Page 45 - Šolsko polje, XXIX, 2018, no. 1-2: The Language of Neoliberal Education, ed. Mitja Sardoč
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m. olssen ■ neoliberalism and laissez-faire: the retreat from naturalism
Knowledge and Planning
Markets are also preferred to planning on grounds of efficiency and be-
cause of the local nature of knowledge. When planning takes the place
of markets, mistakes and errors become ‘entrenched’ because only the
price mechanism can coordinate the diverse activities of individuals, says
Hayek. Partly, this is due to the absence of local or contextual knowl-
edge which actors in the marketplace have and state bureaucrats don’t
have. But, although Hayek distinguishes important characteristics of
local knowledge, he fails to consider whether other sorts of knowledge
might not be important; or perhaps whether or not knowledge might not
work differently at the macro, meso, and micro orders of society. To use
Hayek’s language, from ‘The Use of Knowledge in Society’, while he cel-
ebrates knowledge of ‘time and place’ which is not accessible to planners,
he gives no value to the benefits of ‘aggregated’ or ‘statistical-type’ knowl-
edge, which enables perspective, and which could be held to constitute an
equally important type of knowledge which ‘planners’ do have, and which
is denied to agents in local contexts. This later type of knowledge might be
claimed to be concerned with general guidelines, limits, or contexts, and
coordination, rather than specifically with day to day operations. It there-
fore maintains a different relation to time and place, and hence, the prac-
tical problem which Hayek notes about transmitting information about
events which are situationally local, need not arise.9 Certainly, if planning
sought to replace or override market mechanisms, or disregard, interfere
with, or over-ride local knowledge, one could see that would constitute a
serious problem, but this does not mean that markets and planning can-
not compliment and assist each other in turn.10
9 Hayek makes this point repeatedly in ‘The Use of Knowledge in Society’ (1945: p. 525, 526).
My point is that a different type of knowledge, concerned with guidelines, or limits, or
‘steering’, may not be so sensitive to issues of time and place, but may have a longer term
frame of reference. An additional point might be that advances in communications tech-
nology may make the transmission of what knowledge is relevant to the centre, easier and
faster to transmit.
10 Hayek’s argument against early communist regimes which sought to replace markets
with state planning are indeed valid, but these were based on the idea that markets were
not important, and sought amongst other things, to override the price mechanism as a
routine matter of policy. I am accepting Hayek’s argument that markets convey an im-
portant form of knowledge through the price mechanism which determines that the con-
text of operations should be semi-autonomous from the state. This also applies, I would
argue, to the family, the educational system, the health system, and personal life, although
clearly, there is no such thing as the price mechanism as an indicator of quality. But I am
suggesting that the knowledge generated by markets, or in other local contexts, is not the
only form of knowledge necessary to a healthy social structure, and that planning can (and
must) compliment markets in this quest.
43
Knowledge and Planning
Markets are also preferred to planning on grounds of efficiency and be-
cause of the local nature of knowledge. When planning takes the place
of markets, mistakes and errors become ‘entrenched’ because only the
price mechanism can coordinate the diverse activities of individuals, says
Hayek. Partly, this is due to the absence of local or contextual knowl-
edge which actors in the marketplace have and state bureaucrats don’t
have. But, although Hayek distinguishes important characteristics of
local knowledge, he fails to consider whether other sorts of knowledge
might not be important; or perhaps whether or not knowledge might not
work differently at the macro, meso, and micro orders of society. To use
Hayek’s language, from ‘The Use of Knowledge in Society’, while he cel-
ebrates knowledge of ‘time and place’ which is not accessible to planners,
he gives no value to the benefits of ‘aggregated’ or ‘statistical-type’ knowl-
edge, which enables perspective, and which could be held to constitute an
equally important type of knowledge which ‘planners’ do have, and which
is denied to agents in local contexts. This later type of knowledge might be
claimed to be concerned with general guidelines, limits, or contexts, and
coordination, rather than specifically with day to day operations. It there-
fore maintains a different relation to time and place, and hence, the prac-
tical problem which Hayek notes about transmitting information about
events which are situationally local, need not arise.9 Certainly, if planning
sought to replace or override market mechanisms, or disregard, interfere
with, or over-ride local knowledge, one could see that would constitute a
serious problem, but this does not mean that markets and planning can-
not compliment and assist each other in turn.10
9 Hayek makes this point repeatedly in ‘The Use of Knowledge in Society’ (1945: p. 525, 526).
My point is that a different type of knowledge, concerned with guidelines, or limits, or
‘steering’, may not be so sensitive to issues of time and place, but may have a longer term
frame of reference. An additional point might be that advances in communications tech-
nology may make the transmission of what knowledge is relevant to the centre, easier and
faster to transmit.
10 Hayek’s argument against early communist regimes which sought to replace markets
with state planning are indeed valid, but these were based on the idea that markets were
not important, and sought amongst other things, to override the price mechanism as a
routine matter of policy. I am accepting Hayek’s argument that markets convey an im-
portant form of knowledge through the price mechanism which determines that the con-
text of operations should be semi-autonomous from the state. This also applies, I would
argue, to the family, the educational system, the health system, and personal life, although
clearly, there is no such thing as the price mechanism as an indicator of quality. But I am
suggesting that the knowledge generated by markets, or in other local contexts, is not the
only form of knowledge necessary to a healthy social structure, and that planning can (and
must) compliment markets in this quest.
43
