Prices and knowledge: A market-process perspective

84 Prices and knowledgeframework described in chapter 2 (Kirzner 1988). And thissharpening of the market-process perspective continues to thepresent day. 36 In fact, the specific relationship between complexityand the knowledge problem has probably not been considered beforeas explicitly as here, where the bounded-rationality interpretation hasmade some clarification necessary.This section considers some statements drawn from Mises,Hayek, and Don Lavoie: (1) to clarify further the distinction between‘Simon’s’ ignorance and ‘sheer’ ignorance by pointing out a fewinconsistencies in this respect remaining in market-process writings,and, as a by-product, (2) to show writings that could lead readers tosee no difference between bounded-rationality and market-processtheories. 37In his 1920 critique of socialism, Mises (1920:102) argued that theproblem facing any attempt to plan an economy centrally is that inthe present economic systemno single man can ever master all the possibilities of production,innumerable as they are, as to be in a position to make straightawayevident judgments of value without the aid of some system ofcomputation.Emphasizing ‘the oppressive plenitude of economic potentialities’(101), he says thatin the narrow confines of a closed household economy, it ispossible throughout to review the process of production frombeginning to end, and to judge all the time whether one or anothermode of procedure yields more consumable goods. This, however,is no longer possible in the incomparably more involvedcircumstances of our own social economy…. The human mindcannot orientate itself properly among the bewildering mass ofintermediate products and potentialities of production without suchaid [i.e. economic calculation].(103)This statement is suggestive of Simon’s approach, because it saysthere is no knowledge problem under the simple conditions of ahousehold where the production process can be ‘reviewed frombeginning to end’. As already mentioned above, entrepreneurialdiscovery is necessary also in this situation, although it becomes even