Competition, Economic Planning & the Knowledge Problem

Competition, Economic Planning, and the Knowledge Problem expands on the role of the entrepreneur and its relation to the determination of prices and the coordination of individuals' plans. Kirzner develops here his familiar theme that competition is a rivalrous process of entrepreneurial activity in which individuals and firms discover, innovate, and outdo each other. This volume further emphasizes his theory of knowledge in economics and particularly in the specific case of central planning. Because knowledge is present in all economic interaction, no individual mind can ever comprehend it all. This "knowledge problem" implies, as Hayek has argued, the impossibility of central planning. Kirzner's contribution is to show how the free, competitive market process can overcome this problem by generating knowledge through an entrepreneurial process of discovery.