Freedom, Society, and State - Ludwig von Mises Institute

its plans, the CPB would require information about the
p re fe r e n c e s 0 f "s 0 c i e t y • " T he prob 1em i s t hat s u c h
information is neither static, centralized, nor independent
of the preferences of the individuals who comprIse
the "society." The information needed by the CPB
i sin for rna t ion abo u t the needsand des ire s 0 fin d i v i d ualso
By its very nature such information is radically
deeentralized: it exists only in the minds of each
and every individual in society. Such information is
dynamic, changing as often as individuals alter their
preferences. I t is also sUbjective. An individual's
preferences can be known, even to himself, only through
his act s 0 f c h 0 0 sing . On e rna y c I aim topreferA to B,
but u n til and u n I e s she act uall y rna kesth e c hoi c e, he
can never be certain.
We I ive in an uncertain and ever-changing world.
Information is scarce and costly. The problem of ignorance,
of incomplete knowledge, is perhaps the key
social and economic problem. But, argue libertarians,
i tis jus t t his p r ob 1em t hat the co I lee t i vis t i gn 0 res
by posit i n g the eX i s ten ceof a CPB wh i c h e i the r po s ­
sesses, or is capable of obtainIng at little or no
cost, all of the information needed for the construction
of the economic plan.
The virtue of the market process, libertarians are
fond of pointing out, "IS the economy of knowledge with
which it operates, or how little the individual
particIpants need to know in order to take the right
action."(15) The price system acts as a sensoring
dev i ce wh i ch not only moni tors the ongoing changes in
consumer priorities and other economic data, but
rewards those who adjust to these changes while punishing
those who do not.
The economi c problem facing any society organized
on pure collectivist, i.e., non-market, principles, is
that if there is no market, the CPB would have no information
and thus no economic basis on which to construct
its plans. True, high speed computers could be
used to collect data, but the decentralized, dynamic
and subjective nature of the information required would
render such data practically worthless. From an econom
1 cpo i n t 0 f view, the dec i s ion s 0 f the CPB wo u 1d
therefore be totally arbitrary. The resulting inefficiencies
and distortions would entail capital decumulation
WhICh, in turn, would mean progressive impoverlshrnent.(16)
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