Hayek -the Use of Knowledge in Society

According to Hayek planning refers to a complex decision on how to allocate available resources, and must be based on knowledge. However, since information is given by different means a problem of economic resources arises on how to communicate the plan. For planning to work we should ask if

Stone argues that in the market model people and government look to capitalize on making the best decision that will benefit themselves given perfect or almost perfect information. The market model requires

The challenge in planning is that planning is essentially forecasting future actions and events. Most

It also forms part of good business ethics and is good practice to keep people up to date at all times when things change or need to be changed. Failing to do so can result in other peoples work plans being out of sync.

Chapter 1, the Lesson: One of the greatest fallacies associated with economics is that there is an abundance of economists selfish interests involved. Because are selfish nature men tend to see only the immediate effects of decisions. This is especially true when it comes to economics. Every group has it’s own interests and because of this certain policies that may benefit one group, may not benefit another group. Because of self-interest, groups will banter back and fourth persistently until a solution is reached. This is one of the first causes of

Kay, D. (2012). Relationship Between Planning and Control Explained. Available: http://dailyojo.com/articles/relationship-between-planning-and-control-explained.html. Last accessed 19th Nov 2012

The third principle of individual economic decision-making relates to marginal decision-making. Rational people will think at the marginal level, making small changes or tweaks in their plans to achieve the desired objective. Rational people normally have a certain system or method he/she uses to achieve their objective and they understand that sometimes small changes must be made to accomplish this.

During the time of war Keynes ideas were more successful because the government was able to make a large quantity of jobs for people through goods needed for the war. Since Keynes ideas were so widely used and accepted at this time, Hayek’s ideas were rejected and considered bad because the purposed to do the opposite. After the “good 30 years” Keynes economic ideas began to show flaws through inflation and unemployment rates. This issue resulted from the restriction

Economists have often modelled human decision makers as completely rational. According to this model, rational people know their own preferences, gather and accurately process all relevant information, and then make rational choices that advance their own interests. However, Herbert Simon won a Nobel Prize in economics by pointing out that people are rational, but only boundedly so in that they seldom gather all available information, they often do not accurately process the information

These social dilemmas are related to common-pool resources. The problem of free riding can be an issue. . There has to be governance of common pool resources. If, for example collective action was man’s natural instinct then

Owing to limited rationality of man, Herbert Simon contends that most decisions are based on limited rationality, that is, the organization is working like a brain. It would be impossible for organizations to attain perfection since their members have limited information-processing abilities (Morgan, G, 1997)

Planning is considered to be a primary function of management. All organisations operate in a complex, dynamic and competitive business environment, and therefore, have to plan their actions without which they may not be able to survive.

Planning is a process of establishing a mission with clear goals as a means to achieve them. Good planning requires special skills and perspectives allowing decision-makers to understand the challenges they are facing and apply the most effective solution to a problem. In order to achieve success, one must plan accordingly. Planning can be short term or long term. Short term plans are done on daily basis and are easier to achieve than long term plans. Long term plans are also known as strategic plans and are used to achieve a long range vision or mission of a company. In both methods of planning, short term and long term, is necessary to achieve top notch results. Like in any other process, there are both benefits and pitfalls to a

36). Today, the increased attention for strategic planning is a response to rapid and extensive changes in society such as the introduction of market economies and privatization, increasing environmental awareness, more attention for sustainable development, decentralisation issues and structural adjustments in public spending (Davidson, 1996).

Chapter 4: How do you think planning in today’s organizations compares to planning in an organization 25 years ago? Do you think planning becomes more important or less important in a world where everything quickly changes and crises are a regular part of organizational life? Why?