In this paper, we will be diving deep into the pricing and production process of entrepreneurship, as well as the use of knowledge in society and how we can fix the problems that occur in the economy. In the book, “The Seen, the Unseen, and the Unrealized”, by Per L. Bylund, the author goes into detail about the process of production and pricing, and every step in entrepreneurship all connects one way or another. In addition, the article “The American Economic Review, The Use of Knowledge in Society” by F. A. Hayek, the author touches on the how we can use our knowledge to eliminate problems in the economy.
One may think that prices only contribute to goods sold that directly satisfy the consumer, which is correct, but it goes much deeper than that. It is not just buy, sell, trade. Each transaction that occurs in the present also affects the future.
“So, production is not simply the process that is necessary to make a good available, but also the process that makes it possible to demand other goods” (Bylund, 2016, p. 34).
For instance, the government pumps deadly foods to the population which results in health problems, causing us to go to the doctor which gives the government more money. The production of the food leads to other productions such as medicine or health care. Another example may be Apple selling us a phone with a new charging adapter, causing the production of a new charging port.
At the end of the day, producers do not produce because it is fun, or effective, but for the money (Bylund, 2016).
It is rare to find an entrepreneur whose motive is not money. Not saying that it is bad, but as we learned in the last paper, money is not the root of all evil, but rather mankind. In simple terms, everyone who contributes to the economy is an entrepreneur. If you buy, you add value to an object and give money to the producer to produce more. If you sell, you add goods to the economic menu. The economy did not just appear out of no where one day. Producers invested weeks, months, years, in a product to satisfy the customer’s needs. One product leads to another. For instance, one creates clothes and with the money made from selling, they buy furniture, and so on. Every producer and consumer is connected through the process of production. Entrepreneurship is a scary concept because nothing is for certain. One may have an idea of their products’ values, but you truly never know the outcome of a product. There are a lot of different variables that play a factor to some ones product.
In the article “The American Economic Review, The Use of Knowledge in Society”, by F.A. Hayek, the author tries to examine the problem of our rational economic order. For instance, the problem is not how to receive resources, rather than how to secure the best use of the resources known to society. In other words, how can we use utilizing
“knowledge not given to anyone in its totality” (Hayek, 1945, p. 520).
One may think that this concept is fairly simple; however,
“many of the current disputes with regard both economic theory and economic policy have their common origin in a misconception about the nature of the economic problem of society” (Hayek, 1945, p. 520).
When you look at the economy, everything is planned. A bunch of complex decisions were made about our available resources. For planning to occur, knowledge must be presented. Here, the problem is not who does the planning, but rather if the planning is done correctly. Should one authority have said when it comes to planning or should id be divided among multiple individuals. The problem we face with multiple individuals is everyone has their own kinds of knowledge. However, having multiple sources of knowledge is beneficial due to multiple sources of unique knowledge. Another problem the author faces is given all knowledge to everyone. This article being written in 1945, we now have technology so all knowledge is available to everyone. The author goes on to say that if things progress as expected, there will be no new problems. Wrong. Problems still occur daily, especially in the economic world. A plan is created and changed, it feels like every new day.
Bylund, P. L. (2016). Chapter 3: What Prices Communicate. In Seen, the unseen, and the unrealized: How regulations affect our everyday lives (pp. 27–45). essay, Lexington Books.
Hayek, F. A. (1945). The Use of Knowledge in Society. American Economic Review, 35(4), 519-30.
