ABSTRACT
The phenomenon of the ‘knowledge economy’ has drawn quite a bit of attention, from policy makers to scholars of different feathers. There is a broad understanding that knowledge has always played an important role in the economy and that Hayek’s (1945) key insight in this respect is as valid as ever. One should remember, however, that Hayek saw his focus on the role of knowledge in light of what is now referred to as the Socialist Calculation Debate: is a central organization able to coordinate production such that the waste and duplication sometimes superficially association with a market economy can be prevented? Hayek’s point was that no such organization could ever be able to do so. Rather, a market economy would most effectively use all the relevant knowledge available in an economy – summarized in the prices quoted in the market.
