8 ms·

The Use of Knowledge in Society (1945) [pdf]

109 points by kreyenborgi 2y ago

kaycebasques 2y ago
I've been exploring data / information / knowledge / wisdom management a lot over the last couple months. I was surprised to discover how little consensus there is over the meaning of each of those terms. Or rather, subfields seem to have different takes on the meanings. "Data" and "information" I can kinda pin down. "Knowledge" and "wisdom" much less. Hayek in this article for instance does not seem to ever define what he means by "knowledge". Reading between the lines, he seems to think of it as being able to use data and information to make effective / economical decisions. It's especially unfortunate that writers assume everyone is on the same page about what "knowledge" means because the meaning of the term seems to have changed a lot over the last few hundred years.
- A4ET8a8uTh0 2y ago
  I think I agree. Oddly, the one place where the terms gained some level of settling appears to be corporate, but I can't tell if it is due to the nature of corporations, cross-pollination or some other unknown factors. What I personally find very interesting is the age of that paper and the fact that, the discrepancy between model most commonly presented in school ( in my case, variant of perfectly rational individual ) and real life has been voiced nearly eight decades ago and is not seriously discussed as foundational knowledge when it comes to economics.
- churchill 2y ago
  Once you start on the path of semantics, it's often turtles all the way down. So, unless you want to be rigorous, it's best to go with the generally accepted best bet.
  - kaycebasques 2y ago
    For sure, I know comments about semantics often don't go down well on HN. Was just sharing something I'm intellectually curious about. The act of trying to pin down a rigorous definition has exposed me to 5-10 different interpretations and each has given me different perspective on how to manage this nebulous thing we call knowledge.
  - throwaway19972 2y ago
    "Generally accepted" is nearly impossible to discern from an individual standpoint. I prefer Wittgenstein's stance that you should essentially accept uncertainty that you refer to the same world/concepts/knowledge that others do and engage in good faith efforts to communicate the best you can. This amounts to the same thing but it's not weighted towards some (likely wildly incorrect) subjective viewpoint of the general population.
- vundercind 2y ago
  I’ve refrained from commenting on this one precisely because (I assume) his definition of “rational economic order” and his justification for “best”, in the first two paragraphs, are context a reader of this journal is expected to already have, since he doesn’t elaborate on them, and lacking that the rest of the paper’s basically pointless (though his protest that in 1945 it was widely denied that there is any knowledge but scientific knowledge seems deeply silly per se and exactly the kind of thing you often see from people trying to push a “rebel” image for marketing reasons…) But yes the definitions of several other terms seem slippery and to change from one use to the next, including knowledge.
  - AnimalMuppet 2y ago
    > (though his protest that in 1945 it was widely denied that there is any knowledge but scientific knowledge seems deeply silly per se and exactly the kind of thing you often see from people trying to push a “rebel” image for marketing reasons… Look up "logical positivism" as a philosophical system. It became the dominant academic philosophy for a while (including around 1945). It asserted almost exactly that - that there was no knowledge apart from scientific knowledge (although I believe it did accept direct sensory input as knowledge, and also the operations of pure logic). It's difficult now to see the water that he was swimming in then.
- lurking15 2y ago
  I guess I see this as an attempt or yearning to discredit him, but following in the work that sprung from Hayek and friends, the motivation for his work is clearly curiosity and wonder about how does anything get done in the world without coordination, never mind the wondrously complex things that are created nowadays. His conclusion is that knowledge is dispersed, represented in prices that arise from markets which is simply understood as cooperation. Knowledge may frankly be expressed as whatever enables and motivates someone to offer something on the market. If that's too vague for your taste, too bad. The wonder is that uncoordinated, independent cooperation gives rise to such abundant and sophisticated products. Not only that it's in a system that expresses everyone's individual preferences and competing interests. Central planning fails spectacularly to do this, and there's no reason to believe that it ever will even with fantastic computational power.
  - kaycebasques 2y ago
    Definitely not trying to discredit him. I have no horse in that economic ideology race. I'm just honestly curious about what the heck we mean when we talk about knowledge. The background is that I'm a technical writer (TW), and a lot of us TWs are recognizing that knowledge management is becoming even more important than it already was before (and we already knew it was an important part of our role). So naturally as I begin this journey I am looking deeply into the meaning of the term and finding many different definitions. Your synthesis of this article for example gave me yet another new perspective on it.
    - lurking15 2y ago
      Ah got it. I think the idea of knowledge management is maybe misguided when applied to economics. Knowledge in economic terms is much less definite because prices reflect subjective value.
- dleeftink 2y ago
  Isn't it precisely what makes knowledge and its management interesting? Just as the diversity of PKM solutions it has given rise to? Its definition being difficult to pin down is a feature--not a single knowledge, but a multitude of (in)compatible knowledges and messy knowledge-making processes, and the many different interests that arise from it.
schuyler2d 2y ago
Thanks for linking to this -- it highlights a fallacy that Hayek seemed to mire in whereas on one hand, he believed that the aggregate "market" forces would always be sufficient to stabilize pricing stability (/inflation) he railed against the ability for any 'manager' (i.e. the government) to do so. I'd strongly recommend to folks interested in this to pick up the Stiglitz, et al 2001 Nobel Prize on information asymmetries-research https://www.nobelprize.org/uploads/2018/06/advanced-economicsciences2001-1.pdf https://www.nobelprize.org/uploads/2018/06/advanced-economic...
