The Social Science of Hayek's 'The Sensory Order' (Advances in Austrian Economics)

Leading scholars consider Austrian economics from several perspectives such as characteristic themes of entrepreneurship and uncertainty, scientific methods such as mathematical complexity theory and experimental economics, and historical contexts such as pre-war Vienna and post-war France. Placing 'Austrian economics' in these multiple contexts helps to reveal the rich texture of the Austrian tradition in social thought and its multiple connections to current research in diverse fields. Applications to the theory of the trade cycle and to foreign intervention suggest that the Austrian tradition contains possibilities not yet full explored and exploited. The volume gathers together papers presented at the second biennial Wirth conference on Austrian economics, held in October 2008 when the crisis of Fall 2008 was still new and shocking. This coincidence of timing makes policy issues and crisis management a kind of leitmotif of the volume. If, as keynote speaker David Colander argues, Austrians have a comparative advantage in political economy, then its stock should rise in times of crisis and political uncertainty. The volume provides evidence in favor of this view. Contributors include David Colander, Richard Wagner, Jeffery McMullen, J. Barkley Rosser, Jr., Steve Horwitz, Richard Ebeling, Chris Coyne, and Peter Boettke. Advances in Austrian economics......Page 1 2......Page 2 List of contributors......Page 3 4......Page 5 The unexpected fertility of Hayek’s cognitive theory: An introduction to The social science of Hayek’s ‘‘The sensory order’’......Page 6 Historical comments on The Sensory Order......Page 7 An overview of Hayek’s cognitive theory......Page 10 Generalizing Hayek’s cognitive theory......Page 14 Overview of this volume......Page 17 Notes......Page 22 References......Page 23 Science and The Sensory Order......Page 26 Introduction......Page 27 What is science? ......Page 28 Science in The Sensory Order......Page 30 Science in postpositivist philosophy and sociology......Page 33 The Naturalistic Movement......Page 34 The Sociology of Scientific Knowledge......Page 36 The Impact of Postpositivism......Page 37 Adaptive Classifying Systems......Page 39 Scientific Knowledge as a Systemic Phenomenon......Page 43 Categories of Postpositivism......Page 44 Normative Social Naturalism......Page 47 Nonnormative Social Naturalism......Page 48 Underdetermination, Incommensurability, and Theory-Ladenness......Page 50 The dead end of radical reflexivity......Page 51 Knowledge, individual, and social......Page 53 Conclusion......Page 55 References......Page 56 Reflecting upon knowledge: Hayek’s psychology and social science......Page 60 Introduction......Page 61 Man and society......Page 62 Psychology: alternative paradigms......Page 65 Psychology: mental and physical events......Page 67 Scientific method: from sensory order to physical order......Page 69 Scientific method: theory and fact......Page 71 Scientific method: objectivity and subjectivity......Page 72 Scientific method: social phenomena......Page 73 Scientific method: ’horses for courses’......Page 74 Social order: evolutionary adaptation......Page 77 Conclusion......Page 80 Notes......Page 81 References......Page 83 The sensory order: Operational epistemology as an evolutionary adaptation ......Page 85 Introduction......Page 86 The Hayekian synthesis in cognitive psychology......Page 89 Brain evolution as a spontaneous order......Page 98 Conclusion......Page 109 References......Page 110 Prologue......Page 117 Hayek’s Proto-connectionism......Page 122 Cognitive closure......Page 129 Mind and Society......Page 132 Extended Cognitive Systems......Page 135 An Extended Cognitive System - A Stigmergic Approach......Page 138 Epilogue......Page 141 Notes......Page 146 References......Page 149 Hayek and the evolutionary tradition against the Homo oeconomicus......Page 158 The sensory order is the product of an unconscious process......Page 159 Against associationist psychology......Page 161 The Scottish tradition......Page 163 Menger and Hayek: The rebirth of methodological individualism......Page 167 The primacy of theory in the construction of science......Page 171 Notes......Page 173 References......Page 175 The Sensory Order and the neurophysiological basics of methodological individualism......Page 177 Introduction......Page 178 Categorization and interpretation......Page 179 The self-organization of the mind......Page 182 The impossibility of a full explanation of cognitive processes......Page 185 From the indeterminism of cognitive process to the necessity of Verstehen......Page 187 Sensory order and praxeological approach......Page 190 The nomological-deductive explanation of action......Page 191 The neurophysiologic foundation of the subjective theory of value......Page 194 The analogy between the self-organization of the mind and that of the market......Page 195 Sensory order and social change......Page 197 Conclusion......Page 201 Notes......Page 202 Acknowledgments......Page 203 References......Page 204 The Sensory Order, The economic imagination and the tacit dimension......Page 208 Introduction......Page 209 Concluding comments......Page 210 Brands and criteria-based decision