Prices and knowledge: A market-process perspective

Change, responsiveness and co-ordination 115reasons that make the adoption of such forms of organizationdesirable for market participants.To summarize: from an entrepreneurial perspective, organizationscan never be fully decentralized, in the sense that they will always,by definition, require a designing mind (or a few minds incollaboration). Markets, on the other hand, are a fully decentralizedalternative, in the sense that they consist of a set of rules with nospecific tasks or functions assigned to anyone. The importantimplication of this is that markets leave much larger scope forentrepreneurship to be exercised. Decentralized organizations maymake almost no use of the entrepreneurial abilities of people otherthan their designer, or, if they attempt to do so, will stimulatealertness only in forms, and towards goals, already broadly perceivedas desirable by the entrepreneurial mind of the designer. Thus, whilefrom the bounded-rationality perspective there may be no significantdifferences between these alternative forms, from an entrepreneurialview there are differences and they are important.CONCLUDING REMARKS ON BOUNDEDRATIONALITYThe last two chapters have analysed critically the views of marketsand planning that emphasize the specific cognitive limitation ofhuman beings described as bounded rationality. Although the authorsin this tradition express criticisms of the optimizing, equilibriumapproach similar to those presented by market-process economists,there are significant differences between these perspectives.The entrepreneurial perspective is concerned with a knowledgeproblem that has more to do with ‘sheer’ ignorance of the facts,whether many or few, than with an ignorance due only to the quantityof things that need to be known by minds with finite storage andcomputing capacities. This leads it to be concerned with ways ofstimulating discovery and ‘alertness’, and to judge economic systemsin terms of how well they do this.The emphasis on computational and storage limitations bybounded-rationality theorists leads them to see the performance ofalternative economic systems in terms of how well they enableindividuals to cope with the facts produced by an ‘information-rich’world. This apparently makes comprehensive central planning seeman impracticable alternative. But it also makes these theorists see the