Urban Interventionism and Local Knowledge

Urban Interventionism and Local Knowledge Not only do government interventions tend to compromise the knowledge-utilizing properties of the price system, they also impinge directly and in important ways on local knowledge, or Hayek's “knowledge of the particular circumstances of time and place.” This local knowledge includes norms and trust levels that promote impersonal market interactions and complement more familiar forms of production-related skills and know-how. Thus, along with the well-known Hayekian lesson that the effective use of local knowledge depends on an extensively used and well-functioning price system, it is equally important to appreciate the reverse: i.e., the role of certain kinds of local knowledge in enabling the extensive use and smooth functioning of the price system to occur. In this way, interventionism can diminish the price system's effectiveness not only by directly distorting relative prices, but also indirectly by undermining local knowledge. As is generally true of interventionism, these consequences tend to reinforce the interventionist propensities of public choosers. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Review of Austrian Economics Springer Journals

Urban Interventionism and Local Knowledge

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Publisher
Springer Journals
Copyright
Copyright © 2004 by Kluwer Academic Publishers
Subject
Economics; Public Finance; Political Science; History of Economic Thought/Methodology
ISSN
0889-3047
eISSN
1573-7128
D.O.I.
10.1023/B:RAEC.0000026834.40849.d5
Publisher site
See Article on Publisher Site

Abstract

Not only do government interventions tend to compromise the knowledge-utilizing properties of the price system, they also impinge directly and in important ways on local knowledge, or Hayek's “knowledge of the particular circumstances of time and place.” This local knowledge includes norms and trust levels that promote impersonal market interactions and complement more familiar forms of production-related skills and know-how. Thus, along with the well-known Hayekian lesson that the effective use of local knowledge depends on an extensively used and well-functioning price system, it is equally important to appreciate the reverse: i.e., the role of certain kinds of local knowledge in enabling the extensive use and smooth functioning of the price system to occur. In this way, interventionism can diminish the price system's effectiveness not only by directly distorting relative prices, but also indirectly by undermining local knowledge. As is generally true of interventionism, these consequences tend to reinforce the interventionist propensities of public choosers.

Journal

The Review of Austrian EconomicsSpringer Journals

Published: Oct 18, 2004

References

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