Prices and knowledge: A market-process perspective

92 Prices and knowledgecoordination of knowledge (and thus the better co-ordination ofactions it would lead to) is not assured because the situation issimpler. As argued before, facts, even if few and simple, still haveto be entrepreneurially discovered. ‘Traditional’ societies that (bydefinition) do not rely on an extensive network of markets mayachieve a co-ordination of actions. But they will be, almostcertainly, unco-ordinated as regards knowledge, because they donot provide the institutional framework to encourage individuals todiscover as many available opportunities as possible. (After all,these societies were not so simple as to make the problem ofentrepreneurial discovery completely trivial.) In fact, the stable,unchanging conditions attributed to such societies may not be thecause of an active entrepreneurial discovery process becomingrelatively unnecessary. Instead, they are more likely theconsequence of the absence of an institutional framework thatprovides incentives to entrepreneurship.For example, the agricultural economy of feudal society may haveachieved ‘a more or less complete co-ordination of actions ofmembers of the community in their production activities’. But it,almost certainly, did not achieve even an approximate coordinationof knowledge (or a tendency towards it), because it provided littlestimulus for anybody to discover the numerous better procedures andthings to be produced that surely existed potentially at the time.Without such discoveries, those societies would, not surprisingly,remain relatively stable and unchanging. (‘Stagnant’ would perhapsbe a better descriptive term.)The importance of the distinction between these types ofcoordination is also that for someone emphasizing exclusively thecoordination of actions in the habitual meaning, a decentralizedentrepreneurial procedure becomes necessary only in complexand changing situations and societies in which centralizedalternatives would require much time and effort. For thoseemphasizing ‘coordination of knowledge’, entrepreneurship isimportant in all situations, even in the simplest ‘Robinson Crusoe’economies. Without the entrepreneurial element, even twoindividuals in a solitary island will be—barring the most unlikelycoincidence—unaware of the better courses of action available tothem, regardless of how much time and effort they have at theirdisposal.