The Lily

"In The Lily: Evolution, Play, and the Power of a Free Society, Daniel Cloud, a researcher at Princeton University, argues that the apparent irrationality of the free society is actually its principal source of strength. The problem with planning is that it is limited by the cognitive capacity of the planner. The free society instead takes advantage of evolutionary forces, which through trial and error produce results that generally could not have been anticipated a priori.

Cloud's argument rests on the distinction between performative and declarative knowledge - the former being knowledge of how to do something, the latter knowledge that something is the case. "The knowledge that orders a society of successful rational utility maximizers is presumably all declarative knowledge," he notes, while "much of the knowledge in an evolved society is bound to be purely performative."

Unfortunately for any would-be philosopher kings, performative knowledge plays a key role in the solution of real-world problems. Not only does much of the economically relevant information in society consist of facts about what Hayek, in "The Use of Knowledge in Society," called "particular circumstances of time and place"; many of the techniques for making use of these facts are not even amenable to precise explication. Even if Hayek's "man on the spot" were able to convey all of the declarative knowledge at his disposal to a central authority he might still be unable to give a satisfactory account of what needed to be done.

The economic advantage of the free society is not simply that it can make effective use of all the declarative knowledge available to its members through the price system, as Hayek argued. Its freedom also allows new performative competencies to emerge through natural selection.