Alan Ebenstein – Epistemology, Psychology, and Methodology (Hayek’s Journey)

“Hayek’s Journey. The Mind of Friedrich Hayek” (Part 10)

AFTER HAYEK FINISHED THE ROAD TO SERFDOM AND EXPERIENCED its phenomenal success, he turned his attention to old ideas in psychology that he had explored as a student at the University of Vienna three decades before. Hayek’s work in epistemology, psychology, and methodology is among the most difficult in his corpus for the noneconomist or nonpolitical scientist, and various interpretations are possible. Stemming from the Germanic philosophical heritage, Hayek was likely to place more emphasis on the act of knowing than on objects themselves. Hayek ultimately followed Kant in his ontological conception of reality—he thought that mind impresses order on existence.

He apparently still intended to return to technical economic theory in the years immediately after The Road to Serfdom. Another area he had reentered during the late 1930s was methodology and epistemology, philosophical areas he explored first in Mises’s private seminar. All of this was background to Hayek’s move into political philosophy in The Constitution of Liberty (1960), Law, Legislation and Liberty (1973–79), and “The Fatal Conceit.” The Road to Serfdom moved Hayek from a course primarily in technical economic theory to one in broader areas of philosophical and societal inquiry.

His epistemology began from a phenomenalist base. The philosopher and physicist Ernst Mach was very important in Hayek’s development and to the atmosphere at the University of Vienna when Hayek was a student there. Hayek remarked later: Nearly sixty years ago, when I conceived my psychological ideas, I never had a live teacher in psychology. For a young man returning from World War I to enter the University of Vienna, with his interests having been drawn by those events from the family background of biology to social and philosophical issues, there was at the moment no teaching in psychology available. To teach the subject was then still part of the duties of some of the professors of philosophy— not an altogether bad arrangement; but one of them . . . had recently died, and the other was clearly dying and the few of his lectures I heard, as painful for him to give as for the students to listen to. So I had to get my knowledge of psychology from . . . books. . . . [T]he decisive stimulus for taking up the problem on which I soon started to work came from Ernst Mach and particularly his Analysis of Sensations.

As noted earlier, there was a loud echo of Hume in Mach’s work, as both emphasized the tangibility of all knowledge—ultimately, all knowledge is based in the senses. Mach also emphasized the internal nature of all knowledge, in that it is experienced in the mind. Finally, he emphasized the importance of quantitative and mathematical methods and models to understand sensory experience.

In all of these views, Mach philosophically preceded the Vienna circle of logical positivists. Mach wrote in the 1900 preface to the second edition of The Analysis of Sensations that “one and the same view underlies both my epistemologico-physical writings and my present attempt to deal with the physiology of the senses—the view, namely, that all metaphysical elements are to be eliminated as superfluous and as destructive of the economy of science.” The first chapter of this work is titled “Introductory Remarks: Antimetaphysical.” The Vienna circle took up whole cloth the idea that one of the distinguishing marks of true science is that it is antimetaphysical.

The question of the evolution of the Vienna circle, and of Ludwig Wittgenstein’s influence on it, does not admit of one answer and remains of interest. The issue of the extent of the Vienna circle’s influence and accomplishment remains in dispute.The circle attempted to achieve a scientific understanding of the world. The intellectual (as distinct from personal) relationship between Wittgenstein and Hayek has been of interest.While some have maintained that Wittgenstein had significant direct influence on Hayek, this does not appear to have been the case.Though Hayek incidentally expressed conflicting thoughts about his distant cousin’s intellectual in-fluence on him, he referred very little to him in his major published works.

