New Thinking in Political Economy series
Edited by Emily Chamlee-Wright and Virgil Henry Storr
Chapter 3: The Use of Knowledge in Natural Disaster Relief Management
1 Russell S. Sobel and Peter T. Leeson2 More than 60 years ago F.A. Hayek identified the problem of social coordination in his seminal article ‘The use of knowledge in society’: 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. The economic problem of society is thus not merely a problem of how to allocate ‘given’ resources – if ‘given’ is taken to mean given to a single mind which deliberately solves the problem set by these ‘data.’ It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only those individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge not given to anyone in its totality. (Hayek 1945, pp. 519–20) Hayek’s critical insight, later called ‘the knowledge problem’, highlighted two central features of social organization. First, every society confronts a ‘division of knowledge’ analogous in many respects to the ‘division of labor’. Information is fragmented, diverse and often contained in inarticulate forms, held separately and locally by the many individuals who compose society. Second, the foremost obstacle that every effort at social coordination must overcome is somehow tapping into this dispersed...
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