THE TEXT
Those familiar with the work of Maurice Merleau-Ponty, to whom Paul Ricoeur referred as "the greatest of French phenomenologists," will easily recognize the inter-textual allusion in the title of this paper. It is a transformative echo to the title of an address Merleau-Ponty gave to the Societé francaise de philosophie in 1946 in which he set out and defended the argument of his major work, The Phenomenology of Perception, which had appeared a few months earlier. The title of his address was: "The Primacy of Perception and Its Philosophical Consequences."1 In this paper I would like, in the spirit of Merleau-Ponty, to reflect on the significance of present-day philosophical or phenomenological hermeneutics for both the theory and the practice of the human sciences. Merleau-Ponty himself, you will recall, was greatly interested in the human sciences. Viewed in retrospect, his work can be seen to anticipate many of the themes which subsequently have been emphasized by hermeneutics.
Despite the prominence of the term "perception" in Merleau-Ponty's writings, especially his earlier ones, it would not be at all inappropriate to say that he attempted above all to portray the human subject as an acting subject. Certainly Merleau-Ponty's concern with perception had nothing whatsoever to do with the guiding concerns of modern epistemology, which considered perception to be the means by which the "mind" (the "inner man") was supposedly able to form correct "representations" of external" reality.2 Being a phenomenologist, he adhered fully to the exigencies and the lessons of phenomenological reduction. He effected a decisive break with the guiding concerns of modern, epistemologically centered philosophy (and thus can fittingly be characterized as "postmodern"3). For Merleau-Ponty, perception itself was to be understood not "epistemologically" (in a representational-referentialist context), but as a dimension of human action, as the activity of a bodily, mobile subject engaged pragmatically with the objects of its practical concern. Quoting Antoine de Saint-Exupéry, he said: "Your abode is your act itself. Your act is you."4
If I am emphasizing the notion of action, it is because this notion seems particularly apt to effect a conjunction between the tenets of phenomenological hermeneutics and the concerns of the human sciences. How so? Because, in the first place, the proper object of the human sciences is nothing other than human action and its results or consequences. This obviously is true of such disciplines as history, economics, and sociology, and even of psychology, although I will not attempt to argue that point here. Ludwig von Mises in fact entitled his major work in economic theory Human Action.5 The human sciences are concerned with what people do, the meaning of what they do, why and how they do it, and the consequences of their doing what they do. This you may grant; but what, you might wish to ask, does it have to do with hermeneutics? Is not hermeneutics concerned not with what people do, but with what they "say"--not with action but with texts (biblical, juridical, literary, etc.)?
In response, it could be asserted that human discourse (oral or written) is itself one of the prime means human beings qua human have of acting--or at least of making their actions intelligible to themselves and to others. In any event, this demand for intelligibility or meaning which can come only through language would seem to be the defining characteristic of human existence. To count as human, "action" must be such as to give rise to "glosses," commentaries, or interpretations. What, after all, is historiography if not the written account of what people have done? And what, again, is anthropology if not the logos (the linguistic account) of how people arrange their collective lives? In any event, to speak like Heidegger, I would want to maintain that action and language are, at the very least, "equiprimordial" (gleichursprünglich) as defining traits of that being which we ourselves are.
Hermeneutics may be, in the first instance, that discipline concerned with the correct reading or interpretation of texts, but for all practical, i.e., disciplinary, purposes is there any way that we can understand human action except by viewing it as a kind of text, a "quasi-text" as Paul Ricoeur would say? This, of course, refers to a seminal article by Ricoeur, entitled "The Model of the Text: Meaningful Action Considered as a Text" which had considerable impact on the practitioners of the human sciences, such as the ethnographer, Clifford Geertz.6 To quote from one of my recent publications:
Acting beings may be what we are, but how, as beings which have an insatiable desire to understand what we are and do, can we understand what we are and do other than by speaking and writing about it? It would be hard to deny, I think, that it is only by considering action as a text that we can hope to come to some understanding of it, and thus of that being which essentially we are.7
To sum up the argument thus far. The principal object (subject matter) of the human sciences is human action. As academic disciplines, these seek to make human action intelligible, to understand it; this is their formal object. In order to be made intelligible human action must in the last analysis be viewed "on the model of the text," as a kind of quasi-text. Therefore hermeneutics, which at its (historical) core is the general theory of textual interpretation, has something to contribute to the methodology and practice of the human sciences. I would like to make this general and abstract argument clearer and more concrete by focusing on one human science in particular, namely that science called "economics."