Nonetheless, interesting tangents that relate to Hayek’s psychology and epistemology can be followed from verbal (as distinct from, necessarily, conceptual) similarities between the two men’s work. Hayek rarely referred philosophically (as distinct from personally) to Wittgenstein. One place he did was the 1962 article “Rules, Perception and Intelligibility,” where he quoted Wittgenstein in a footnote: “Cf. L. Wittgenstein . . . :‘“Knowing” it only means: being able to describe it.’” Regardless of what Hayek or Wittgenstein meant by this remark, it is very suggestive. The idea of knowledge encompasses more than can be expressed in words—this was Hayek’s view. Wittgenstein’s point, at least as could be inferred from his words in this quotation (though Hayek cited him in precisely the opposite context) was that knowledge means being able to describe something in sensible terms.

The question of the relationship between words and physical, sensory reality was taken up by the Vienna circle of logical positivists, whose leading members included Moritz Schlick, a successor of Mach at the University of Vienna and teacher of Hayek; Otto Neurath, the group’s practical organizer; and Rudolf Carnap, another leading Viennese philosopher. Hayek was not a member of the Vienna circle, though he was aware of discussions there as a result of his friendship with Felix Kaufmann, a member of the circle, Hayek’s Geistkreis (spirit circle), and Mises’s “private seminar.”

While it is always difficult to summarize the philosophy of a school that included diverse members over decades, prominent logical positivist themes included the essentiality of verification to knowledge; the exclusive meaningfulness of mathematics, logic, and science in knowledge; and the rejection, as knowledge, of ethics, metaphysics, and religion. Logical positivists were concerned with the philosophy of science and foundations of knowledge. They strove to answer the question: What makes something true? They drew heavily on the work of earlier British empiricists, such as Hume, and more recent philosophers of mathematics, logic, and semantics such as Wittgenstein and Bertrand Russell.They were also inspired by Einstein.

The key ideas of this group of philosophers, scientists, and mathematicians included verificationism and empiricism—that is, knowledge must be capable of being proven to the senses in order to be scientific, in order to be knowledge. Perhaps the central element of the Vienna circle and of logical positivism generally can be found in Schlick’s statement that “[t]he meaning of a proposition is its method of verification.” As Carnap put it, the aim of logical positivism was “conclusive justification for every statement.”Verification was basic in the logical positivist system. Propositions must be made in such a way as to be empirically testable in order to be scientific.
Hayek thought that logical positivism foundered on the shoals of verification. He wrote in The Constitution of Liberty: “I do not wish to underestimate the merit of the persistent and relentless fight of the eighteenth and nineteenth centuries against beliefs which are demonstrably false. But… extension of the concept of superstition to all beliefs which are not demonstrably true lacks the same justification and may often be harmful. That we ought not believe anything which has been shown to be false does not mean that we ought to believe only what has been demonstrated to be true.”

Hayek’s idea here was that it is not possible to corroborate every statement. Doing so would become philosophically absurd. At some point, statements should have meaning. Hayek’s question was at what point this should be. He thought that the logical positivists did not adequately address this question, and thus they were ensnared in hopeless skepticism. On the other hand, the Vienna circle adopted the concept of “protocol statements,” and Frank Knight put forward the idea of the relatively absolute absolute.

In a personal biographical recollection, Hayek remarked of Wittgenstein (grandson of a sister of one of Hayek’s maternal great-grandfathers) and the intellectual milieu in Vienna that, on his first substantial contact with Wittgenstein in 1918, when both were officers in the Austrian army: “What struck me most in this conversation was a radical passion for truthfulness in everything (which I came to know as a characteristic vogue among the young Viennese intellectuals of the generation immediately preceding mine . . .). This truthfulness became almost a fashion in that… group . . . in which I came so much to move. It meant much more than truth in speech. One had to ‘live’ truth and not tolerate any pretence in oneself or others. . . . Every convention was dissected and every conventional form exposed as fraud. Wittgenstein merely carried this further in applying it to himself.”

Truth is the great philosophical object. Philosophy ultimately concerns the search for the truth. Wittgenstein’s great contribution to philosophy was his emphasis on words. In his great work, Tractatus Logico-Philosophicus (1921 German original edition), Wittgenstein put forward the view that “what can be said… can be said clearly, and what we cannot talk about we must pass over in silence.” Wittgenstein’s point here was empirical. He possessed a sensory conception of the world and thought that if something cannot be described through the senses, then nothing, empirically, could be said about it. It must, literally, be passed over in silence.

