„I cannot reword“

WIf we humans are storytelling animals, then one of the most influential stories of recent decades has been the one about the market as a great knowledge machine. This story goes something like this: the knowledge that an economic system needs is decentralized, it resides in the minds of countless actors and is constantly changing. Consumer preferences change, favorable opportunities arise, technologies continue to develop and open up new possibilities. No one could capture this knowledge in its entirety. But fortunately, there is a social system that allows this knowledge to be socially useful: the market, which indicates scarcity and abundance, demand and supply through its constantly adjusting prices. According to this story, if prices are allowed to have free play, economic efficiency and societal prosperity can be achieved, perhaps even – supported by the welfare state – „prosperity for all“ (Ludwig Erhard).

This idea, known as the „epistemic argument“ for the market in philosophical circles, is old. It dates back at least to Adam Smith, whose metaphor of the „invisible hand“ is sometimes equated with it, even though he did not use it in relation to his theory of prices. Since then, its popularity has fluctuated both within and outside of economics.