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David is correct in asserting that formalization does not require a  
perfect knowledge.  The formalization I had in mind was the  
tendency to set up models to show how perfectly the economy  
works -- that it achieves some sort of optimum.  In fact, once you  
allow the existence of long-bit capital goods, then perfect  
knowledge is required to show how the economy leads to such an  
optimum.  The Austrians mostly avoid that requirement by not  
adopting formalization, but, at the same time, their conclusion, to  
be perfectly correct, would require that the individual business  
people had some sort of perfect knowledge that would allow them  
to adopt the right kind of capital.  The Austrians seem to get  
around this problem by the reducing in the specificity of capital to a  
matter of degrees of roundaboutness.   
 
Michael Perelman 
California State University, Chico 
 
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