ECONOMICS AS A SCIENCE
At first glance, this might seem to be a rather odd choice. After all, economics would appear to be the most "unhumanistic" of the human sciences as much of the discipline today is dominated by formal, mathematical reasoning. Economics would seem to be that human science which has succeeded best in realizing what Lewis White Beck once referred to as "the natural science ideal," by best approximating the rigor and exactitude thought to be the hallmark of the natural sciences.8 Undoubtedly, it is no accident that, precisely because it has been so viewed, economics has been a favorite object of traditional, analytic philosophy of science which always has operated under the assumption that the natural sciences provide the paradigm of knowledge itself, a model to be emulated by the human sciences to the degree that they too seek to lay claim to epistemic validity.
Looks can be deceiving, however. Not only, pursuant to the collapse of Keyneseanism, is a general consensus on basic theorems lacking in economics, but the discipline itself is today in methodological disarray. As Ludwig Lackmann has observed, economics has entered "A tempestuous season."9 One can legitimately doubt whether the "queen of the social sciences," as some refer to it, is still entitled to her crown. Or, to vary the metaphor, people are discovering that the emperor is very scantily clad, indeed. In this situation an increasing number of economists have been led to question received doctrine and to cast doubt upon the validity of mainline, neoclassical economics. A small, but significant, number even have turned to phenomenology and hermeneutics in an attempt to reconceptualize their discipline.10
Much of this current discussion turns on methodological issues. Is economics a science, and, if so, what kind of science is it? What is its proper object, and what "method" or approach is best suited to that object? Traditionally, ever since the nineteenth century, economists, awed by the "natural science ideal," have sought to model their science after physics.11 Their highest goal has been to make of economics a social physics, a kind of Newtonian mechanics of human affairs. Thus, to speak in phenomenological terms, it must be said that economics has been one of the prime victims of naturalism and objectivism; it is, as economist Philip Mirowski has said, "the social science most addicted to "the Cartesian vice."12 It is precisely this "slavish imitation of the method and language of science," as F.A. Hayek referred to it,13 that today is being contested by those economists who have renounced the positivism that still tends to prevail in the discipline and who have turned to hermeneutics.
As Husserl taught in his Crisis of European Sciences and Transcendental Phenomenology, modern, mathematical, physicalist science of the Galilean sort originates in a methodological option fraught with far-ranging consequences. Husserl referred to Galileo as "at once a discovering and a concealing genius."14 The originality of Galilean science is that it deliberately and methodically turns its back on the real world of human experience, the life-world, substituting for it a world of idealized abstractions. Out of the world of ordinary human experience it first abstracts those features, and only those, which can be measured with exactitude in a fully objective way (the so-called "primary qualities"); subsequently, it idealizes them, i.e., redefines the world in terms of these abstractions and idealizations whose very existence is a result of the new method itself. As Husserl pointed out, the fateful move of Galilean science consists in its "Tak[ing] for true being what is actually a method."15 Summing up the lesson of Husserl's investigations into the origins of the modernist mentality, David Carr remarks: "The scientific conception must be regarded as a view of the world, a certain way of looking at it and dealing with it which serves certain purposes."16 In other words, the so-called objective world of science is but a particular interpretation of the world of our immediate experience; by no means does Science provide us with an "objective picture" of the "real" world. Galilean science deals not with realities but with idealizations. As Husserl remarked in another late work, Experience and Judgment, scientific objectivities are "nothing more than a garb of ideas thrown over the world of immediate intuition and experience, the life-world."17
To be sure, the particular, idealizing interpretation of the life-world that is modern science has proven its worth in many respects. To view nature, as modern science came to view it, as nothing more than matter in motion whose laws can be discovered and expressed in mathematical formulae, does indeed, as Carr says, serve certain purposes. These purposes were clearly articulated early on by Descartes in his Discourse on Method; they are such as to enable humankind to become "masters and possessors of nature." In enabling us to "explain" and "predict" natural phenomena, modern science enables us to control these phenomena, to achieve mastery and dominance over them. To paraphrase Heidegger, it must be said that the very essence of modern science is in fact technology.18 Whatever epistemic "truth-value" scientific propositions may have, I would want to maintain, resides entirely in their technological use-value. Modern science should be placed under the rubric not of epistemè, but of technè.
Whether or not science-technology is the best, or even the only proper way to understand nature, will not be treated here, though recent ecological studies might give pause for reflection. Whether or not, on the other hand, this is the most proper way to understand human reality is quite another question, indeed an inescapable one from a phenomenological perspective. Let us then return to economics.