- the_optimist 2y ago
  Stigliz’ enthusiasm for “correcting” markets never seemed to extend to reducing his hypothetical information asymmetries, but rather tipped toward intervention. This disposition plays well with bureaucracy with whom he enjoys the most fervent support. Meanwhile, the market sustains an unbounded global search to identify and remediate material information deficiencies. The examples he identifies form a limited caveat to the whole. Those who bring him to the front of the line consistently miss the economic forest for an ephemeral tree, and often do so to curry political favor.
  - schuyler2d 2y ago
    Stiglitz specifically wrote about minimal interventions of e.g. just supporting/hosting (reliable) information exchanges. His proof showed that there were some markets where there was no value for any individual player to "pay" for the information needed to improve a market, so it stayed bad. Stiglitz' career definitely moved in a direction of more interventionist policies (of which I'm probably more sympathetic than you to some/many of them). Are you suggesting that I'm trying to curry political favor with...Stiglitz (or someone else)?
    - the_optimist 2y ago
      My comment is broad-based and not directed at you specifically.
- BlandDuck 2y ago
knxnts 2y ago
nice to see this.
kreyenborgi 2y ago
The Wikipedia article on this mentions that Wikipedia was partly inspired by it, which makes sense in that it very much values local, decentralized knowledge and dismisses the possibility of an all-seeing oracle (which even the sum of Wikipedia is not, cf edit wars). Compare and contrast the repost today of The Singularity - would Hayek believe that a computer (with the goal of being an Economy Maximizer) would even theoretically be able to have enough knowledge to implement economic equilibrium (and maintain that equilibrium over time)?
DiscourseFan 2y ago
Another, earlier book that essentially takes the same premise but in a far grander fashion is Georg Simmel's Philosophy of Money, which takes money as the central organizing factor of contemporary society and examines everything from that standpoint. I would highly recommend it; though it's quite long, and if you don't have time to read it all you can start from the last chapter.
Animats 2y ago
That''s a very classic view, from an era when market-based systems vs. central planning were a big issue. They missed so much. - Just because there are restoring forces doesn't mean stability is reached. This is basic control theory, but it escaped economists for a long time. There's always nonzero lag. Often there's a lot of lag. This can move things out of the stable region. - There's an assumption here that a market economy is a competitive market economy. This breaks down when the number of major players in a market is small. Or somebody has a "moat". Read Thiel's "Zero to One". - Hayek was writing in an era when manufacturing dominated, production cost exceeded marketing cost, and the size of companies was limited by inefficiencies in coordinating a really large organization. Those constraints favor a market economy. Today, services dominate, marketing often costs more than production (which means most of the cost is advertising), and computing has made it possible to scale companies to planetary scale without organizational collapse. Those factors favor sheer scale.
- Terr_ 2y ago
  > There's an assumption here that a market economy is a competitive market economy. Aside, there's also a fundamental trade-off been a competitive market and a market where individual actors have freedom. For example, one model may assume that everyone has perfect price information and therefore the market is very efficient, while another assumes that everyone can make secret deals and keep prices hidden and therefore cartels are unstable.
- dh77l 2y ago
  Well Collapse almost happened in 2008. Useful exercise is to play out what would have happened if the banks werent bailed out. And again just last year everyone got fully bailed out when SVB collapsed. This type of stuff encourages all kinds of halucinations.
- DiscourseFan 2y ago
  >computing has made it possible to scale companies to planetary scale without organizational collapse I wonder. Say we had various factories for producing goods around the world, and different factories requested the same inputs in different amounts. An algorithm could probably calculate how much of each input it should distribute to those factories. However, the structure of this economy still relies on the commodity form, since those inputs would almost certainly be worked in a certain, standardized way to be properly organized by the algorithm properly. Therefore, the computerization of the economy only leads to an image of the kind of unrestrained productivity you might imagine technology would bring, but lacks the kind of creativity necessary for it. This is all to say that if not the market, then whatever else could've managed an incomprehensibly complex economy certainly existed before contemporary computers (and certainly, the structure of the economy in even the 19th century in early high capitalism itself was the "computer," the quantitative management of social forces). Its not as if our era, today, is particularly unique, or that Hayek was right then or wrong now, but rather that he was fundamentally wrong to believe that the market itself was the path to freedom, even then.
temporallobe 2y ago
I read the first few paragraphs and will set it aside for later, but it has always been fascinating to me how writing styles and English language usage varies over the years. I could immediately tell this was an “older” publication based on phrasing and word order, but it still flows nicely and conveys information elegantly (which we somewhat lack in modern writing). Go back 100 years and it’s even more pronounced but still very similar to modern English, 200 years and it’s still quite familiar, but 300 years you’re getting dangerously close to King James/Shakespeare, 400 years it’s almost a different language, etc. I sometimes like to back as far as I can until something becomes completely unintelligible.
- bwanab 2y ago
  Hayek wasn't a native English speaker so that could have something to do with the style.

