The Market’s “Marvel”: What Hayek Still Teaches Us About the Limits of Power

How Hayek’s insight into dispersed knowledge still humbles today’s planners

Every few decades a fantasy returns that with enough data, political will, and clever economists, governments can steer an economy better than millions of dispersed, self-interested individuals ever could. The twentieth century’s socialists believed it. Today’s industrial planners and “national capitalists” believe it again.

Peter Boettke’s recent essay in The Dispatch, “What Hayek Understood About the Unknowable Nature of Markets,” reminds us why this conceit always fails. It also reminds us what makes capitalism—not the caricatured greed of textbooks, but the dynamic process of price discovery and adaptation—the most extraordinary cooperative system human beings have ever built.

Hayek’s Central Insight

In 1945, F. A. Hayek wrote The Use of Knowledge in Society, the essay that turned economics from a theory of equilibrium into a study of discovery. His point was deceptively simple: knowledge in a modern economy is not concentrated in any one mind or ministry. It is scattered, in the skills of workers, the changing preferences of consumers, and the shifting costs faced by suppliers.

Boettke writes:

“But the dynamics of a market aren’t a given to be applied as one thinks wise when powerful people want to mandate lower rent or produce more computer chips. They must be generated, discovered, utilized, and conveyed—constantly adapting and adjusting to the changing circumstances of economic life. “The continuous flow of goods and services,” Hayek wrote, “is maintained by constant deliberate adjustments, by new dispositions made every day in the light of circumstances not known the day before, by B stepping in at once when A fails to deliver.””

The “problem of economic calculation,” as Hayek called it, is not that planners lack computers. It’s that they lack access to the tacit, local, constantly evolving information that individuals reveal only through their actions in markets. Prices are the language through which this knowledge is communicated. Every change in a price, every profit or loss, every spontaneous substitution when one product runs short, conveys more information than any bureaucrat could collect, let alone act on in time.

As Boettke notes:

“Prices are the conduit through which this vital knowledge is communicated, Hayek argued, making unencumbered markets an almost-miraculous telecommunication system that aids us all in changing circumstances.

Why? Because prices are the result of the relentless push-and-pull among what consumers value, what sellers seek, plus supply chains, technology changes, resource availability, and every other conceivable factor. Setting a true market price—not having one dictated from on high—is done only after these unknowable forces have been incorporated into the marketplace and felt, directly but more often indirectly, by the seller.

The price system works because of private property and freedom of contract, which are the antithesis of central planning.”

Boettke explains that Hayek never opposed planning itself. He opposed the monopoly of planning by the state. Everyone plans: entrepreneurs, firms, families. What distinguishes a free economy is that these plans compete and adjust. A bad business plan goes bankrupt; a bad government plan gets a bailout and a press release.

When governments fix prices or direct investment—whether through socialist ministries or today’s industrial policy—they suppress the very feedback loop that keeps an economy alive. The price system, Hayek wrote, is “a marvel”: a decentralized telecommunications network transmitting signals about scarcity and opportunity faster than any central brain could hope to process.

Strip away that system and you strip away what makes economic progress possible: the discipline of loss, the incentive of profit, and the freedom to try, fail, and learn.

Why Hayek Matters Now

Eighty years after Hayek’s essay, we still need his shock to complacency. Both the populist right and the progressive left flirt with economic nationalism and techno-planning. Each insists that “this time is different”—that the problems of deindustrialization, climate, or AI justify a little more direction from Washington.

But as Boettke reminds us, every attempt to bypass the spontaneous order of markets ends the same way: with fewer goods produced, higher costs, and less freedom. Socialism, Hayek warned, “produces less with more.” Markets, disciplined by property rights and competition, consistently do the opposite—producing more with less.

The marvel of the market is not moral perfection; it’s adaptive intelligence. It turns self-interest into social cooperation. It teaches us humility before complexity. And that humility, not the conceit of control, is what sustains prosperity.

Hayek’s message is as urgent in 2025 as it was in 1945: an economy cannot be engineered; it must be allowed to evolve. The data will never be complete. The experts will never be omniscient. What we can rely on is the discipline and creativity unleashed when people are free to plan their own lives and bear the consequences.

Boettke closes by remarking on the fact that Hayek’s insight is still not universally understood as an “intellectual travesty”. He’s right. The real marvel is that, despite all efforts to override it, the price system keeps working quietly coordinating billions of decisions every day, feeding and employing people who will never know each other’s names.

That miracle deserves not just study but gratitude and constant defense.