If the object of historiography is "history" and the object of sociology is "society," the object of economics is what is called an "economy." But just what, one might well ask, is an "economy"? Is it, as natural systems are thought to be, a self-contained realm of determinate, causeand-effect relations subsisting somehow independently of flesh and blood human beings, something that accordingly can be understood in abstraction from them, i.e., in purely objective terms? This, of course, is how modern economics sought to conceive an economy in its attempt to liberate itself from the domain of "moral philosophy" in order to make itself over into a Newtonian mechanics of human affairs.
But is not an economy, like a culture in the anthropological sense of the term, simply the sedimented result of human action, the particular outcome of the ways in which a community of human beings have sought to regulate that aspect of human existence which has to do with the production and exchange of goods and services? Who would seriously want to deny this? From a hermeneutical point of view, however, certain important consequences would seem to follow if it is indeed the case that economics has to do not with objectivities which are supposed to exist "in themselves", but with human action.
HUMAN ACTION VS ECONOMIC MAN
The most important of these consequences is that, to be understood properly, human action calls for a different mode of analysis than the one which is applicable to mere bodily or physical motion. The reason for this is quite simple. Unlike the "action" of one physical, e.g., planetary, body upon another, human action cannot be understood in what is specific to it unless one takes into account categories other than those employed by cause-and-effect, physicalistic explanation. These are the categories of meaning and purpose. As the Austrian economist, Ludwig von Mises, has remarked, the two basic, indeed, as he would say, aprioristic, characteristics of action are to "remove uneasiness" and to make ourselves "better off." Action is by definition purposeful or teleological; it is the deliberate attempt on the part of human beings to improve their position, to make their lives more livable, more meaningful. "There is," von Mises insisted, "no human being to whom is foreign the intent to substitute by appropriate conduct one state of affairs for another state of affairs that would prevail if he did not interfere."19 Thus, unlike the behavior of natural entities, as modern science conceives of it human action is essentially intentional.
Implied in what I have just said is that human action is future oriented. To say that action is intentional is to say that, unlike natural being, human reality is never understandable in terms merely of what it actually is, but, as Heidegger pointed out, only in terms of the nonexistent future into which it is constantly projecting itself. Humans act in order to bring into being a state of affairs which would not exist, or would not likely exist, unless they acted. This is precisely in contrast to the future of physical systems, as understood by classical physics, which in principle is fully determinable or "predictable" (cf. Laplace). This is another way of saying that if we act, it is because the future is inherently indeterminate and uncertain, which, of course, is another way of saying that human action is creative and not merely adaptive. All action involves genuine risk and is a way of coping with ignorance and uncertainty. From a phenomenological point of view, these are all basic characteristics of human agency; for the most part they are, however, ones which mainline economists have preferred to ignore.20 The reason economists have ignored them is because they are simply not conceptualizable within the naturalistic and atemporal universe of discourse which economists have adopted in their attempt to make of economics an exact science like physics.21 With the methodologically determined conceptuality of neoclassical economics it makes no more sense to speak of risk, ignorance, uncertainty, and creativity than it does from a behaviorist point of view to speak of the "freedom and dignity" of human beings.22
For mainline economics human beings are not the acting beings we encounter in our surrounding life-world, but idealized abstractions in the Husserlian sense. Like the stylized body which appears in the pages of anatomy textbooks of which Merleau-Ponty speaks, homo economicus is nobody in particular. He, or (I should say) it, is an entity which is fully transparent to itself, fully in control of itself, fully aware of its needs and desires, fully "given." It is, in addition, fully cognizant of, or has complete "information" about, the objective situation in which it operates; its behavior is solely "adaptive". Homo economicus is a rational entity through and through, reason being understood here in a purely calculative-instrumental sense; it is in fact an instant, lightning calculator of pleasures and pains and a maximizer or optimizer of its own lucidly grasped utility. It is, thus, no accident that many economists have looked to the formal disciplines of game theory and decision theory for their models (cf. the recent theory of Rational Expectations).23 Homo economicus knows nothing of that of which ordinary human beings have such an acute and often painful awareness: their own ignorance and uncertainty. At the limit, this becomes the experience of Angst and of nothingness. The economic man of neoclassical economics is mercifully spared the difficult task of having to cope with that which, being uncertain, is unknowable, i.e., the future.24
