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Unformatted text preview: by point of view or by accumulated wisdom (tacit knowledge). One example of the effect of the division of knowledge maximizing social gain would be peoples knowledge of their own comparative advantage when seeking jobs, or the price of one good relative to all others. The implications for central planning is that it wont be able to account for the thousands of shifts in the market that one price change (increase/decrease in scarcity of one product) would create. Perhaps more importantly, by centralizing the means of production, there is now only one producer as opposed to many, and without competing ideas as to how products should be made or distributed the manner with which the new government corporation conducts business is not likely to be as optimal as when many firms compete with eachother....
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This document was uploaded on 10/27/2011 for the course MAP CA102 at NYU.
- Fall '10