The problem of knowledge in society

"The peculiar character of the problem of a rational economic order is determined precisely by the fact that 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. The economic problem of society is thus not merely a problem of how to allocate 'given' resources—if 'given' is taken to mean given to a single mind which deliberately solves the problem set by these 'data.' It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilisation of knowledge which is not given to anyone in its totality."

~ third paragraph from F.A. Hayek's Nobel Prize speech from 1972. David R. Henderson reckons the published speech "is one of the ten most important articles published in economics in the last 80 years. So, it’s worth the effort." And the most important paragraph in this article, he reckons, is this third paragraph — and the most important sentence in the whole article being this paragraph's first sentence. Henderson himself helps to untangle Hayek's German locution in his own teaching notes. With all appropriate humility, I have a go below at translating it into plain English ...

MY 'TRANSLATION':

"Specialist knowledge is distributed throughout society — knowledge of particular circumstances or opportunities, 'local knowledge' if you like, which specific separate individuals possess and which will often appear contradictory. (There is after all no such thing as a 'collective brain' that knows or can know and integrate every single discrete circumstance.)

    "Yet in a rational economic order, those specific morsels of local and focussed knowledge are being put to use at every moment across society to find, transform, produce and distribute resources for ends whose relative importance only individuals know. And from that process comes the things we each value, produced by minds none of whom can ever see the whole.

    "To put it briefly, it is a little-recognised miracle of the integrated utilisation of morsels of local knowledge, none of which is given to anyone in its totality, to create the wealth on which we all depend."