By James E. Miller It's fascinating to watch footage of a trading floor on Wall Street. Here men and women spend hours with their eyes glued to computer monitors while furiously calculating trades that often yield small profits or minimal losses. In the case of Swiss bank UBS trader Kweku Adoboli, it can result in a $2 billion loss and an unfortunate incarceration. The risks run high as trading requires a sizeable amount of dexterity and concentration to be successful in a network of like-minded profit seekers. Still, there is an underlying beauty to the process, as thousands (perhaps millions) of individuals coordinate their knowledge on the allocation of limited resources throughout the world.
Nobel laureate Friedrich Hayek dedicated much of life's work (brilliantly summed up in his classic essay "The Use of Knowledge in Society") showing us how knowledge and expertise are widely dispersed throughout society and can never reside in a single mind. That is to say, while individuals may use their own expertise and labor to create, they will never be in full possession of all available knowledge to account for the nuances of market and societal demands. The same concept applies to a government composed of fallible men — much to the dismay of statist ideologues such as Elizabeth Warren.
The limit of individual knowledge is what provided the initial need for social cooperation. Primitive man banded together with others, not under the auspices of creating one great state, but as a desire to utilize more resources and raise their own standard of living. Out of this grew the division of labor and… (Read more)
Source: Mises.org
No comments:
Post a Comment