Knowledge Questions: Hayek, Keynes and Beyond

This paper discusses the “knowledge problem” in terms of both the use and generation of knowledge. This is analyzed in the context of Hayek's failure to respond to the “Keynes Challenge”—the claim that markets fail to produce relevant knowledge—by suggesting that in the aftermath of The General Theory he was not well-positioned to address that problem. Ironically, his post-World War II work in cognitive psychology, The Sensory Order, offers a theory of the generation of knowledge which can provide a useful analogy for understanding the generation of market-level knowledge. Copyright Kluwer Academic Publishers 2003Hayek, Keynes, knowledge,

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Margolis, Thomas McQuade, Gordon Tullock, and an anonymous referee for helpful suggestions on an earlier draft. The usual caveat applies. F.A. Hayek’s theoretical psychology was developed in his 1952 book, The Sensory Order. Because economists have increasingly become interested in cognition and psychology, this work has valuable implications for economic science. Nevertheless, these implications have sometimes been obscured by bogus interpretations of the book. We address down such interpretations of Hayek and suggest some ways in which the message of The Sensory Order matters for economic research today. 1 I

Carabelli & de Vecchi on Keynes and Hayek

Carabelli & De Vecchi dispute competing interpretations of Keynes and Hayek, including ours. They mistakenly impute to us the view that Keynes was inconsistent. They deny that Keynes had a subjectivist theory of expectations by noting his rationalist philosophy. We agree that Keynes had a rationalist philosophy, but deny that this implies an objectivist theory of economic expectations. We persist in viewing Keynes as a subjectivist regarding expectations. This short paper reviews these issues and a few other contentious matters regarding Keynes and Hayek.

The Sensory Order and other Adaptive Classifying Systems

social theory, cognition, knowledge, adaptation, markets, science, classification, Hayek, A12, B41, B52, B53, Z13,

Confidence in Keynes and Hayek: Reply to Burczak

We agree with Burczak's identification of the crucial issues. We disagree with his interpretation of them. We expand our defense of the claim that Keynes was a rationalist. We introduce the "horizon principle" to critize Keynes' dichotomy between short-term and long-term expectations. We question the statistical simile guiding some Post Keynesian dsiscussions of uncertainty. We point to the role of evolution in shaping conventions that fit the economic environment in a world with novel events. We think the evidence favors our view over Burczak's. Finally, we put in a plea for framing the issues in a way that facilitates empirical testing.