Thursday, 23 July 2020

'The co-ordinating functions of the market are but a special case of co-ordination by mutual adjustment. In science, adjustment takes place by taking note of the published results of other scientists; in the market, mutual adjustment is mediated by a system of prices.' #QotD


"I am suggesting, in fact, that the co-ordinating functions of the market are but a special case of co-ordination by mutual adjustment. In the case of science, adjustment takes place by taking note of the published results of other scientists; while in the case of the market, mutual adjustment is mediated by a system of prices broadcasting current exchange relations, which make supply meet demand."
~ Michael Polanyi, from his 1962 article 'The Republic of Science: Its Political and Economic Theory'

"The business man who forms an expectation is doing precisely what a scientist does when he formulates a working hypothesis. Both business expectation and scientific hypothesis serve the same purpose; both reflect an attempt at cognition and orientation in an imperfectly known world, both embody imperfect knowledge to be tested and improved by later experience."
          ~ Ludwig Lachmann, from his 1956 book Capital and its Structure
[Hat tip Don Lavoie, from his book National Economic Planning: What is Left?]

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