ``truly social phenomena'' such as language (also an undesigned system). Against the idea that consciously designed systems have some sort of inherent superiority over those that have merely evolved, he cites A. N. Whitehead to the effect that the progress of civilisation is measured by the extension of ``the number of important operations which we can perform without thinking about them'' (Hayek, 1945, p. 528). He continues:

The price system is just one of those formations which man has learned to use after he had stumbled upon it without understanding it. Through it not only a division of labor but also a coordinated utilization of resources based on an equally divided knowledge has become possible [N]obody has yet succeeded in designing an alternative system in which certain features of the existing one can be preserved which are dear even to those who most violently assail it such as particularly the extent to which the individual can choose his pursuits and consequently freely use his own knowledge and skill. (ibid .)

The outline of Hayek's argument is now, we trust, clearly in view. We are ready to proceed to our criticisms, which are structured as follows. We first challenge the subjectivist philosophy that underpins Hayek's conception of information. We then offer an alternative perspective on the nature of the problem faced by a planned economic system, and we dispute Hayek's claims regarding the benefits of decentralisation. This then leads into a critique of the idea that the market constitutes an efficient telecommunications system. Our critique is developed by means of a formal model of the information exchanges required under market and plan. The penultimate section of the paper deals with the idea that change is all important; and the concluding section takes up the issue of the market as a `spontaneously evolved' system.

3.  Hayek's subjectivism: critique

Hayek's radically subjectivist view of the social sciences is open to the objection that its constitutive category, the rational subject, is by no means obviously given. As Lawson (1992) has argued, a wealth of psychological and sociological research has revealed that human behaviour is highly routinized, and coordinated in the main by unconscious brain functions. Indeed, as Dennett (1991) relates, experiments in neuropsychology indicate that people act first and become concious of their intention to act later.

For the more limited domain of economics, there is the problem that the `subjects' in question are more likely to be juridical than personal. In the main, the economic actors in industrial production are firms, not human individuals. Nor can the actions of a firm be reduced to the inner subjective life of its managing director. In any large firm, the courses of action taken result from a complex set of practices, reviews, and decision-making procedures involving many people, and in which the procedures can be as important as who fills which particular positions. We would argue that the economic subject that Hayek takes as his starting point is not empirically given at all, but is rather a reification of economic theory. The rational economic subject makes sense only in terms of formalised calculating procedures, which, if they are realised in practice, are more likely to be materialised in the accounting and management practices of firms than in the brains of individuals. Economic theory then projects back these practices, rational for the enterprise as a juridical subject, onto a supposedly constitutive human subject.

The historical conditions for this projection are clear enough. In the early stages of capitalism the distinction between personal and juridical subjects was as yet ill defined. The agent of economic practice thus appeared to be the person of the capitalist or entrepreneur rather than the firm. But from the standpoint of the current state of economic development, it can be seen that the rational calculating subject is the property-maximising juridical subject. To the extent that in a property system some of the juridical subjects are individual human animals, the reified subject of economic theory provides an account of what would be rational action on their part. But the assertion that these animals do engage in such rational action is more an act of faith than an empirical result of science. By starting out with this act of faith Hayek aimed to mark off economics as essentially a branch of moral philosophy rather than science.

But once the category of subject is recognised for what it is, not an empirically existing property of the human animal, but something ascribed to it both by the structures of language and of juridical discourse (Althusser, 1971), then this exclusion of science from the study of society becomes untenable. It becomes just one more of the special pleas by morality to hold the encroachments of science at bay.

Hayek's subjectivist philosophical standpoint has an important bearing on his arguments against socialist planning, since these arguments hinge on the notion of subjective information. Despite the fact that The Counter-Revolution of Science was published after the establishment of a scientific information theory by Shannon and Weaver (1949), Hayek's notion of information remains resolutely pre-scientific. Admittedly, it takes time for the discoveries of one discipline to percolate through to others. In the mid-1950s the idea of the objectivity of information had not yet spread far beyond the study of telecommunications. But now, when it has revolutionised biology, become the foundation of our major industries, and begun to transform our understanding of social ideologies (Dawkins, 1982), its absence vitiates Hayek's entire argument.

For Hayek information is essentially subjective; it is knowledge in people's minds. Thus we have the problem of how information that is dispersed in the minds of many can, through the operations of the market, be combined for the common good. By taking this subjectivist standpoint, attention is diverted away from the very practical and important question of the technical supports for information. It becomes impossible to see the production and manipulation of information as both a technology and a labour process in its own right, whose development acts as a constraint upon the possibility of economic relations.

