Prices and knowledge: A market-process perspective

122 Prices and knowledgeAs a by-product, a better understanding of the role of money inthe discovery process may also shed light on the effects of inflationon entrepreneurial discovery.4. Much work remains to be done regarding the role and theeffects of entrepreneurship in the market process. One issue thatneeds additional study is the determination of what entrepreneurshipcan be said precisely to achieve, given that ‘equilibration’ may not bea wholly satisfactory description. (This should not be interpreted asthe adoption of a Schumpeterian position that finds ‘disequilibration’to be a better description.)A few considerations may serve to illustrate the point. The datafaced by participants in a market economy consist of theirperceptions of the availability of resources and of technology, and ofother individuals’ planned supplies and demands for goods. Theseperceptions lead to plans that, even if they turn out to be correct inthe sense that they lead to profits, would not necessarily coincideduring the market process with the ‘correct’ plans a hypotheticalomniscient observer would recommend. This is because the plans anagent finds profitable are largely dependent on the behaviour, bothcorrect and mistaken, of others: for example, a brick manufacturercould find it profitable to sell bricks to a builder who later realizesthat his project was a mistake.The implication of this is that profit opportunities may not alwaysstimulate the discovery of courses of action that are ‘correct’ from anomniscient perspective. Instead, they may be incentives for coordinatingindividual plans, even when some of these plans may bemistaken. (Of course, profits and losses will also act as incentives forthe correction of the mistaken plans.) This feature may explain whymarkets, without ever reaching something like equilibrium, still seemreasonably orderly. And it suggests that ‘equilibrium’ may perhapsbe profitably substituted by some other term for the description of thedegree of plan co-ordination achieved by a market system.