Urban Interventionism and Local Knowledge
AbstractNot only do government interventions tend to compromise the knowledge-utilizing properties of the price system, they also impinge directly and in important ways on local knowledge, or Hayek's "knowledge of the particular circumstances of time and place." This local knowledge includes norms and trust levels that promote impersonal market interactions and complement more familiar forms of production-related skills and know-how. Thus, along with the well-known Hayekian lesson that the effective use of local knowledge depends on an extensively used and well-functioning price system, it is equally important to appreciate the reverse: i.e., the role of certain kinds of local knowledge in enabling the extensive use and smooth functioning of the price system to occur. In this way, interventionism can diminish the price system's effectiveness not only by directly distorting relative prices, but also indirectly by undermining local knowledge. As is generally true of interventionism, these consequences tend to reinforce the interventionist propensities of public choosers.
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Bibliographic InfoArticle provided by Springer in its journal The Review of Austrian Economics.
Volume (Year): 17 (2004)
Issue (Month): 2_3 (06)
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Web page: http://www.springerlink.com/link.asp?id=100335
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- Thierry Aimar, 2009. "The curious destiny of a heterodoxy: The Austrian economic tradition," The Review of Austrian Economics, Springer, vol. 22(3), pages 199-207, September.
- Palmberg, Johanna, 2013. "Spontaneous Orders and the Emergence of Economically Powerful Cities," Working Paper Series in Economics and Institutions of Innovation 310, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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