Adam Smith and Friedrich Hayek saw the liberty principle as focal and accorded it strong presumption. But their wisdom invokes how little we can know. In Knowledge and Coordination, Daniel Klein re-examines the elements of economic liberalism. He interprets Hayek's notion of spontaneous order from the aestheticized perspective of a Smithian spectator, real or imagined. Klein addresses issues economists have had surrounding the notion of coordination by distinguishing the concatenate coordination of Hayek, Ronald Coase, and Michael Polanyi from the mutual coordination of Thomas Schelling and game theory. Clarifying the meaning of cooperation, he resolves debates over whether entrepreneurial innovation enhances or upsets coordination, and thus interprets entrepreneurship in terms of discovery, or new knowledge. Beyond information, knowledge entails interpretation and judgment, emergent from tacit reaches of the "society of mind," itself embedded in actual society.
Rejecting homo economicus in favor of the "deepself," Klein offers a distinctive formulation of knowledge economics, entailing asymmetric interpretation, judgment, entrepreneurship, error, and correction-and kinds of discovery-which all serve the cause of liberty. This richness of knowledge joins agent and analyst, and meaningful theory depends on tacit affinities between the two. Knowledge and Coordination highlights the recurring connections to underlying purposes and sensibilities, of analysts as well as agents. Behind economic talk of market communication and social error and correction lies Klein's Smithian allegory, with the allegorical spectator representing a conception of the social. Knowledge and Coordination instructs us to declare such allegory. Knowledge and Coordination is an authoritative take on how, by confessing the looseness of its judgments and the by-and-large status of its claims, laissez-faire liberalism makes its economic doctrines more robust and its presumption of liberty more viable.
Daniel Klein is Professor of Economics at George Mason University, and Associate Fellow at the Ratio Institute in Stockholm. He is the creator and chief-editor of the scholarly journal Econ Journal Watch.
Acknowledgments/A Note about Citation Practice ; Preface ; Some Smith-Hayek Homiletics ; 1. Rinkonomics: A Window on Spontaneous Order ; 2. Discovery Factors of Economic Freedom ; About This Book ; 3. From a Raft in the Currents of Liberal Economics ; The Two Coordinations ; 4. Concatenate Coordination and Mutual Coordination ; 5. Joy and the Matrix of Concatenate and Mutual ; 6. Light Shed by the Two Coordinations ; Asymmetric Interpretation ; 7. Discovery and the Deepself ; 8. Experiment on Entrepreneurial Discovery ; 9. Let's Be Pluralist on Entrepreneurship ; 10. Knowledge Flat-talk: A Conceit of Supposed Experts and a Seduction to All ; Studies in Spontaneous Order ; 11. Urban Transit: Planning and the Two Coordinations ; 12. The Integrity of You and Your Trading Partners: The Demand for and Supply of Assurance ; 13. Outstripped by Unknowns: Intervention and the Pace of Technology ; Rethinking Our Way ; 14. Unfolding the Allegory of Market Communication and Social Error and Correction ; 15. Conclusion: Liberalism These Past 250 Years ; Appendix Chapters ; 16. Owning Up to and Properly Locating Our Looseness: A Critique of Israel Kirzner on Coordination and Discovery ; 17. Some Fragments ; 18. In Defense of Dwelling in Great Minds: A Few Quotations from Michael Polanyi's The Study of Man ; Glossary ; References ; Index