ON KNOWLEDGE AND INFORMATION IN ECONOMICS Information , the Tip of the Tacit Iceberg

“IS THERE A DIFFERENCE BETWEEN KNOWLEDGE AND information?” is the question that participants in this symposium were asked to address. I come to the question as an historian of economic thought who has studied the Austrian tradition, and in particular the contributions of F.A. Hayek, who is remembered among information theorists for his early writings on “the knowledge problem.” An analysis of his work may be helpful in grappling with the question of this symposium. In an earlier paper I looked at differing interpretations of the socialist calculation debate and the current prospects for market socialism, and linked to issues of information and knowledge (Caldwell 1997). My remarks here draw in part on that paper. In recent years, in works by Bardhan and Roemer, (1993), Stiglitz (1994), Roemer (1995) and others, a new stylized history of the socialist calculation debate that highlights the contributions of the economics of information has emerged. According to this account, the original debate between market advocates like Mises, Hayek, and Robbins on the one hand, and market socialists like Lange and Lerner on the other, ended in a draw. Mises’ “impossibility arguments” regarding rational calculation under socialism were rejected as unproven, and Lange’s proposal of a “trial and error” method that would mimic the workings of a market was taken to mean that socialism was indeed possible, with its feasibility deemed to be an empirical matter. Renewed interest in the debate was sparked by the poor