Schlick, in particular, was vitally influenced by Wittgenstein— whom Schlick considered to have inaugurated a new stage in philosophy. However, while there were a few contacts between members of the Vienna circle and Wittgenstein, the circle developed in largest part along separate lines than may be derived from Wittgenstein’s life and words. This, though, was the philosophical background—so well described in Malachi Haim Hacohen’s exquisite 2000 Karl Popper—The Formative Years 1902–1945—in which Hayek developed his own philosophical, psychological, epistemological, and methodological thought.

Hayek’s epistemology was ultimately based on a phenomenalist perspective of sensory experience, but only as it is experienced in the mind. In this basic Kantian perspective of the nature of reality, Hayek was completely within the Germanic idealist intellectual and philosophical traditions.

Hayek’s early work as a student in psychology (mostly before Wittgenstein’s Tractatus was published) led him to ask himself the questions:“What is mind?” and “What is the place of mind in the realm of nature?” Hayek essentially adopted a Kantian view of the nature of the world. He saw mind as implanting order on the world rather than the world necessarily having any properties of, as it were, itself. In The Sensory Order, Hayek wrote that if the “account of the determination of mental qualities which we have given is correct, it would mean that the apparatus by means of which we learn about the external world is itself the product of a kind of experience.” Hayek did not ultimately ascribe much significance to the brain as an accurate (whatever, in this circumstance, accuracy would be) receptacle of reality. Reality, such as it is, is what brain makes of it.

This Kantian ontological (theory of being) perspective had, in Hayek’s view, significant philosophical consequences or repercussions for epistemology. Since there is no ultimate reality apart from what brain makes of it, knowledge is not of ultimate essences but merely of mental states that themselves are liable to change during the lifetime of an organism or over the evolution of a species. Hayek’s ontology ultimately reduces the role of absolute knowledge absolutely.

Hayek’s view was that all the knowledge that is possible of a circumstance is a theory of the circumstance—that is, there is no such thing as pure sensation.There is, rather, a theory of sensation. As Heinrich Klüver wrote in introducing The Sensory Order: “In brief space, it is impossible to outline even the essentials of Dr. Hayek’s theory, but from a broad point of view his theory may be said to substantiate Goethe’s famous maxim ‘all that is factual is already theory’ for the field of sensory and other psychological phenomena.”

Hayek thought that the social sciences are capable of greater knowledge than the natural. He wrote in “The Facts of the Social Sciences” in 1943—after, significantly, his “Economics and Knowledge” essay, which he considered to have constituted his decisive breakthrough and departure from Mises (though Mises, as already noted, did not think this):“While at the world of nature we look from the outside, we look at the world of society from the inside.” Because we look at the world of society from, in Hayek’s view, the “inside,” we are capable of more knowledge of it than of the external world of nature.

Similarly, Hayek considered the fundamental divide between the social and natural worlds not to be in kind of phenomena (notwithstanding that we experience the former from the inside and the latter from the outside), but in complexity. He wrote in his “Scientism and the Study of Society” essay, which became a part of The Counter-Revolution of Science (again, after “Economics and Knowledge”), that the “place where the human individual stands in the order of things brings it about that in one direction [the natural world] what he perceives are the comparatively complex phenomena which he analyzes, while in the other direction [the social world] what is given to him are elements from which those more complex phenomena are composed that he cannot observe as wholes. While the method of the natural sciences is in this sense, analytic, the method of the social sciences is better described as compositive or synthetic.” From Hayek’s perspective, the natural sciences move from complexity to individual elements; the social sciences move from individual elements to complexity.

