The unexpected fertility of Hayek's cognitive theory: An introduction to The social science of Hayek's “The sensory order”

''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 1 1 Advances in Austrian economics 1 2 2 3 3 List of contributors 3 4 5 5 6 The unexpected fertility of Hayek’s cognitive theory: An introduction to The social science of Hayek’s ‘‘The sensory order’’ 6 Introduction 7 Historical comments on The Sensory Order 7 An overview of Hayek’s cognitive theory 10 Generalizing Hayek’s cognitive theory 14 Overview of this volume 17 Notes 22 Acknowledgments 23 References 23 6 26 Science and The Sensory Order 26 Introduction 27 What is science? 28 Science in The Sensory Order 30 Science in postpositivist philosophy and sociology 33 The Naturalistic Movement 34 The Sociology of Scientific Knowledge 36 The Impact of Postpositivism 37 Science as an adaptive system 39 Adaptive Classifying Systems 39 Scientific Knowledge as a Systemic Phenomenon 43 Postpositivism in the light of adaptive systems theory 44 Categories of Postpositivism 44 Normative Social Naturalism 47 Nonnormative Social Naturalism 48 Underdetermination, Incommensurability, and Theory-Ladenness 50 The dead end of radical reflexivity 51 Knowledge, individual, and social 53 Conclusion 55 Note 56 Acknowledgments 56 References 56 7 60 Reflecting upon knowledge: Hayek’s psychology and social science 60 Introduction 61 Man and society 62 Psychology: alternative paradigms 65 Psychology: mental and physical events 67 Scientific method: from sensory order to physical order 69 Scientific method: theory and fact 71 Scientific method: objectivity and subjectivity 72 Scientific method: social phenomena 73 Scientific method: ’horses for courses’ 74 Social order: evolutionary adaptation 77 Conclusion 80 Notes 81 References 83 8 85 The sensory order: Operational epistemology as an evolutionary adaptation 85 Introduction 86 The Hayekian synthesis in cognitive psychology 89 Brain evolution as a spontaneous order 98 Conclusion 109 Note 110 References 110 9 117 Hayek: Cognitive scientist Avant la Lettre 117 Prologue 117 Hayek’s Proto-connectionism 122 Cognitive closure 129 Hayek’s social connectionism 132 Mind and Society 132 Extended Cognitive Systems 135 An Extended Cognitive System - A Stigmergic Approach 138 Epilogue 141 Notes 146 Acknowledgments 149 References 149 10 158 Hayek and the evolutionary tradition against the Homo oeconomicus 158 The sensory order is the product of an unconscious process 159 Against associationist psychology 161 The Scottish tradition 163 Menger and Hayek: The rebirth of methodological individualism 167 The primacy of theory in the construction of science 171 Notes 173 References 175 11 177 The Sensory Order and the neurophysiological basics of methodological individualism 177 Introduction 178 Categorization and interpretation 179 The self-organization of the mind 182 The impossibility of a full explanation of cognitive processes 185 From the indeterminism of cognitive process to the necessity of Verstehen 187 Sensory order and praxeological approach 190 The nomological-deductive explanation of action 191 The neurophysiologic foundation of the subjective theory of value 194 The analogy between the self-organization of the mind and that of the market 195 Sensory order and social change 197 Conclusion 201 Notes 202 Acknowledgments 203 References 204 12 208 The Sensory Order, The economic imagination and the tacit dimension 208 Introduction 209 A pluralistic perspective on choice 210 Connections, characteristics and constructs 212 Cognition and instinctive behavior 216 Consciousness versus the tacit dimension 219 The fallible decision maker 216 Brands and criteria-based decision rules 212 Concluding comments 210 Note 231 Acknowledgments 231 References 231 13 234 Hayek on Prices and Knowledge: Supplementing ‘‘The Use of Knowledge in Society’’ with The Sensory Order 234 Introduction 235 The knowledge papers 236 From the sensory order to an epistemological theory 239 Informational role of prices 242 Hayek interpretations 246 Conclusion 251 Notes 252 Acknowledgments 253 References 253 14 257 The sensory order and organizational learning 257 The implicit learning theory of The Sensory Order 260 The firm as a collection of routines reflecting organizational learning 263 The analogies of minds and firms 266 Minds and Firms as Learning Processes 266 Rules and Routines 268 Maps and Models; Balance Sheets and Budgets 270 Environmental effects on organizational learning 273 Suggestions for further research and conclusion 275 Notes 277 Acknowledgments 277 References 277 15 279 Instincts and institutions: The rise of the market 279 Introduction 280 The Rise of the Market and the Problem of Exchange 280 An Outline of the Paper 281 The framework 282 Hayek’s Tripartite Theory 283 The Evolution and Development of Mind 283 Cultural Transmission and Evolution 284 The Evolution of Formal and Informal Institutions 284 Social cooperation: its basis in evolved psychology 285 Cooperation in Close-Knit Societies 286 How did market-supporting institutions emerge? 287 Instincts for Trust and Cooperation in Large-Scale, Fluid Societies 289 The Evolution of Culture and Social Norms 292 The conflict between instincts and institutions 294 Notes 297 References 299 16 304 An institutional solution for a cognitive problem: Hayek’s sensory order as foundation for Hayek’s institutional order 304 Introduction 305 Hayek’s sensory order 307 A Bit of Historical Context 307 The Sensory Order 308 The Map and Model 310 Summary: Main Themes 311 The cognitive foundations of Hayek’s social order 312 The Knowledge Problem 314 Learning 315 Mental Models, Epistemological Communities, and Subjectivity 316 Beyond the text: Post-Hayekian applications 318 Economic Choice: Culture and Economics 319 An Example: Constitutional Culture 322 Conclusion 323 Notes 324 Acknowledgments 325 References 326 17 329 The role of dispositions in Hayek’s cognitive theory 329 Introduction 330 Hayek’s cognitive theory in a nutshell 331 The core element of cognitive processes: the dispositions 333 Social evolution as evolution of dispositions 336 The role of government in the process of social evolution 338 Conclusion 340 Notes 341 Acknowledgments 343 References 344 18 346 Making Sense out of The Sensory Order 346 Introduction: The new neuro-Hayekians 347 Is The Sensory Order the key to understanding Hayekquest 350 An alternative hypothesis 361 Does The Sensory Order have a useful economic futurequest 362 Conclusions 364 Notes 366 Acknowledgments 367 References 367 19 371 I am not a ‘‘Neuro-Hayekian,’’ I’m a subjectivist 371 Neuro-Hayekian? Not me 373 From Mind to Market 374 Minds or Institutions? 376 References 377 20 378 Confessions of a neuro-Hayekian 378 Acknowledgment 383 References 383 21 385 From Neuro-Hayekians to subjectivist Hayekians: A reply to Horwitz and Koppl 385 References 389