Not a Zero-Sum Game - Ludwig von Mises Institute

Because 'imperfections in the world impose limitations on
knowledge, the allocation of tasks can never be perfect. One
frequently overlooked impediment to the quest for perfection is
the cost of acquiring information, which F. A. Hayek pointed out.
This is due to the fact that usable knowledge is dispersed in time
and ci~mstance, and both time armd ci~mstmces are changing
continually and unpredictably. Only those in the right place at the
right time can make the most of it. 11
Admittedly, no one can possibly be aware of every existing
opportunity to which every person might apply his talent and
effort at any given moment, But as we gain more knowledge
we continually endeavor to seek and adapt to more profitable
opportunities to divide labor over time. The ever present incen-
tives of higher rewads tend to steer the community toward max-
imizing each person" particular howledge, experience, and
ability to manage and economize. This continuous process of
reallocation is coordinated by the principle of comparative costs.
As specialization increases, the individual productivity of eaeh
participant in his own field in turn increases the differences in abil-
ities, lowering the opportunity costs for each. As opportunity costs
decrease, everyone can offer more in exchange, increasing the ben-
efits and wealth for all. When InferJoe increases his own produe-
tivity by specializing in BREAD, the BREAD he uses as payment
casts him less, With this savings, he can pay SuperJaek more
BREAD for the GARMENTS, or he can increase his bid in the
market for other things. Everybody shares the gains sf everyone
else's increased productivity.
1 1. Friedrich von Hayek, "The Use of Knowledge in Society," American Economic Wevkw
35, no. 4 (September 1945): pp. 519=539. Also available online at
ht$://www.econlib.org/1ibrary/E~~ays/hyk~w1 ,htm (acee~8ed October 2, 2667).