[jacques_chester]

That's a fairly sweeping generalisation of economic theory. Hayek, for example, explained that markets work for allocating scarce resources because they cause actors to share their incomplete information with each other through price signals.

Without a market, information is disjointed; everybody has some imperfect, incomplete part of the whole picture. Any planner will make irrational plans, he or she is dealing with a minute subset of information.

[T_S_]

I was describing an equilibrium model like Debreu's (very sweeping by the way), where information is not really explicit. Hayek's opinion about the hopelessness of central planning is more about the role of markets in eliminating the computational burden of central planners and is very important. But his was primarily a point about the hopelessness of central planning.

When the market is for information itself, I'm not sure if Hayek would have much to say. Markets for such things seem like they should be far more fragile. I think stock market volatility in the recent crisis is actually evidence of that.

Incidentally, and ironically, all this technology at our disposal giving us more "freedom", has made the feasibility of central planning more possible. Dys/U-toptian novelists take note.

[jacques_chester]

Thanks for the followup.

I am not an economist of Hayek expert, but my understanding is that he address "markets as information" as being markets. Even gambling markets and futures markets, which are both classes of prediction markets generally, are actually information markets even though they are ostensibly about goods or events.

I agree and disagree about your characterisation of technology. While yes, computers make authoritarianism more tractable, I don't think they can completely solve the calculation problem.

Suppose you use Leontiev input-output matrices to do your central planning. Matrix multiplication is an O(n^3) problem (I've been told by a mathematician that it can be done in n^2.75 with some tricks). If we take GDP growth as a proxy for the number of matrices required, it would need to be kept below a few percent or it would outstrip Moore's law in the long run. And that's ignoring the problem of populating the matrices in the first place.

FWIW, I host an economics blogger in Australia, Dr Nicholas Gruen, who has proposed to reduce market volatility by requiring blind clearances on a once-per-minute basis.

[T_S_]

I like Gruen's idea. Try this one on: We could have size investors continuously publish their postions. A 10000 investor x 10000 securities matrix would be more than enough. Price vol would drop like a stone.