Abstract
A key insight in Hayek’s thought is the importance of so-called “local knowledge” in economic activity. In The Fatal Conceit, he states that such knowledge is “essentially dispersed,” an especially intriguing description given that “essential” is a highly technical term from a philosophical perspective. In Section 1, we outline and discuss Hayek’s use of essential as found in The Fatal Conceit and in the process distinguish a “strong” and a “weak” sense of the term. We then explain the importance of this distinction to the theoretical viability of socialism and make an initial attempt to determine which sense Hayek himself might have had in mind. Section 2 explores the “strong” sense of essential in more detail and links it to Aristotle’s “causal account” of scientific knowledge. Section 3 traces the development of the popular and highly influential “empirico-positivistic” explanation of scientific knowledge –an explanation that does not support the strong sense of essential—and concludes that Aristotle’s account is superior. In Section 4 we employ the Aristotelian account and observe that, in point of fact, local knowledge is essentially dispersed in the strong sense and as such inherently defies the centralized management required by all forms of socialism. Evidence that the stronger sense of essential is more consistent with Hayek’s own thought is also briefly presented.
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Notes
As summarized at the beginning of the chapter (66) and laid out in more detail in the previous chapter (61–62), all “reasonable” moral dictums would have four basic characteristics: they have been proven scientifically; are fully understood; are directed toward some fully specified end; and all effects of the prescribed or proscribed actions are known. The traditional moral code fails these tests and is thereby “unscientific” and thereby “unreasonable” and unfit as a basis for moral human action.
By “traditional moral code” Hayek refers especially to “… our institutions of property, freedom, and justice” that “… are not a creation of man’s reason but a distinct second endowment conferred on him by cultural evolution….” (Hayek 1989, 52). By this he does not appear to mean that the moral code is the product of an irrational process nor some mechanistic evolutionary process. If that were the case, then he would be in the odd position of claiming that the irrational or the non-rational is the cause of something rational; namely, a rational moral code (i.e., a code capable of being grasped by reason). This would be a case of something “giving what it does not have,” i.e., of an effect exceeding its cause. Rather, Hayek seems only to be claiming that the traditional moral code is not the product of the deliberate, “scientific” process outlined above.
The parenthetical, almost off-hand way he mentions prices should not mislead the reader as to the importance Hayek assigns to the price mechanism. In an earlier work, he refers to it as a “marvel” and laments that it is underappreciated:
I have deliberately used the word “marvel” to shock the reader out of the complacency with which we often take the working of this mechanism [i.e., the price mechanism] for granted. I am convinced that if it were the result of deliberate human design, and if the people guided by the price changes understood that their decisions have significance far beyond their immediate aim, this mechanism would have been acclaimed as one of the greatest triumphs of the human mind. Its misfortune is the double one that it is not the product of human design and that the people guided by it usually do not why they are made to do what they do (Hayek 1945, 527).
Perrons and Jesse note three drivers for the growth in big data: A steep decline in storage costs; a continued increase in processor speeds, and breakthroughs in mathematics that have enabled the analysis of unstructured and dynamic data sets (Perrons and Jesse 2015, 118).
See also Evgeny Morozov’s article in The New Yorker, where he recounts the historical connection between socialism and big data (Morozov 2014).
E.g., some might argue that Engelhardt’s analysis is too pessimistic, that the requisite data might be reducible to a set of proxies that are manageable in size.
For general information on Boethius, cf. (Marenbon 2019).
For general information on Avicenna, cf. (Rizvi 2019).
For general information on Averroes, cf. (Hillier 2019).
For general information on Aquinas, cf. (Brown 2019).
Other legitimate forms of definition are possible besides the strict, “essential definition” we are discussing. For a brief overview of some of the major types of definitions possible, cf. (Oesterle 1963, 68–71).
In a way analogous to Hayek’s parenthetical comment regarding prices (cf. n.3), Aquinas’ quick summary belies significant textual differences among the named authors. For an overview of the different textual presentation of the term “essence,” cf. (Maurer 1951). In general however, all agree that the term “essence” in some manner is related to what a thing is, necessarily; i.e., what belongs to a thing in virtue of it being a certain kind of thing.
For a brief overview of properties, along with additional examples, cf. (Condic and Condic 2018, 158–161).
Or the primary efficient cause. Other efficient causes may also be involved; e.g., a strong wind.
Hume offers an example of such “constant conjunction” earlier in the text:
Thus we remember to have seen that species of object we call flame, and to have felt that species of sensation we call heat. We likewise call to mind their constant conjunction in all past instances. Without any farther ceremony, we call the one cause and the other effect, and infer the existence of the one from that of the other. (Hume 1992, 87)
The careful reader has no doubt noticed that Hume does not really do away with efficient causality but only shifted its locus. Rather than one existent thing causing or altering another existent thing, Hume has the existent thing causing an alteration in the knower, in virtue of the external thing’s relation to another existent thing. This case of “crypto” efficient causality should not be thought to be any more empirically grounded than the sort Hume has already rejected for its lack of empirical basis. Also noteworthy is that “constant conjunction” undercuts any meaningful distinction between “causation” and “correlation.”
For more on the marble horse and the difference between the modern view and Aristotle’s, cf. (Condic and Condic 2018, 23–25).
Copleston concurs, noting that for Comte “positive knowledge” (i.e., scientific knowledge) is restricted “to knowledge of observed facts or phenomena and to the coordination and descriptive laws of phenomena” (Copleston 1985, 77).
That Hayek generally viewed scientific knowledge, empiricism, and positivism as outlined above seems clear. In The Fatal Conceit, he favorably quotes Oxford philosopher Anthony Quinton, who offers definitions of empiricism and positivism quite consistent with what has been presented here. Cf. (Hayek 1989, 61).
Cf. n. 16.
That Hayek himself might have had this stronger usage in mind is suggested by the importance he assigns to the individual market actor in The Constitution of Liberty. In a discussion of the “transmission and communication of knowledge,” Hayek remarks:
What is essential to the functioning of the [communication] process is that each individual be able to act on his particular knowledge, always unique, at least so far as it refers to some particular circumstances, and that he be able to use his individual skills and opportunities within the limits known to him and for his own individual purposes. (Hayek 2011, 80)
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Condic, S.B., Morefield, R. Hayek on the essential dispersion of market knowledge. Rev Austrian Econ 34, 449–463 (2021). https://doi.org/10.1007/s11138-019-00487-4
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DOI: https://doi.org/10.1007/s11138-019-00487-4