Hayek's proposition feels intuitively correct to me. I have some experience projecting the revenues of an $80 million, 900 person business, and have learned how to do so fairly accurately, but have learned a few significant things along the way:
Though I have noted before that Justice Holmes' "marketplace of ideas" metaphor for free speech leaves me vaguely queasy, it illustrates nicely the interplay between markets and democracy. A market is a clutter of votes, thousands of votes every fraction of a second on prices, quantities and value. Free marketplaces involve democratic choices of lifestyles, places, culture, affinities and ideas. Unplanned free markets are an underpinning of human liberty, and have been since the first prehistoric human traded something unwanted for something desired.
Hayek, in fact, seems to think of himself as a liberal, though he uses the term far differently than conservatives use it today. To him, and to me, a liberal is not a collectivist, not a believer in big interventive government, but a believer in the Mill-ian concept of liberty: that we each should be free to develop in whatever direction we please so long as we do not harm other people.
Hayek is usually quoted by conservatives and libertarians today, in support of their belief that Government is Bad, but Hayek actually believed that there are purposes served only by government. "The successful use of competition as the principle of social organization precludes certain types of coercive interference with economic life," he wrote, "but it admits of others which sometimes may very considerably assist its work and even requires certain kinds of government action." Vital acts which can be performed only by government include "adequate organizations of certain institutions like money, markets and channels of information", some of which "can never be adequately provided by private enterprise."
The fundamental problem of capitalism, which Hayek does not really address, is that powerful forces soon develop which desire to end market freedoms. The dreaded collectivism sought by socialists is eerily similar to the collectivism brought about by economic monopolies and deprivation of choice. What is the difference between a government-planned and controlled Soviet village, and the West Virginia coal mining company town, with rows of dreary identical company-owned houses and the company as the only employer, supplier of groceries, all other goods and medical services, and employer of the police? Since market forces and freedom are so closely linked, the fundamental problem of capitalism also becomes the gravest danger to democracy.