In “The Theory of Complex Phenomena” (completed in 1961), Hayek wrote that it “should not be difficult now to recognize the similar limitations applying to the theoretical explanations of the phenomena of mind and society. One of the chief results so far achieved by theoretical work in these fields seems to me to be the demonstration that here individual events regularly depend on so many concrete circumstances that we shall never in fact be in a position to ascertain them all.” The complexity of the social world renders it impossible to plan or control.

In “Scientism and the Study of Society,” first published between 1942 and 1944, Hayek gave examples of what are commonly considered societal events: “the Napoleonic Wars,” “France during the Revolution,” and “the Commonwealth period.”While he believed that too many social scientists looked at these events inaccurately, as “definitely given objects, unique individuals which are given to us in the same manner as the natural units in which biological specimens or planets present themselves,” Hayek did not fundamentally look at the world of society differently than he looked at the world of nature. Rather, he understood the complexity of social phenomena, whereas other social scientists did not.

It is, furthermore, he thought, precisely because social phenomena are so complex that only “pattern prediction” of them is possible. He had this exchange in 1978 with James Buchanan:

Q: . . . I think pattern prediction is a very important concept that most economists still sort of miss.

A: It’s the whole question of the theory of how far can we explain complex phenomena where we do not really have the power of precise prediction.We don’t know of any laws, but our whole knowledge is the knowledge of a pattern, essentially.

Earlier in his career, Hayek referred to pattern prediction as “explanation of the principle.” His idea was that, as a result of the complexity of the social world, only general predictions of it are possible. His emphasis on prediction of the principle or pattern leaves out a great deal. It is not merely that only general predictions can be made—it is that predictions often can be made only of best-guess probabilities, not even of patterns or principles. As Hayek mentioned, patterns can sometimes be expressed numerically as ranges.

Popperian Mark Notturno has written perceptively on the sociology of the Vienna circle, emphasizing its collectivist or communal outlook: “Positivism, from its very start, stressed the communal nature of scientific inquiry.” Notturno quotes from the preface of Carnap’s The Logical Structure of the World to substantiate this point: “‘If we allot to the individual in philosophical work as in the special sciences only a partial task, then we can look with more confidence into the future: in slow careful construction insight after insight will be won. Each collaborator contributes only what he can endorse and justify before the whole body of his co-workers.Thus stone will be carefully added to stone and a safe building will be erected at which each following generation can continue to work.’” Notturno concludes that he himself “regard[s] this idea of science as a collective labor as part of the legacy of logical positivism. It is an idea that has led many contemporary philosophers to characterize the scientific community as collectively underwriting the authority of scientific knowledge—and to define scientific knowledge, if not truth itself, as the consensus of belief within the scientific community.” Joseph Agassi, another Popperian philosopher, notes “the letter from Neurath to Carnap of 25 June 1935, castigating him for his support of Popper though Popper had failed to support the Vienna Circle.” Logical positivism suffered from the tendency of some of its adherents to dogmatism, a common failing of intellectual movements.

The Sensory Order may in some respects be read almost as a tract against logical positivism. Hayek thought that his work in epistemology, psychology, and methodology and that of the logical positivists had a common foundation—the work of Ernst Mach. He said in 1985:

A: …Vienna is the origin of so many schools of its own which were dominant in the 1920s. And one of the most fundamental and influential, in which we all were partially caught, was logical positivism. In fact, Mises’ brother, Richard von Mises, became one of the leading figures. Now he and I all grew up in this Ernst Mach philosophy that ultimately everything must be rationally justified…

Q: …You lived in this unique period of time in this remarkable city [Vienna]….

A: . . . [I]ntellectually, the dominating figure …was Ernst Mach, the physicist. That was the principle of thinking in which we all grew up, and at first all adopted it. But some of us—My psychological thinking begins directly with Ernst Mach. Mach in his famous book The Analysis of Sensations explains or assumes that while all our individual sensations have an original pure quality, they are constantly modified by experience.There is only an original order and then the experiential change. Which led me to the conclusion that if you can show that experience can change the thing, why need there be an original quality? The original quality may have arisen in the same fashion. So it was only a step beyond Mach, which turns against him with the result that my own psychology developed. In this sense I began from the same thing on which the logical positivist [movement]— Schlick, Neurath, Carnap, and so on—developed from Vienna; but split at the base, led us apart very much. But these two apparently absolutely contrary trends come from a common initial viewpoint.

