ABSTRACT

From now on we must recognize that all the circumstances relevant to selecting an efficient allocation of resources can never be known by any single individual or small group; information regarding them is inevitably dispersed among the minds of very many different people. Similarly just as one man can never know everything, he can never decide everything. No single person can specify the work to be done in every factory, and the goods that each man has to consume. Thus the fact that the relevant information is dispersed and that there are limits to the capacity of any human mind makes it inevitable that economic decisions have to be taken by very many different people. The practical problem of economic organization as contrasted with the purely logical problem considered hitherto is to arrange that these many inter-related decisions are coordinated in such a way that an efficient pattern of allocation is the result.