I have always been suspicious of what has become almost conventional wisdom that there is something called the “wisdom of the crowd.” It is generally interpreted to mean that the collective somehow knows what is not knowable by any individual. That notion is one of the motivating factors that recommends democracy to some. I disagree: I think the crowd collectively does not “know” since the act of knowing applies to individuals and not to abstract collectives. (Actually, it is superfluous to write “abstract collectives” since there are no other kinds of collectives; all collectives are abstractions.) Each individual knows something but those particularized “knowings” cannot be meaningfully aggregated to something that can be called the “knowledge of the crowds” or some such.
In any case, I interpret the “wisdom of the crowd” to mean that individuals in the crowd have different understanding of any particular matter and therefore some particular individual knows the best (however defined) about it. That bit is axiomatic and does not need further elaboration. What does need stressing is that ex ante we don’t know who among the crowd is the one who knows best regarding that particular matter. If everyone among the crowd has the opportunity to demonstrate their understanding, we (not collectively but as individuals each making our own judgement) could recognize ex post who knows best.
That is one of the many reasons why liberty and freedom of the individual is important. Liberty for people to demonstrate their understanding (through their actions of course), and the liberty for people to assess for themselves the actions of others. Since nobody knows a priori what or who is best, the most we can do is to have the liberty to explore the space of possibilities and then choose what to accept. Freedom is instrumental in this venture. Hayek makes the case for freedom with his characteristic elegant eloquence:
If there were omniscient men, if we could know not only all that affects the attainment of our present wishes but also our future wants and desires, there would be little case for liberty. And, in turn, liberty of the individual would, of course, make complete foresight impossible. Liberty is essential in order to leave room for the unforeseeable and unpredictable; we want it because we have learned to expect from it the opportunity of realizing many of our aims. It is because every individual knows so little and, in particular, because we rarely know which of us knows best that we trust the independent and competitive efforts of many to induce the emergence of what we shall want when we see it. [Source: The Case for Freedom. Oct 1960.]
Go read that essay very seriously. You’ll be much wiser than the crowd. (I should take this opportunity to plug another book that I think all smart people should read — Gustave Le Bon’s THE CROWD: A STUDY OF THE POPULAR MIND. 1896.)