A contradiction in Hayek’s famous 1945 article

In his “Quotation of the Day” yesterday, one of my favorite parts of CafeHayek, Don Boudreaux quotes from one of my favorite articles by Hayek, his ‘The Use of Knowledge in Society’, published in the American economics magazine in 1945. (By the way, wouldn’t it be great if the AER started publishing articles with words and no equations, articles that make important points? A guy can dream.)

Here’s an important paragraph that Don quotes:

The peculiar character of the problem of a rational economic order is precisely determined by the fact that the knowledge of the circumstances that we have to make use of never exists in concentrated or integrated form, but only as the scattered bits of incomplete and often contradictory knowledge that make up 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 understood as given to a single mind that deliberately solves the problem posed by these ‘data’. Rather, it is a problem of how to best use the resources known to all members of society, for purposes whose relative importance is known only to these individuals. Or, to put it briefly: it is a problem of utilizing knowledge that is not given to anyone in its entirety.

For about the last twenty years of teaching at the Naval Postgraduate School, I assigned this article and we went through it as a class, paragraph by paragraph. (Previously, the Liberty Fund had numbered each paragraph, which made class discussions easier.)

But you don’t learn an article over and over again without noticing problems. For this article, I actually only noticed one, and that’s in the paragraph above.

It is this: “often contradictory knowledge.”

Knowledge can not be contradictory. That can be opinions. Evaluations can be. But no knowledge.

Let me take an example. I’m at my cottage in Minaki, Ontario. One of the big changes here since last year is that the landfill is closed. Bears went there to feast on people’s food scraps. Now they don’t. Bears are now coming closer to houses.

Let’s say I know there is a bear in my yard. You know that’s not true. If I really know, then you’re wrong.

Or vice versa. You know there’s no bear in my yard. I “know” that is not the case. If you really know, then I’m wrong.

QED.