Friday, December 30, 2005

Adam Smith on Dispersed Knowledge

I was having a discussion with one of my teachers Yeung Wai-hong, a card carrying member of the Hayek Fan-club, on the empricial content of Hayek's 1945 paper"The Use of Knowledge in Society" the other day.

For those of us who have read the piece, probably all will agree that this is the first work that provides a defence of the free market based upon the importance and existence of dispersed knowledge.

We are wrong!

Adam Smith had talked about this in his monumental work "The Wealth of Nations."

Here is the quote:

"What is the species of domestic industry which his
capital can employ, and of which the produce is likely to
be of the greatest value, every individual, it is evident, can
in his local situation, judge much better
than any statesman or lawgiver can do for him."

By the way, I get this quote from Jerry Muller's The Mind and the Market, an excellent work. The quote is on p.67.

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