Hayek's Conception of Knowledge (was Re: Harry Magdoff on marketsocialism)

["Charles Brown" <CharlesB@xxxxxxxxxxxxxxxxxxxxx>]

>>> furuhashi.1@xxxxxxx 07/17/00 03:09PM >>>

I entirely agree with you.  A Mieses-Hayekian opposition to our
position, however, would be something like this: "all needs & desires
of all individuals are unknown & unknowable to any single mind; we as
individuals only possess very partial knowledge; it can't be properly
said that we 'know' even our own needs & desires unless real, not
hypothetical, alternatives are presented & opportunity costs
(tacitly) calculated through our participation in the market; we
can't explicitly go through all the relations between ends and means,
so we need prices that help us (tacitly) make use of a relative value
of each alternative."  (This radical privileging of tacit & partial
knowledge dispersed among individuals over explicit & collective
knowledge, as well as opposition to conscious planning, is a theme
that later gets carried by postmodernists to its anti-scientific
extreme.)

Whereas we think of the market, for instance, as a mechanism of
rationing ("A shortage of water supply?  Raise the price!
Unemployment?  Lower the wage!") in the system of production for
profits, not for human needs, Hayek thinks of the market as a
mechanism of discovery of human needs & desires we cannot know
otherwise.  For us the market is a question of social relations; for
Hayek, it is a matter of epistemology.

))))))))))))))

CB: This "market as an epistemological mechanism" seems a handy way of thinking about Hayek's theory. Nonetheless,  I don't think Hayek escapes the result that as an epistemological mechanism it means it is a way for someBODY(S) to know something.  As a non-human entity the "market" can't know anything. It might be a rule of conduct by which some humans come to know something, but nonetheless, in the end, it must be humans who know it.

Perhaps we can compare the market to a computer used in the human genome project. No single human mind could make the calculations that the computer can. But the computer can't really know anything.






*****   If we possess all the relevant information, if we can start
out from a given system of preferences, and if we command complete
knowledge of available means, the problem which remains is purely one
of logic. That is, the answer to the question of what is the best use
of the available means is implicit in our assumptions. The conditions
which the solution of this optimum problem must satisfy have been
fully worked out and can be stated best in mathematical form: put at
their briefest, they are that the marginal rates of substitution
between any two commodities or factors must be the same in all their
different uses.

This, however, is emphatically not the economic problem which society
faces. And the economic calculus which we have developed to solve
this logical problem, though an important step toward the solution of
the economic problem of society, does not yet provide an answer to
it. The reason for this is that the "data" from which the economic
calculus starts are never for the whole society "given" to a single
mind which could work out the implications and can never be so given.
(Hayek, "The Use of Knowledge in Society," at
<http://www.virtualschool.edu/mon/Economics/HayekUseOfKnowledge.html>
*****

I agree with Hayek that no single mind can command the complete
knowledge of all our needs & desires + all available means.  Why
should we, however, strive to work out planned economy with such
assumptions of divine perfection?  Why set the bar of successful
planning so impossibly high?  There seems no reason to assume what
Hayek has us assume.  We need only know enough to meet existing needs
better than capitalism does (= we don't have to be perfect) & leave
room for improvement (say, invention of greener technology) through
the process of trial and error (here we can even, if we so desire,
leave a little room for the "market" as long as the "market" doesn't
assume the character of compulsion).  In other words, I object to
Hayek's assumption about what degree of knowledge is necessary to get
socialist planning going.

Yoshie