In any but the most primitive of economies, economic relations have depended upon the development of techniques for objectifying information. Consider the relationship between landlord and tenant, and thus rent. This can only stabilise once society has a means for recording ownership and tenancy contracts, whether as written documents or the mortgage marker stones so hated by the peasantry of Attica.

The development of price relies upon the technology of counting and calculation, which can never in a commercial society be a purely mental operation. Calculation demands a material support, whether it be the calculi or small stones of the early Romans, or the coins and reckoning tables of late Antiquity and the middle ages. Economic rationality is an algorithmic process supported by a machinery for computation and information storage. The fact that until recently the machinery was simple and hand-operated-the abacus, the coin box, or the ledger-allowed it to be ignored in economic theory. But the means of rationality are as essential to economic relations as the means of production. Trade without a technology of calculation and record is as impractical as agriculture without instruments to turn the soil. Once these aspects of information theory and information technology are considered, quite different answers can be given to Hayek's problem of economic information.

4.  The calculation problem and its misrepresentation

We have argued elsewhere (Cottrell and Cockshott, 1993a) that the classic `socialist calculation debate' in the first part of this century took place on the terrain of the neoclassical critics of socialism rather than its Marxian advocates. This had an effect in defining the structure of the problem. In the neoclassical variant, the problem starts with the preferences of the individual agents and their production possibilities. This formulation is vulnerable to Hayek's critique, on the grounds that individuals' preferences are in no sense `given' to the planners. But Marxian economists would not accept that these individual preferences have any meaningful pre-existence;2 they do not, therefore, form part of the problem.

The practical problem is to bring production potential into alignment with a pattern of social need revealed by a combination of democratic political decisions (as in the case of, say, the appropriate level of public health service provision) and aggregate consumer purchases. Given a reasonable data-collection system reporting on the rates at which consumer goods are selling, and assuming a pricing system based on labour values (Cockshott and Cottrell, 1993), deriving a target net-output vector demands no special telepathic powers on the part of the planning system. It is perhaps harder to gather the information about production possibilities. It is in this practical context that Hayek's discussion of centralised versus decentralised control systems must be placed.

5.  To centralise or not?

5.1  `One mind'

Austrian opponents of socialism talk as if socialist planning has to be carried out by one man. Mises (1949) personified him as `the director'. Hayek continues the metaphor, stating that the ``data from which the economic calculus starts are never for the whole society given to a single mind". How then, he asks, can one mind presume to improve on the combined result of the cogitations of millions (as achieved via the market)? Surely only a megalomaniac, or at any rate one blinded by scientific hubris, could propose such a thing.

Of course no single individual has the brainpower to understand all of the interconnections of an economy, but when have socialists ever asserted anything so foolish? Not even the most avid personality cultists claimed that Stalin drew up the 5-year plans himself. What socialists have proposed is the replacement of market information processing by the processing of economic information within a planning organisation. In the past, because of technological limitations, the planning organisation has proceeded by a division of mental labour among a large number of people. In the future, the information processing is likely to be done mainly by computing machines.

In neither case-and here our critique of Hayek's subjectivism comes into play-is the information concentrated in one mind. In the former case it is obviously not in the mind of a single worker, but it is not even in the minds of a collection of workers. Instead, the information is mainly in their written records, forms, ledgers, etc. These constitute the indispensible means of administration. From the earliest temple civilisations of Sumer and the Nile, the development of economic administration was predicated upon the development of means of calculation and record. The human mind enters in as an initial recorder of information, and then as a manipulator of the recorded information. By procedures of calculation strings of symbols are read and transformed ones written down. The symbols-whether they be arabic numerals, notches on tally sticks or quipu-represent physical quantities of goods; their transformations model actual or potential movements of these goods.

By posing the question in terms of concentrating the information in a single mind, Hayek harks back to a pre-civilised condition, abstracting from the real processes that make any form of administration possible. If instead, his objection is that no system of administration can possibly have the information-processing capacity required for the task, then he is liable to the attack that information technology has revolutionised the amount of information that can be effectively administered.

