“One can in particular interpret the proposition as a statement conditions under which the simplicity of incentive structure and the economies of information handling characteristic of a competitive market organization can be secured without loss of efficiency of allocation… The price system carries to each producer, resource holder, or consumer a summary of information about the production possibilities, resource availabilities and preferences of all other decision makers. Under the conditions postulated, this summary is all that is needed to keep all decision makers reconciled with a Pareto optimal state once it has been established.”

— Tjalling Koopmans

Source: Three Essays (1957), p. 53, as cited in: Harold Kincaid, ‎Don Ross (2009) The Oxford Handbook of Philosophy of Economics. p. 128

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Tjalling Koopmans16

Dutch American economist 1910–1985

Adam Przeworski (1940) Polish-American academic

Adam Przeworski and Michael Wallerstein, The American Political Science Review (Mar., 1988)

“She still believes in classical economics, the allocation of resources under conditions of scarcity. Information doesn’t work that way.”

Charles Stross book Accelerando

Source: Accelerando (2005), Chapter 2 (“Troubadour”), p. 72

“The proposition that markets drive economic efficiency is central to much of economics. Adam Smith illustrated that the “invisible hand” of the market drives efficient allocation of resources in a system of division of labor. Friedrich Hayek illustrated the central importance of the price system as an information processing mechanism more powerful than any centrally planned system could ever be. Kenneth Arrow and Gerard Debreu illustrated that complete and perfect markets deliver a Pareto-efficient equilibrium, in which no one person can be made better off without making someone else worse off. And the development of the efficient- market and rational- expectations hypotheses suggested that financial markets are in fact efficient, and that the conditions required for efficiency and for rational and stable equilibria apply even in contracts between the present and the future, which financial markets provide.”

Adair Turner, Baron Turner of Ecchinswell (1955) British businessman

Source: Economics after the crisis : objectives and means (2012), Ch. 2 : Financial Markets: Efficiency, Stability, and Income Distribution

“1. The standard neoclassical model the formal articulation of Adam Smith's invisible hand, the contention that market economies will ensure economic efficiency provides little guidance for the choice of economic systems, since once information imperfections (and the fact that markets are incomplete) are brought into the analysis, as surely they must be, there is no presumption that markets are efficient.
2. The Lange-Lerner-Taylor theorem, asserting the equivalence of market and market socialist economies, is based on a misguided view of the market, of the central problems of resource allocation, and (not surprisingly, given the first two failures) of how the market addresses those basic problems.
3. The neoclassical paradigm, through its incorrect characterization of the market economies and the central problems of resource allocation, provides a false sense of belief in the ability of market socialism to solve those resource allocation problems. To put it another way, if the neoclassical paradigm had provided a good description of the resource allocation problem and the market mechanism, then market socialism might well have been a success. The very criticisms of market socialism are themselves, to a large extent, criticisms of the neoclassical paradigm.
4. The central economic issues go beyond the traditional three questions posed at the beginning of every introductory text: What is to be produced? How is it to be produced? And for whom is it to be produced? Among the broader set of questions are: How should these resource allocation decisions be made? Who should make these decisions? How can those who are responsible for making these decisions be induced to make the right decisions? How are they to know what and how much information to acquire before making the decisions? How can the separate decisions of the millions of actors decision makers in the economy be coordinated?
5. At the core of the success of market economies are competition, markets, and decentralization. It is possible to have these, and for the government to still play a large role in the economy; indeed it may be necessary for the government to play a large role if competition is to be preserved. There has recently been extensive confusion over to what to attribute the East Asian miracle, the amazingly rapid growth in countries of this region during the past decade or two. Countries like Korea did make use of markets; they were very export oriented. And because markets played such an important role, some observers concluded that their success was convincing evidence of the power of markets alone. Yet in almost every case, government played a major role in these economies. While Wade may have put it too strongly when he entitled his book on the Taiwan success Governing the Market, there is little doubt that government intervened in the economy through the market.
6. At the core of the failure of the socialist experiment is not just the lack of property rights. Equally important were the problems arising from lack of incentives and competition, not only in the sphere of economics but also in politics. Even more important perhaps were problems of information. Hayek was right, of course, in emphasizing that the information problems facing a central planner were overwhelming. I am not sure that Hayek fully appreciated the range of information problems. If they were limited to the kinds of information problems that are at the center of the Arrow-Debreu model consumers conveying their preferences to firms, and scarcity values being communicated both to firms and consumers then market socialism would have worked. Lange would have been correct that by using prices, the socialist economy could "solve" the information problem just as well as the market could. But problems of information are broader.”

Joseph E. Stiglitz book Whither Socialism?

Source: Whither Socialism? (1994), Ch. 1 : The Theory of Socialism and the Power of Economic Ideas

“[Schemata are] knowledge structures that represent objects or events and provide default assumptions about their characteristics, relationships, and entailments under conditions of incomplete information.”

Paul DiMaggio (1951) American sociologist

Paul J. DiMaggio (1997). "Culture and Cognition." Annual Review of Sociology, 23: p. 269.

“I recognized that information was, in many respects, like a public good, and it was this insight that made it clear to me that it was unlikely that the private market would provide efficient resource allocations whenever information was endogenous.”

Joseph E. Stiglitz (1943) American economist and professor, born 1943.

Autobiographical Essay (2001)

“Without a market in which allocations can be made in obedience to the law of supply and demand, it is difficult or impossible to funnel resources with respect to actual human preferences and goals.”

Tibor R. Machan (1939–2016) Hungarian-American philosopher

Liberty and Research and Development: Science Funding in a Free Society, Introduction chapter: “Some Skeptical Reflections on Research and Development”, Hoover Institution Press, Stanford University (2002) p. xiii http://media.hoover.org/documents/0817929428_xi.pdf

“The First Welfare Theorem holds only if all consumers and firms are price takers. If some individuals or firms are price makers (they have the power to affect prices), then the allocation of resources will generally be inefficient.”

Harvey S. Rosen (1949) American economist

Source: Public Finance - International Edition - Sixth Edition, Chapter 3, Tools of Normative Analysis, p. 44

“The basic proposition is that the greater the uncertainty of the task, the greater the amount of information that has to be processed between decision-makers during the execution of the task. If the task is well understood prior to performing it much of the activity can be preplanned. If it is n~t understood, then during the actual task execution more knowledge is acquired which leads to changes in resource allocations, schedules, and priorities.”

Jay R. Galbraith (1939–2014) American business theorist

Source: Organization design: An information processing view, 1977, p. 21

“The mark of a capitalistic society is that resources are owned and allocated by such nongovernmental organizations as firms, households, and markets. Resource owners increase productivity through cooperative specialization and this leads to the demand for economic organizations which facilitate cooperation. When a lumber mill employs a cabinetmaker, cooperation between specialists is achieved within a firm, and when a cabinetmaker purchases wood from a lumberman, the cooperation takes place across markets (or between firms). Two important problems face a theory of economic organization—to explain the conditions that determine whether the gains from specialization and cooperative production can better be obtained within an organization like the firm, or across markets, and to explain the structure of the organization.”

Harold Demsetz (1930–2019) American economist

Source: Production, information costs, and economic organization. 1972, p. 777, Lead paragraph

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