109 points by kreyenborgi 2y ago

I've been exploring data / information / knowledge / wisdom management a lot over the last couple months. I was surprised to discover how little consensus there is over the meaning of each of those terms. Or rather, subfields seem to have different takes on the meanings. "Data" and "information" I can kinda pin down. "Knowledge" and "wisdom" much less. Hayek in this article for instance does not seem to ever define what he means by "knowledge". Reading between the lines, he seems to think of it as being able to use data and information to make effective / economical decisions. It's especially unfortunate that writers assume everyone is on the same page about what "knowledge" means because the meaning of the term seems to have changed a lot over the last few hundred years.

A4ET8a8uTh0 2y ago
I think I agree. Oddly, the one place where the terms gained some level of settling appears to be corporate, but I can't tell if it is due to the nature of corporations, cross-pollination or some other unknown factors. What I personally find very interesting is the age of that paper and the fact that, the discrepancy between model most commonly presented in school ( in my case, variant of perfectly rational individual ) and real life has been voiced nearly eight decades ago and is not seriously discussed as foundational knowledge when it comes to economics.
churchill 2y ago
Once you start on the path of semantics, it's often turtles all the way down. So, unless you want to be rigorous, it's best to go with the generally accepted best bet.
- kaycebasques 2y ago
  For sure, I know comments about semantics often don't go down well on HN. Was just sharing something I'm intellectually curious about. The act of trying to pin down a rigorous definition has exposed me to 5-10 different interpretations and each has given me different perspective on how to manage this nebulous thing we call knowledge.
- throwaway19972 2y ago
  "Generally accepted" is nearly impossible to discern from an individual standpoint. I prefer Wittgenstein's stance that you should essentially accept uncertainty that you refer to the same world/concepts/knowledge that others do and engage in good faith efforts to communicate the best you can. This amounts to the same thing but it's not weighted towards some (likely wildly incorrect) subjective viewpoint of the general population.
vundercind 2y ago
I’ve refrained from commenting on this one precisely because (I assume) his definition of “rational economic order” and his justification for “best”, in the first two paragraphs, are context a reader of this journal is expected to already have, since he doesn’t elaborate on them, and lacking that the rest of the paper’s basically pointless (though his protest that in 1945 it was widely denied that there is any knowledge but scientific knowledge seems deeply silly per se and exactly the kind of thing you often see from people trying to push a “rebel” image for marketing reasons…) But yes the definitions of several other terms seem slippery and to change from one use to the next, including knowledge.
- AnimalMuppet 2y ago
  > (though his protest that in 1945 it was widely denied that there is any knowledge but scientific knowledge seems deeply silly per se and exactly the kind of thing you often see from people trying to push a “rebel” image for marketing reasons… Look up "logical positivism" as a philosophical system. It became the dominant academic philosophy for a while (including around 1945). It asserted almost exactly that - that there was no knowledge apart from scientific knowledge (although I believe it did accept direct sensory input as knowledge, and also the operations of pure logic). It's difficult now to see the water that he was swimming in then.
lurking15 2y ago
