 Hello, my name is Jamie Lemke. I'm a Senior Research Fellow and Associate Director of Academic and Student Programs at the Mercatus Center at George Mason University. I'm here with my colleague, friend, and former professor, Chris Coyne. Chris Coyne is a Professor of Economics and the Director of Graduate Studies at George Mason University. He is also the Associate Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center. His most recent book is Doing Bad by Doing Good, Why Humanitarian Action Fails. Chris is here to talk with me a little bit about Austrian economics today. So thank you for coming in, Chris. Oh, thank you for having me. It's great to be here. You could describe Austrian economics as the economics of knowledge. Sometimes people say that that unique emphasis is a defining characteristic of the study. So can you just say a little bit more about what it means to bring knowledge into the conversation? So what oftentimes referred to as economic knowledge or the knowledge problem, oftentimes people refer to it to what Hayek's talking about, really goes and can be linked back to you. And really, it's important to link this back to the calculation debate. And so Askelanga and others who fall into this camp of what today we call the market socialists said, look, Mises, you're right. We need some market prices, but we don't need full market prices. That is, we can still have central planning, but we can have markets in final consumer goods and in labor markets. And we'll just do exactly what you all do when you teach students, which is we will tell firms, the planners will, they'll tell firms to set price equal to marginal cost and to minimize average cost. And if you do that, just like the model of perfect competition suggests, you'll get allocative efficiency. Hayek comes in then and says, well, wait a minute. This argument, this market socialist argument, makes numerous huge assumptions, but it makes one really important assumption, which is that you have access to the cost curves. What Hayek was saying is, there is no way for planners to access the relevant economic information. They can do stuff. They can ask people, what do you want, for instance? And people can tell them things and they can produce it. But what Hayek's capturing is that is not capturing the full cost. That is not capturing the cost that economists talk about. The only way to access that knowledge, that knowledge of time and place, that context-specific knowledge that Hayek talks about in most detail in his 1945 paper, The Use of Knowledge in Society, is through markets. And for instance, Hayek uses an example. He says, look, imagine the price of tin increases. Economic actors do not have to have any gauge whatsoever as to whether the price of tin increased because of demand-side influences or supply-side influences or both. They will change their behavior accordingly. And so what he's capturing in that story, that illustration, is that prices both capture this context-specific information and communicates it to people extremely efficiently. Now, many people misinterpret Hayek. And the act is, if we just have enough computing power, if we just engage in enough search, for instance, to collect the relevant information, then we can do it. So we can have some kind of algorithm. For instance, Amazon puts up recommended books on your page when you log in on your account page based on your previous buy behavior. And people say, well, why can't we just replicate that kind of thing to produce paper towels or coffee? We can just do the same thing. But that misses out on Hayek's fundamental point, which is there's knowledge you can't capture. There's the opportunity cost aspect. There's daily nitty-gritty information that you can't capture. For instance, I'm sure most people have heard of an organization that loses someone that's worked there for 15 or 20 years. And it could be in the most roles that are considered relatively menial. So you might say, oh, that's an administrative assistant. We can replace an administrative assistant. That's quite easy to do. There's lots of people that have that basic skill set. But then the new person comes in. And it's not that they lack the necessary lack the basic skills of how to do administrative activities. But you say, how do I get x done? Who do I go to see this? And they won't know, where the previous person would have said, well, I know exactly how to get that done. You see this person, you see that person, and you can accomplish your end. That's the kind of local knowledge that Hayek was talking about. One aspect of the local knowledge that Hayek was talking about. And those type of things cannot be captured by search. It cannot be captured by hiring more people with PhDs and having them sit down and figure out complex algorithms and so on. It has to be discovered, as Hayek said, anew each day through the market. And that's the reason behind his emphasis on the knowledge aspect of economic activity. One of my favorite works by Hayek is the Constitution of Liberty from 1960. And in there, he describes what you're talking about as civilization progressing because people are able to take advantage of knowledge that they don't actually possess. So that's what you're talking about there at this large institutional level, right? That's exactly right. So Hayek's argument for liberty, what he called the Constitution of Liberty, as you said, was that each of us have very limited knowledge. Even the smartest people in the world have very limited knowledge. That's just a function of human reason and what we can comprehend about the world. But even, again, if you had supercomputers, you couldn't comprehend everything. And so what we need to figure out, assuming our goal is to have an advanced material civilization, that is wealth in the broadest sense, things that we value, not just monetary income, but just everything that we value, we need to figure out how to rely on the fact that we know, each of us know very little about the world. And Hayek said, look, when you allow for freedom, when you allow individuals to have a sphere whereby they have complete freedom and autonomy as long as it doesn't infringe upon the private sphere of others, one of the great benefits, if not the greatest benefit of that, is it allows them to engage in a whole host of experimental behaviors. That is to try different things in life and to use their specific knowledge, but also to take advantage of other people's specific knowledge as well. And for Hayek, that is, as you pointed out, what fundamentally drove the advancement of civilization was allowing for this division of labor, if you will, of knowledge and to allow people to take advantage of what other people knew and vice versa.