Perfect knowledge?

September 5, 2002 | hedgetrimmer

[hedgetrimmer]

Twice now I have heard that communism failed because those tasked to run things had "imperfect knowledge". For example, the head of a hungarian shoe factory when it was a communist country, would make only one size of shoe all year. If you did not wear size 11, for example, you would have to buy a shoe that didn't fit or go shoeless.This has been explained to me by (by a local communist) as a failure due to imperfect knowledge. He claims, now we have perfect knowledge and if we try communism again we will have a perfect, sustainable system to live under.

I am flabbergasted anyone can claim perfect knowledge of anything, and very much afraid when people like this fellow, with some influence over our county government says he has perfect knowledge with a straight face!

I did a short search and came up with a quote from George Soros. What I am looking for is, what is "perfect knowledge" exactly, where did it come from and why are people acting like this is something that will be acheived in America soon?

Please note that open society does not preclude the pursuit of self-interest; on the contrary, in the absence of perfect knowledge, it is best left to the individual to define what his interests are and it is best left to the market mechanism to reconcile those interests. But, in the absence of perfect knowledge, it cannot be left to the individual to protect the common interest. You need institutions which take precedence over the individual. These institutions are bound to be flawed but, if they belong to an open society, this fact will be recognized in their constitution and there will be a never-ending endeavor to correct the deficiencies. That is what makes open society such a subtle and sophisticated concept.

http://www.soros.org/textfiles/speeches/063095_Crans_Montana_Speech.

[hedgetrimmer]

Ping

[Sundog]

The Closest we will ever get to Perfect Knowledge.

cheers.

[Mark Felton]

The problem was not "imperfect" knowledge; the problem was lack of motivation to acquire "better" knowledge.

Capitalism in a free-market rewards those who improve their knowledge.

[Uncle Miltie]

"Perfect Knowledge" would, I suppose solve the problem of Communism. However, it must be perfect knowledge of everyones desires and priorities, maintained dynamically. So, if I want a Bud instead of a Miller this time, the Commie Bureaucrat must have that particular knowledge at the moment I think it.

When a world-wide super computer is wired into everyones brains, "Perfect Knowledge" will have been achieved and Communism may work. I hope to never live in that world.

In the mean time, all I gotta do is ask the bar tender for what I want, and BINGO! I gotta Bud.

Communism's use of "perfect knowledge" to plan everything is just an inefficient effort at eliminating my efficient judgment.

[fporretto]

The "perfect knowledge" canard seems unkillable. But that's not the reason central-planning / socialism is doomed. The problem is that in a division-of-labor (i.e., specialized) economy, people's economic decisions are only rational if they're premised on what other people want and are willing to pay for -- a subject on which "perfect knowledge" is impossible, because people's desires, their priorities, and the means to implement them are changing all the time.

Ludwig von Mises demolished the "perfect knowledge" conceit in his book Socialism. That was 1922. It would be nice if we could move on to some other rationalization for economic lunacy, after a mere eighty years. Sigh.

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit The Palace Of Reason: http://palaceofreason.com

[r9etb]

The problem is not "perfect knowledge," or lack of it. After all, the shoemaker had perfect knowledge that he was to make size 11 shoes.

For all intents and purposes, the commissar's knowledge was "perfect" as well: he knew he wanted size 11 shoes, and it was illegal to counteract his decisions. (For now let's assume the commissar is honest and intelligent.)

The commissar probably had a size 9 shoe factory out there someplace, too, so theoretically the shoe needs would have been satisfied by the set of factories.

The real problem has to do with allowable responses to imperfect knowledge. For example, the commissar may not have knowm of the corrupt factory manager over at Size 9. Nor, perhaps, of the flood that disrupted the transport of size 6 shoes from the factory to the distribution points.

Given the freedom to respond, the Size 11 plant could have covered the size 9 shortfall. But the system didn't allow it.