Institutions and Knowledge

Institutions also act, in a way similar to prices, as knowledge surrogates (it’s important to point out the difference between a knowledge surrogate and embodied knowledge; see Steven Howitz’s “Monetary Calculation and the Unintended Extended Order: The Misesian Microfoundations of the Hayekian Great Society”). They allow us to accomplish tasks and achieve goals without fully understanding the means we use in the process. For example, we do not have to have any knowledge of banking in order to use the banking system to save for retirement.