Q: In Mach?


The difference between Hayek’s view and that of the logical positivists was that he moved in an idealist direction and they emphasized verification. In the preface to The Sensory Order, Hayek said that the eighth and last chapter, “Philosophical Consequences,” was one of four chapters in the work with which he was “tolerably satisfied” and that it contains “consequences” from his earlier speculations “for epistemology and the methodology of the sciences.” The final section of chapter 8 is “The Division of the Sciences and the ‘Freedom of the Will’”; in it Hayek stated that “From the fact that we shall never be able to achieve more than an ‘explanation of the principle’ by which the order of mental events is determined, it also follows that we shall never achieve a complete ‘unification’ of all sciences in the sense that all phenomena of which it treats can be described in physical terms.” He then footnoted to this line: “The term ‘physical’ must here be understood in the strict sense in which it has been defined in the first chapter and not be confused with the sense in which it is used, e.g., by O. Neurath or R. Carnap when they speak of the ‘physical language.’ In our sense their ‘physical language,’ since it refers to the phenomenal or sensory qualities of the objects, is not ‘physical’ at all. Their use of this term rather implies a metaphysical belief in the ultimate ‘reality’ and constancy of the phenomenal world for which there is little justification.” This is an important passage for understanding Hayek’s metaphysical, epistemological, philosophical, and psychological views.

Hayek thought there are two orders through which individuals consider the world: the sensory order and the physical order. The sensory order is what we sense. The physical world is the real world of existence beyond our senses that every sane person who is not a solipsist accepts on faith.

According to Hayek, advances in science have rendered any correspondence between the real, physical world and the sensory world almost nonexistent. Instead, the natural, real world expresses itself in mathematical relationships. Hayek’s views tended philosophically to solipsism. While he believed in the existence of a physical world external to mind, he ascribed almost no (if any) properties to it.

He was not as opposed to positivism as to logical positivism, and it is important to be clear about these terms. Positivism is simply the idea that there should be some correspondence with the material world extrinsic to one’s physical self that one perceives in order for statements about nature to be valid, to be true. Using this broad definition of positivism, Hayek was a positivist. Logical positivism tries to go a step beyond this position. The logical positivists sought to reduce all experience to sensory experience and to reduce every sensory experience to a conclusive or exact statement. This has proven an unattainable goal.

Hayek did not completely explore the ideas of and relationships among words, prediction, control, sensory knowledge, theory, and will. In a number of essays he emphasized that civilization emerges. It is not planned in any one individual’s mind before it develops, just as an economy cannot be.

The core ideas in Hayek’s metaphysical and methodological thought were, in the former, that reality is complex; and in the latter, that there should be some empirical corroboration for statements about events in the realm of nature. With respect to Hayek’s methodological thought, more should be said. Hayek was a weak corroborationist philosophically (“corroboration” is not used here in a Popperian sense, but merely to indicate some use of empirical data to confirm or disconfirm theories). Hayek did not clearly identify what the empirical data were that corroborated or discorroborated his theories. In addition, he had a tendency to introduce two sorts of empirical data—data of the outside (scientific data) and data of the inside (social sciences data). He considered the latter to be more accurate than the former.

Hayek obtained much from the focus on evolution to which his studies in psychology led him. He saw the brain as a strictly physical organ that has evolved over billions of years; it is extremely limited in comprehension and attempts to impose order on (assumed) sensation from the perspective of maximizing survival. He came to see society as the peaceful and productive interaction of minds.