I guess I see this as an attempt or yearning to discredit him, but following in the work that sprung from Hayek and friends, the motivation for his work is clearly curiosity and wonder about how does anything get done in the world without coordination, never mind the wondrously complex things that are created nowadays. His conclusion is that knowledge is dispersed, represented in prices that arise from markets which is simply understood as cooperation. Knowledge may frankly be expressed as whatever enables and motivates someone to offer something on the market. If that's too vague for your taste, too bad. The wonder is that uncoordinated, independent cooperation gives rise to such abundant and sophisticated products. Not only that it's in a system that expresses everyone's individual preferences and competing interests. Central planning fails spectacularly to do this, and there's no reason to believe that it ever will even with fantastic computational power.
- kaycebasques 2y ago
  Definitely not trying to discredit him. I have no horse in that economic ideology race. I'm just honestly curious about what the heck we mean when we talk about knowledge. The background is that I'm a technical writer (TW), and a lot of us TWs are recognizing that knowledge management is becoming even more important than it already was before (and we already knew it was an important part of our role). So naturally as I begin this journey I am looking deeply into the meaning of the term and finding many different definitions. Your synthesis of this article for example gave me yet another new perspective on it.
  - lurking15 2y ago
    Ah got it. I think the idea of knowledge management is maybe misguided when applied to economics. Knowledge in economic terms is much less definite because prices reflect subjective value.
dleeftink 2y ago
Isn't it precisely what makes knowledge and its management interesting? Just as the diversity of PKM solutions it has given rise to? Its definition being difficult to pin down is a feature--not a single knowledge, but a multitude of (in)compatible knowledges and messy knowledge-making processes, and the many different interests that arise from it.

schuyler2d 2y ago

Thanks for linking to this -- it highlights a fallacy that Hayek seemed to mire in whereas on one hand, he believed that the aggregate "market" forces would always be sufficient to stabilize pricing stability (/inflation) he railed against the ability for any 'manager' (i.e. the government) to do so. I'd strongly recommend to folks interested in this to pick up the Stiglitz, et al 2001 Nobel Prize on information asymmetries-research https://www.nobelprize.org/uploads/2018/06/advanced-economicsciences2001-1.pdf https://www.nobelprize.org/uploads/2018/06/advanced-economic...

the_optimist 2y ago
Stigliz’ enthusiasm for “correcting” markets never seemed to extend to reducing his hypothetical information asymmetries, but rather tipped toward intervention. This disposition plays well with bureaucracy with whom he enjoys the most fervent support. Meanwhile, the market sustains an unbounded global search to identify and remediate material information deficiencies. The examples he identifies form a limited caveat to the whole. Those who bring him to the front of the line consistently miss the economic forest for an ephemeral tree, and often do so to curry political favor.
- schuyler2d 2y ago
  Stiglitz specifically wrote about minimal interventions of e.g. just supporting/hosting (reliable) information exchanges. His proof showed that there were some markets where there was no value for any individual player to "pay" for the information needed to improve a market, so it stayed bad. Stiglitz' career definitely moved in a direction of more interventionist policies (of which I'm probably more sympathetic than you to some/many of them). Are you suggesting that I'm trying to curry political favor with...Stiglitz (or someone else)?
  - the_optimist 2y ago
    My comment is broad-based and not directed at you specifically.
BlandDuck 2y ago

knxnts 2y ago

nice to see this.

