''Knowledge and Decisions'' is a non-fiction book by American economist

Thomas Sowell Thomas Sowell (; born June 30, 1930) is an American author, economist, political commentator and academic who is a senior fellow at the Hoover Institution. With widely published commentary and books—and as a guest on TV and radio—he becam ...

. The book was initially published in 1980 by Basic Books and reissued in 1996. Sowell analyzes social and economic knowledge and how it is transmitted through society, and how that transmission affects decision making. The book's central theme of

dispersed knowledge Dispersed knowledge in economics is the notion that no single agent has information as to all of the factors which influence prices and production throughout the system. The term has been both expanded upon and popularized by American economist Th ...

is drawn from

F.A. Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, Jurisprudence, legal theorist and philosopher who is best known for his defense of classical lib ...

's article "

The Use of Knowledge in Society "The Use of Knowledge in Society" is a scholarly article written by economist Friedrich Hayek, first published in the September 1945 issue of ''The American Economic Review''. Written (along with ''The Meaning of Competition'') as a rebuttal to f ...

." Hayek said that this book expanded admirably on his original concepts and made them clear to lay readers, with examples of economic activity drawn from the real world.Hayek
Reason, 1981, retrieved 2021-07-24 Sowell rejects the tendency to put economic and political decisions and their results in moral terms. Doing so, he argues, ignores the tradeoffs and limitations inherent in every economic system and society. Consistent with his established

laissez-faire ''Laissez-faire'' ( ; from french: laissez faire , ) is an economic system in which transactions between private groups of people are free from any form of economic interventionism (such as subsidies) deriving from special interest groups ...

viewpoints, Sowell also indicts price controls (such as

rent control Rent regulation is a system of laws, administered by a court or a public authority, which aims to ensure the affordability of housing and tenancies on the rental market for dwellings. Generally, a system of rent regulation involves: * Price con ...

, minimum wage,

price fixing Price fixing is an anticompetitive agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given ...

, and

subsidies A subsidy or government incentive is a form of financial aid or support extended to an economic sector (business, or individual) generally with the aim of promoting economic and social policy. Although commonly extended from the government, the ter ...

) as interfering in the implicit communication between consumers and producers necessary to optimize the choices of each. The fact that some industries or

government agencies A government or state agency, sometimes an appointed commission, is a permanent or semi-permanent organization in the machinery of government that is responsible for the oversight and administration of specific functions, such as an administratio ...

seem particularly incompetent or corrupt over many turnovers of their staff, he argues, is not bad people performing the duties, but of rational people acting in their own interests responding to whatever incentives have been established in the system. The last section of the book deals with

intellectuals An intellectual is a person who engages in critical thinking, research, and reflection about the reality of society, and who proposes solutions for the normative problems of society. Coming from the world of culture, either as a creator or as ...

, those whose profession is the distribution of ideas. Sowell questions the popular unwavering faith in the expert intellectual and "articulated rationality" for "solutions" to economic or political problems. He explains that through intellectuals, government agencies, such as the

United States Environmental Protection Agency The Environmental Protection Agency (EPA) is an independent executive agency of the United States federal government tasked with environmental protection matters. President Richard Nixon proposed the establishment of EPA on July 9, 1970; it ...

and

National Institutes of Health The National Institutes of Health, commonly referred to as NIH (with each letter pronounced individually), is the primary agency of the United States government responsible for biomedical and public health research. It was founded in the late ...

, have become more numerous and more powerful. Sowell explains that agencies make more laws than Congress does, but the agencies are insulated from any sort of consequences of their decisions because the officials are not elected. That has the effect of creating a larger divide between people who make decisions and those who experience the consequences. Sowell also talks about the recurrent

unintended consequences In the social sciences, unintended consequences (sometimes unanticipated consequences or unforeseen consequences) are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by Ameri ...

of many intellectual decisions. Consequently, Sowell advocates decentralized decision making by allowing people to make economic choices for themselves rather than assuming that non-elected intellectuals at centralized planning agencies will make better decisions.

References

1980 non-fiction books Basic Books books Books by Thomas Sowell Economics books Works about the information economy {{Econ-book-stub

See also

References