Polanyi

There has been both agreement and disagreement regarding Polanyi's argument that science is like a market.  There is one dissimilarity and one similarity I wish to emphasize.

First, as has been pointed out there is no "profit motive" in scientific discovery.  There can't be, since there is no supply and demand and hence no prices.  This does not mean there is no self-interest (there is).  Rather, as Polanyi himself points out, the specific institutional framework for the transmission of knowledge and information is what differs.

How then are they the same?  What Polanyi is trying to bring out is first that both are feedback mechanisms and second the nature of the feedback mechanism. Both science and markets depend upon feedback.  This feedback must be in the form of other individuals (or decision centers) that are free to decide for themselves what feedback they will give.  In this respect, the argument is similar to arguments concerning the benefit of free speech.  We allow people to speak freely because this is the best way to uncover the truth.  It is in the process of arguing that the truth comes out.  Polanyi adds to this argument that there must be a framework for this feedback.  In science it is universities and journals.  In markets it will be the institutions that give rise to prices.  These institutions are what transform the cacophony of everyone talking at once into useful information.  Otherwise it is just noise.

Furthermore, we sort of see in Polanyi what will be explicit in Adam Smith: The larger the feedback framework the more useful it is.  This is why the Ghemawat video is so important.  Many assume that the market loop is already at a maximum (the globe) when it turns out that most markets fall far short of global feedback.

The underlying assumption here is that larger loops are better.  It is not until we read Smith and Hayek in week three, though, that we get specific arguments as to why larger loops are better in the market.