Abstract

In spite of the important discoveries made by Adam Smith and later by the economists of the Austrian School, Friedrich Hayek remained intellectually challenged by the miracle of the price mechanism. As it turned out there was still some pioneering to do in describing the price mechanism. This became clear when Hayek identified the dispersal of information relevant to exchange transactions as the central issue of economic study. In the context of his distinction between competition as a state of things and as a process the price mechanism manifests itself as a powerful integrator of information which is at first sight hopelessly dispersed in modern society. In 1945 he pointed out another intellectual challenge which the miracle of the price mechanism poses: How could such a marvelous functionality come into existence? “I am convinced that if it [the price mechanism] were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind”. It is precisely because the free determination of prices is obviously not an invention, and because actors on the market in general do not realize that their decisions are at once also signals for the information-processing system that the market is, that in general this market order is not highly estimated. The market order is nevertheless the best illustration of the dual principle that the most beautiful forms of complex functionality are not deliberately created and are not deliberately maintained.