Economic Information in the Life and Death of the Soviet Command System

This paper is about the value of information in a command system. Paul David and Dominique Foray distinguish information from knowledge as follows: knowledge is the cognitive capability that empowers its owners to act, intellectually or practically, whereas information is merely the “structured and formatted data that remain passive and inert” until those empowered by knowledge use it (David and Foray, 2001). On board an aircraft, the instruments and charts provide information whereas the pilot has the knowledge of how to fly the plane using the information. Thus information is much less than knowledge. It is only a small part of the stock of intangible capital that is used to fly the plane or manage society. But information is still very important. In the classic formulation of Kenneth Arrow, the value of information is that it reduces uncertainty (Arrow, 1984: 106–14). Flying in cloud or darkness, for example, the most knowledgeable pilot cannot pinpoint the plane's position and attitude relative to the ground without checking the dials on the instrument panel…