In 1977, twenty-five years after The Sensory Order appeared and three years after Hayek received the Nobel Prize for economics, a conference was held that considered his work in psychology. In response to a question he said that “Basically, I am still a Popperian. Indeed, I should tell you that in a way, I was a Popperian before he published The Logic of Science Discovery. We were both, in the 1920s, constantly arguing with two types of people—Marxists and Freudians—who both claimed that their theories were, in their nature, irrefutable. Now the claim that a scientific theory should be beyond the possibility of refutation is, of course, very irritating. This led Popper to the conclusion that a theory that cannot be refuted is, by definition, not scientific. When Popper stated that in detail, I just embraced his views as a statement of what I was feeling.”

Hayek’s point here was that what he shared in method with Popper was the view that for a theory to be considered scientific, there must be some way to refute it, some evidence that would contradict it. While this is, again, a weak corroborationist perspective without further specification of what these data would be, it is nonetheless partially in the realm of the external world from one’s sensory experience of one’s self.

Hayek always followed Mises that “the pure logic of choice” of the economic calculus is strictly deductive, and thus it is possible to have axiomatic laws of individual action. However, where he did not follow Mises was in Hayek’s further belief that interpersonal activity is empirical from the perspective of the world outside of one’s sensory experience of one’s self and that the same fixity of axiomatic laws of human interaction as of individual human action is not possible. Individuals act on their understandings of the world, Hayek thought, and it is impossible to know what these are in other people with precision and complete accuracy.

In the 1937 published version of his 1936 “Economics and Knowledge,” Hayek made reference to Karl Popper when he corrected a line in the main text by replacing “verification” in the published version with a footnote reference to Popper’s emphasis on falsifiability. Hayek’s move here was not from the sensory world external to one’s self to another metaphysical sphere, but simply to the conceptual point, which he already had reached, that empirical corroboration or discorroboration is always tentative.There is no such thing as absolute verification, Hayek thought.

The utilization of knowledge is vital. Both within an organism and in society, individual units perform actions for the benefit of the whole without knowing all of the larger circumstances. In September 1945, Hayek’s “The Use of Knowledge in Society” appeared in the American Economic Review. Many economists, including Milton Friedman and Thomas Sowell, consider this among Hayek’s greatest works. In “Economics and Knowledge,” Hayek put forward the problem of the division of knowledge. Now he put forward some of the solution—the price system, which communicates information and is essential to effective economic decision-making. In turn, exclusive control over objects and the ability to exchange them are crucial to prices.

The free market system is implied, Hayek felt, by his ontology in order to attain maximum human productivity, the highest standard of living for all—the utilitarian-liberal-socialist-communist-libertarian goal.The division and paucity of individual knowledge renders a market economy necessary for optimal economic productivity.The utilization and communication of information and knowledge are critical.

Hayek is recognized for the comprehensive nature of his thought. Hayek scholar Gerald Steele writes that “Friedrich Hayek is held in the highest academic esteem for his contributions toward a genuine praxeology (a unified theory of human action) that incorporates economics, epistemology, ethics, jurisprudence, politics and psychology.”

Milton Friedman wrote in 1976 that Hayek’s academic influence had “been tremendous. His work is incorporated in the body of technical economic theory; has had a major influence on economic history, political philosophy, and political science; has affected students of the law, of scientific methodology, and even of psychology.” Steele also accurately states that “there is no doubt that Hayek’s work will secure its rightful place at the apex of twentieth century philosophy.”

On May 20, 1946, on one of his annual or so trips to America, Hayek gave the Stafford Little Lecture at Princeton University, entitled “The Meaning of Competition.” When Hayek first sought to come to the United States on a permanent basis after the publication of The Road to Serfdom, he sought appointment at the Institute for Advanced Studies in Princeton, where Albert Einstein’s institutional affiliation was and where he resided. However, the institute would not accept funding for Hayek, on the grounds of not allowing donors to direct appointments. Hayek was also interested in Yale when he first considered moving to the United States permanently after World War II.


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