----------------- HES POSTING ----------------- 
 
I think, Jan, that unrealistic assumptions are necessary in thought.  
We define a thing by referring to what it is not. The problem faced  
by _actors in a market economy_ is to acquire and use particular  
knowledge about particular ways to profit from exchange. The  
problem faced by _the economist_ is to make sense of all of the  
separate and individualized knowledge sought out, possessed, and  
communicated by an indefinite number of actors. So the economist  
imagines a system in which knowledge of everything important is  
possessed by every actor. Then he contrasts this system with the  
actions and knowledge that he knows from his experiences and his  
ability to interpret his experiences. In this way, he comes to  
identify the "knowledge problem" that is somehow solved in a  
market economy.   
 
So by conceiving of a system in which every actor has perfect  
knowledge -- that is, a system in which knowledge is free --  
economists are better able to understand the system in which  
knowledge is scarce.   
 
Knight's RISK, UNCERTAINTY, AND PROFIT was about  
entrepreneurship. He wrote in the preface to his 1957 reprint that  
"[u]niversal foreknowledge would leave no place for an  
'entrepreneur.'"(this is on page lix of the edition from which I copied  
this page.) 
 
Pat Gunning, Sultan Qaboos University, Oman   
 
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