The Enlightenment position is that knowledge should be objective. I think that originated in an analogy with the scientific method: the only conclusions that should be accepted are those which can be independently verified. If I say that a bird cannot live in air in which a candle has burned out, you should be able to put a bird in a jar with a candle and kill it the same way. If you can’t, then my claims are not objective, and are scientifically worthless.
The Enlightenment extended this principle to government. The decision of a government should not be made on the basis of one person’s private judgement; it should be made by a scientific process, and the reasons for making it should be objective facts that others can share.
Democracy requires that principle. Like science, democracy requires that one person’s conclusions can be replicated by another. In some cases the replication may not be contemporaneous with the actual decision, but the principle must still be that “If you knew what I know”, you would reach the same conclusion, and the politican can be judged retrospectively by that standard.
Hayek identified the problem with this approach. The main problem is “Tacit Knowledge”. Tacit knowledge is what you know, but you don't know that you know. It is knowledge that cannot be shared just by publishing a paper, but only, if at all, by teaching a craft.
A decision that has to be justified objectively cannot rely on tacit knowledge. Tacit knowledge is, by definition, subjective. A person, who, in whatever environment, is making a decision that is going to be evaluated by others, must deliberately ignore subjective considerations — tacit knowledge — and make what seems to be the best decision without that knowledge.
This process has a catastrophic impact on personal responsibility. If I make a decision not because, based on all my knowledge objective and tacit, I think it is the right one, but rather, because it is the one I can best justify to someone else, then I am no longer responsible for the result of my decision, only for the process (sound familiar?).
If someone is responsible for the results of their decision, rather than for the process of making the decision, then they will naturally make the decision most likely to have the desired result, and they will do so based on all the knowledge they have, objective and tacit.
The practical difference is most obvious in the case of choosing people. Judging other people is an innate skill: it is something our minds have evolved to do particularly well. Indeed, it is plausible that human intelligence is primarily evolved to assess other people, and, conversely, to deceive other people. Our knowledge of each other is therefore almost entirely tacit. Trying to estimate another person's qualities using only objective criteria is like walking around a house blindfolded.
(This doesn't mean I’m arguing for primacy of the subjective — I’m not saying we should “trust our feelings” and close our eyes to objective facts. We should also be prepared to suppress our subjective impressions where there is evidence they are unreliable. But that is not the case, particularly where we are doing what we have evolved to do, which is to evaluate the people we know well).
It seems like a small thing, but if you want people to be able to make decisions based on tacit knowledge, you actually have to change everything about the way our society is organised. For two hundred years almost every change has been to remove human judgement and replace it with objective process.
Obviously reversing it starts with abolishing democracy and restoring monarchy, but I don’t think you can really manage without restoring some kind of aristocracy as well — subjective judgements of trust and, to a lesser degree, ability, are going to rely heavily on actual personal contact, and people who are regular contact with each other, on a family basis, are going to develop their own standards of trustworthy behaviour, with a distinct disparity in trust between insiders and outsiders.