ABSTRACT
The metaphor of market competition as a process by which firms experiment and economize remains a powerful image among economists. Indeed, such a metaphor leads to the conclusion that firms are “a repository of a broad range of experiments, mostly with production technology” (Foss and Foss, 2002: 308) operating within a price system that functions as “a system of telecommunications which enables individual producers to watch merely the movement of a few pointers, as an engineer might watch the hands of a few dials” (Hayek, 1945: 527) to discover “which goods are scarce goods, or which things are goods, and how scarce or valuable they are” (Hayek, 1978: 181). Such a view leads to the well-known conclusion that experimentation and economizing yield goods at lower cost than any alternative based on collective decision making (e.g. government). Yet this metaphor omits the fact that such experimentation cannot proceed without there first having been a determination (often a collective decision) of what costs are to be economized and by whom.
