----------------- HES POSTING ----------------- 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 ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]