The Importance of Dispersed Bits of Incomplete Knowledge

Charlie Arlinghaus

October 1, 2014

As originally published in the New Hampshire Union Leader

Politicians suffer from both too much information and not enough information at the same time. The result is that we need to ask them to have fewer ideas and try their best not to come up with any plans for the future. When one of them unveils his or her grand scheme, the best thing to do is ignore them or tell them to go away.

We are bombarded with information today perhaps because some pundit chose to try and call this era “the information age.” But we’ve always had too much information or perhaps I mean more information than we can process and synthesize. This is not an insight but one of the most important theses of Friedrich Hayek.

Hayek famously wrote about the problem of knowledge: “the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.”

Hayek’s discussion of “The Use of Knowledge in Society” is seen primarily as a critique of centralized planning and of the planned economy so widely accepted before he wrote in 1945. It is also a cautionary tale to those who would solve the problems of society and the public sphere.

Too much information is accessible to us – too much to fully research and fully assimilate. At the same time, no one person, committee, or commission can gather as much information as they need to construct the perfect scenario or scheme to fix the problem they hope to address. What they can do is admit that the dispersed bits of knowledge which all the separate individuals possess are what might solve the problem.

In the modern, overly jargonistic speech we might call this crowd sourcing. The unassembled multitude has greater collective wisdom than any one of us. No single person this side of Samuel Johnson could write an encyclopedia but the collected multitude could produce something like Wikipedia by each person contributing his own dispersed bit of knowledge.

It is similarly jargonistic to say “let the market fix this problem.” Yet what the market proponent really means is that no government official, however wise, is likely to come up with a solution on his own because the knowledge of which he must make use does not exist in a concentrated and integrated form. Better to use all the dispersed bits of information possessed by individuals and massaged, synthesized, and implemented – however imperfectly – in that uncontrolled but organic mechanism we think of as rational economic order.

Steve Jobs left the government advice they might well take. Jobs spoke eloquently about the imperfections of backward looking research: “you can’t just ask customers what they want and then give it to them. By the time you get it built, they’ll want something new.” Research is hampered by imperfect knowledge and the whims of the individual.

One of the best comments about a potential government controlled gas pipeline mirrors Jobs. Once the government has decided to finance, design, collect taxes or rates for, and build a pipeline, you can be sure that it’s no longer a good idea. The government’s best skill is not figuring out markets in a timely manner. Better to let others risk their capital and either fail or reap a reward.

Analysis of static systems is easier. It’s easier to figure out how to build a Model T more efficiently if you can presume that no one will ever want to move on to a Model A – which they will love even if they haven’t heard it yet.

Steve Jobs’s most famous comment about the imperfectability of research and knowledge is “people don’t know what they want until you show it to them.” Why, for example, would anyone ever want to turn their cell phone into a computer when they have a nicer one on their desktop? How much market could there possibly be for putting that computer on your lap? Or for some silly device that pretends to be a computer even though it’s the same size as your mousepad?

Government can and should get out of the way. I don’t mean that in a slighting way. It can figure out the ways in which it is not merely policing the playing field but has turned into an obstacle. Let’s allow the freer flow of dispersed bits of individual knowledge.