kreyenborgi 2y ago

The Wikipedia article on this mentions that Wikipedia was partly inspired by it, which makes sense in that it very much values local, decentralized knowledge and dismisses the possibility of an all-seeing oracle (which even the sum of Wikipedia is not, cf edit wars). Compare and contrast the repost today of The Singularity - would Hayek believe that a computer (with the goal of being an Economy Maximizer) would even theoretically be able to have enough knowledge to implement economic equilibrium (and maintain that equilibrium over time)?

DiscourseFan 2y ago

Another, earlier book that essentially takes the same premise but in a far grander fashion is Georg Simmel's Philosophy of Money, which takes money as the central organizing factor of contemporary society and examines everything from that standpoint. I would highly recommend it; though it's quite long, and if you don't have time to read it all you can start from the last chapter.

Animats 2y ago

That''s a very classic view, from an era when market-based systems vs. central planning were a big issue. They missed so much. - Just because there are restoring forces doesn't mean stability is reached. This is basic control theory, but it escaped economists for a long time. There's always nonzero lag. Often there's a lot of lag. This can move things out of the stable region. - There's an assumption here that a market economy is a competitive market economy. This breaks down when the number of major players in a market is small. Or somebody has a "moat". Read Thiel's "Zero to One". - Hayek was writing in an era when manufacturing dominated, production cost exceeded marketing cost, and the size of companies was limited by inefficiencies in coordinating a really large organization. Those constraints favor a market economy. Today, services dominate, marketing often costs more than production (which means most of the cost is advertising), and computing has made it possible to scale companies to planetary scale without organizational collapse. Those factors favor sheer scale.

Terr_ 2y ago
> There's an assumption here that a market economy is a competitive market economy. Aside, there's also a fundamental trade-off been a competitive market and a market where individual actors have freedom. For example, one model may assume that everyone has perfect price information and therefore the market is very efficient, while another assumes that everyone can make secret deals and keep prices hidden and therefore cartels are unstable.
dh77l 2y ago
Well Collapse almost happened in 2008. Useful exercise is to play out what would have happened if the banks werent bailed out. And again just last year everyone got fully bailed out when SVB collapsed. This type of stuff encourages all kinds of halucinations.
DiscourseFan 2y ago
>computing has made it possible to scale companies to planetary scale without organizational collapse I wonder. Say we had various factories for producing goods around the world, and different factories requested the same inputs in different amounts. An algorithm could probably calculate how much of each input it should distribute to those factories. However, the structure of this economy still relies on the commodity form, since those inputs would almost certainly be worked in a certain, standardized way to be properly organized by the algorithm properly. Therefore, the computerization of the economy only leads to an image of the kind of unrestrained productivity you might imagine technology would bring, but lacks the kind of creativity necessary for it. This is all to say that if not the market, then whatever else could've managed an incomprehensibly complex economy certainly existed before contemporary computers (and certainly, the structure of the economy in even the 19th century in early high capitalism itself was the "computer," the quantitative management of social forces). Its not as if our era, today, is particularly unique, or that Hayek was right then or wrong now, but rather that he was fundamentally wrong to believe that the market itself was the path to freedom, even then.

temporallobe 2y ago

I read the first few paragraphs and will set it aside for later, but it has always been fascinating to me how writing styles and English language usage varies over the years. I could immediately tell this was an “older” publication based on phrasing and word order, but it still flows nicely and conveys information elegantly (which we somewhat lack in modern writing). Go back 100 years and it’s even more pronounced but still very similar to modern English, 200 years and it’s still quite familiar, but 300 years you’re getting dangerously close to King James/Shakespeare, 400 years it’s almost a different language, etc. I sometimes like to back as far as I can until something becomes completely unintelligible.

bwanab 2y ago
Hayek wasn't a native English speaker so that could have something to do with the style.