Glenn Harlan Reynolds discusses the X-prize for private space travel using a rather Austrian viewpoint.

But in all sorts of areas — from space and jet aviation in the 1950s and 1960s, to computers in the 1970s and 1980s, to the X-Prize today — it seems that we make faster progress when we have lots of parallel efforts, with freedom to experiment, and to fail.

I was reminded of this excellent essay by science fiction writer David Brin.

Take a closer look at how science, courts, democracy and markets actually work. In each arena, the process has two phases.

First, centrifugal structures help participants go off on their own, to organize and prepare in safety. Scientists have their labs, lawyers and their clients get confidentiality, politicians rally their parties, and businessfolk lead companies. People need secure enclaves to gather allies, make plans, and prepare for coming battles.

…What each of the older accountability arenas has — and today’s Internet lacks — is centripetal focus. A counterbalancing inward pull. Something that acts to draw foes together for fair confrontation, after making their preparations in safe seclusion.

No, I’m not talking about goody-goody communitarianism and “getting along.” Far from it. Elections, courtrooms, retail stores and scientific conferences all provide fierce testing grounds, where adversaries come together to have it out… and where civilization ultimately profits from their passion and hard work.

This process may not be entirely nice. But it is the best way we ever found to learn, through fair competition, who may be right and who is wrong.

The market process of sorting out by trial and error is something that I think is properly emphasized by Austrian economics and under-appreciated by the more mathematical schools of thought. In mainstream economics, trial-and-error learning is one of those phenomena about which the typical thinking seems to be, “Oh, yes, it is very important. So-and-so has a nice model of it. But we ignore it in this paper.”

For Discussion. What papers in mainstream economics capture the importance of trial and error learning?