5.2  Forms of knowledge

The dichotomy that Hayek operates between the natural sciences and the social domain also leaves its imprint on his categorisation of forms of knowledge. In his view, there are but two such forms: knowledge of general scientific laws, and (subjective) knowledge of `particular circumstances of time and place'. But this leaves out of account a whole layer of knowledge that is crucial for economics, namely knowledge of specific technologies. Such knowledge is not reducible to general scientific law (it is generally a non-trivial problem to move from a relevant scientific theory to a workable industrial innovation), but neither is it so time- or place-specific that it is non-communicable. The licensing and transfer of technologies in a capitalist context shows this quite clearly. A central registry of available technologies would form as essential component of an efficient planning system. How would such information be assembled? Again, Hayek's notion of knowledge existing solely `in the mind' is an obstacle to understanding. It is increasingly common-indeed, it is by now all but universal practice-for firms to keep records of their inputs and outputs in the form of some sort of computer spreadsheet. These computer files form an image of the firm's input-output characteristics, an image which is readily transferable.3

Further, even the sort of `particular' knowledge which Hayek thought too localised to be susceptible to centralisation is now routinely centralised. Take his example of the information possessed by shippers. In the 1970s American Airlines achieved the position of the world's largest airline, to a great extent on the strength of their development of the SABRE system of computerised booking of flights (Gibbs, 1994). Since then we have come to take it for granted that our local travel agent will be able to tap into a computer network to determine where and when there are flights available from just about any A to any B across the world. Hayek's appeal to localised knowledge in this sort of context may have been appropriate at the time of writing, but it is now clearly outdated.

We would not dispute, however, that some localised knowledge, important for the fine-grained efficiency of the system, may be too specific for any meaningful centralisation. Our objection here is that Hayek seems to overlook the possibility that this sort of knowledge may simply be used locally, without prejudice to the operation of a central plan. The question here concerns the degree of recursiveness of planning, that is, the extent to which plans can be formulated in general terms by the higher planning authorities, to be specified in progressively fuller detail by successively lower or more local instances. Nove (1977, 1983) has argued persuasively that as regards the composition of output, the degree of recursiveness of planning is rather small. If a central authority sets output targets in aggregated terms, and leaves it to lower instances to specify the details, the result is bound to be incoherent. In the absence of the sort of horizontal links between enterprises characteristic of the market system, the enterprises simply cannot know what specific sort of output will be needed, unless they are told this by the planning authority. This may be granted.4 But low recursiveness with respect to decisions on the composition of output does not imply that all decisions relating to production have to be taken centrally. Consider the knowledge, at the level of the enterprise, of which particular workers are best at which tasks, who is the fastest worker and who the most reliable and so on (and similarly for the particular machines operated within the enterprise). Why shouldn't such knowledge just be used locally in drawing up the enterprise's own detailed schedules for meeting an output plan given from the `centre'? Isn't this precisely what happens at plant level in the context of planning by a large (multiplant) capitalist enterprise?

5.3  Disadvantages of dispersal

Having argued that the centralisation of much economic information is feasible, we now consider its desirability. When economic calculation is viewed as a computational process, the advantages of calculation on a distributed or decentralised basis are far from evident; the question hinges on how a multiplicity of facts about production possibilities in different branches of the economy interrelate. Their interrelation is, partially, an image in the field of information of the real interrelation of the branches of the economy. The outputs of one activity act as inputs for another: this is the real interdependence. In addition, there are potential interactions where different branches of production function as alternative users of inputs.

It is important to distinguish the two types of interaction. The first represents real flows of material and is a static property of a snapshot of the economy. The second, the variation in potential uses for goods, is not a property of the real economy but of the phase space of possible economies. The latter is part of the economic problem insofar as this is considered to be a search for optimal points within this phase space. In a market economy, the evolution of the real economy-the real interdependencies between branches-provides the search procedure by which these optima are sought. The economy describes a trajectory through its phase space. This trajectory is the product of the trajectories of all of the individual economic agents, with these individual agents deciding upon their next position on the basis of the information they get from the price system.

Following up on Hayek's metaphor of the price system as telecoms system or machinery for registering changes, the market economy as a whole acts as a single analog processor. A single processor, because at any one point in time it can be characterised by a single state vector that defines its position in the phase space of the economic problem. Moreover, this processor operates with a very slow cycle time, since the transmission of information is bounded by the rate of change of prices. To produce an alteration in prices, there must be a change in the real movement of goods (we are abstracting here from the small number of highly specialised fu