rules......Page 212 The fallible decision maker......Page 216 Consciousness versus the tacit dimension......Page 219 References......Page 231 Hayek on Prices and Knowledge: Supplementing ‘‘The Use of Knowledge in Society’’ with The Sensory Order......Page 234 Introduction......Page 235 The knowledge papers......Page 236 From the sensory order to an epistemological theory......Page 239 Informational role of prices......Page 242 Hayek interpretations......Page 246 Conclusion......Page 251 Notes......Page 252 References......Page 253 The sensory order and organizational learning......Page 257 The implicit learning theory of The Sensory Order......Page 260 The firm as a collection of routines reflecting organizational learning......Page 263 Minds and Firms as Learning Processes......Page 266 Rules and Routines......Page 268 Maps and Models; Balance Sheets and Budgets......Page 270 Environmental effects on organizational learning......Page 273 Suggestions for further research and conclusion......Page 275 References......Page 277 Instincts and institutions: The rise of the market ......Page 279 The Rise of the Market and the Problem of Exchange......Page 280 An Outline of the Paper......Page 281 The framework......Page 282 The Evolution and Development of Mind......Page 283 The Evolution of Formal and Informal Institutions......Page 284 Social cooperation: its basis in evolved psychology......Page 285 Cooperation in Close-Knit Societies......Page 286 How did market-supporting institutions emerge? ......Page 287 Instincts for Trust and Cooperation in Large-Scale, Fluid Societies......Page 289 The Evolution of Culture and Social Norms......Page 292 The conflict between instincts and institutions......Page 294 Notes......Page 297 References......Page 299 An institutional solution for a cognitive problem: Hayek’s sensory order as foundation for Hayek’s institutional order......Page 304 Introduction......Page 305 A Bit of Historical Context......Page 307 The Sensory Order......Page 308 The Map and Model......Page 310 Summary: Main Themes......Page 311 The cognitive foundations of Hayek’s social order......Page 312 The Knowledge Problem......Page 314 Learning......Page 315 Mental Models, Epistemological Communities, and Subjectivity......Page 316 Beyond the text: Post-Hayekian applications......Page 318 Economic Choice: Culture and Economics......Page 319 An Example: Constitutional Culture......Page 322 Conclusion......Page 323 Notes......Page 324 Acknowledgments......Page 325 References......Page 326 The role of dispositions in Hayek’s cognitive theory......Page 329 Introduction......Page 330 Hayek’s cognitive theory in a nutshell......Page 331 The core element of cognitive processes: the dispositions......Page 333 Social evolution as evolution of dispositions......Page 336 The role of government in the process of social evolution......Page 338 Conclusion......Page 340 Notes......Page 341 Acknowledgments......Page 343 References......Page 344 Making Sense out of The Sensory Order......Page 346 Introduction: The new neuro-Hayekians......Page 347 Is The Sensory Order the key to understanding Hayekquest......Page 350 An alternative hypothesis......Page 361 Does The Sensory Order have a useful economic futurequest......Page 362 Conclusions......Page 364 Notes......Page 366 References......Page 367 I am not a ‘‘Neuro-Hayekian,’’ I’m a subjectivist......Page 371 Neuro-Hayekian? Not me ......Page 373 From Mind to Market......Page 374 Minds or Institutions? ......Page 376 References......Page 377 Confessions of a neuro-Hayekian......Page 378 References......Page 383 From Neuro-Hayekians to subjectivist Hayekians: A reply to Horwitz and Koppl......Page 385 References......Page 389 "The Social Science of Hayek's The Sensory Order" systematically examines the relevance and significance of Hayek's cognitive psychology for economics and social science, and is the only publication of its kind to do so. Sixteen original papers are divided into four parts in this volume: Hayek's Cognitive Psychology, Evolution, and Social Theory; Hayek's Cognitive Psychology and Economics; Hayek's Cognitive Psychology, Institutions, and Broader Social theory; and The Place of The Sensory Order in Hayek's Oeuvre: A Mini-Symposium. Papers examine Hayek's cognitive psychology from the perspective of evolutionary theory, economics, market and social institutions, and broader social theory. Part of "The Advances in Austrian Economics Series", this book will appeal to people working in a variety of traditions in economics and related disciplines. Although Austrian school economists are the primary audience, those working in public choice, new institutionalism, complexity theory, cognitive or behavior economics, entrepreneurship, and other areas will find great value in the series. This volume is edited by William Butos, Professor of Economics, Trinity College, Hartford and Visiting Research Fellow, New York University, Austrian Economics Program. Considering Austrian economics from various perspectives such as characteristic themes of entrepreneurship and uncertainty, scientific methods like mathematical complexity theory and experimental economics, and historical contexts such as pre-war Vienna and post-war France, this book reveals the texture of the Austrian tradition in social thought.