Economic man also exists in a world which bears no resemblance to the life-world of ordinary human beings. This, as Husserl said, is a world shot through with surrounding-fringe realms of indeterminacy; in the words of Merleau-Ponty, it is a world of insurpassable ambiguity. Just as economic man is fully "given," is "all there," so also is his world. Like the world of classical physics which never gains or loses anything in regard to its total sum of energy, the world of neoclassical economics is essentially static, fully determinate in itself. The sacrosanct concept of mainline economic thinking is that of "equilibrium." Owing to their slavish adherence to physicalistic models, economists assume that all economic activity aims at, and must be understood in terms of, equilibrium, just as Nature herself is thought to be "economical," subservient to the Law or the Conservation of Energy, and in marked contrast to the wild profligacy of nature as Nietzsche envisaged it. This is a form of what one author has called "mechanomorphism"25--a thoroughgoing and reductively mechanistic way of conceiving the activities of economic agents, which is to say, of market processes. Against this standard approach the interpretive economists, Boettke, Horwitz, and Prychitko, have argued persuasively that "the imaginary construction of general equilibrium is [not] an appropriate and helpful tool for understanding the world." "Much of modern economics," they observe, "is trapped in an ahistorical [timeless] equilibrium world, unable to render intelligible the purposive action of human beings in the real world."26
Now, from a methodological point of view, one cannot avoid asking what value the concepts of a given disciple have if they ignore crucial aspects of the object they seek to explain. If in the case of human beings action enjoys ontological primacy, does it not follow that when it comes to the human sciences action should enjoy methodological priority as well? If economics is unable to account for certain basic characteristics of human action by means of such purely objectivistic concepts as "economic man" and "general equilibrium"--if, in fact, in relying on such concepts it actually draws a distorted picture of human action--does this not mean that a different approach is called for? Is it not time for economics to follow the lead of other human sciences and abandon its purely objectivistic approach for a more hermeneutic or interpretive one, that is to say, an approach which is not causalistic, but instead has for its explicit focus the category of meaning?
I do not wish to imply by these remarks that there is no place in economics---or in any other human science--for concepts and assumptions of a strictly objectivistic or physicalistic sort. To employ the language of traditional hermeneutic theory, I do not wish to set up a rigid opposition between explanation (Erklärung) and understanding (Verstehen), and I do not wish to argue, as a Wittgensteinian, Peter Winch, did a number of years ago, that the explanatory techniques of natural science are never appropriate in the social sciences and that all that we can legitimately do in them is to describe a given world (an "economy," in this case) in the terms that the actors in it would themselves use, were they given the chance.27
Rather, like Paul Ricoeur, I think it much more profitable to view human understanding in general as a kind of continuum and to say that purely explanatory techniques have their legitimate place in the overall interpretive process, that they form one segment of what Ricoeur calls the hermeneutical arc.28 The use of formal, quantitative models and the attempt to construct "objective," causal explanations of human action are a hindrance to the proper understanding of human action only when--as, unfortunately, often happens to be the case--they are taken as the last word, as providing a sufficient "explanation" of human action. Objectivistic explanations are certainly helpful to some degree in making human affairs more intelligible, and they do have a certain limited usefulness in predicting, and thus controlling, human affairs. But it must be recognized that the intelligibility they provide is necessarily partial and one-sided since they rest upon idealized abstractions. The point stressed by hermeneutics is that human action cannot adequately or fittingly be understood until the results of the explanatory approach are taken up and integrated into a wider, interpretive understanding or analysis in terms of meaning. When this is not done, the intelligibility achieved by objective measuring techniques comes at the expense of genuine understanding, because objectivistic explanations either fail to make any contact whatsoever with the actual world in which we live or, worse still, they induce in us a kind of epistemic blindness in relation to this world.29 I shall argue below that this has important consequences as regards economic policy.
ECONOMICS AS HERMENEUTICS
From the above, it should be obvious that in writing of an interpretive or hermeneutic approach to human action I do not mean providing an account of action solely in terms of the meaning that it has for the actors themselves, i.e., the meaning consciously intended by them. One of the things that, in opposition to hermeneutics of a more traditional sort,30 phenomenological hermeneutics has sought to emphasize is that the concept of meaning is itself in need of revision. It must be, as it were, depsychologized. The meaning of a text, for instance, cannot be equated with the meaning intended by the author of the text. As Ricoeur has said, although we cannot conceive of a text without an author, yet the fact of the matter is that "the text's career escapes the finite horizon lived by its author."31 After the death of the author--let it be noted, the author always "dies" once his or her text is born--the meaning of a text exists nowhere but in the interpretations that can be made of it, including those of the author. As Ricoeur went on to say: "What the text says now matters more than what the author meant to say, and every exegesis unfolds its procedures within the circumference of a meaning that has broken its moorings to the psychology of its author."
It is precisely this characteristic of textual meaning that justified Ricoeur, or so he thought, in comparing the meaning of action with the meaning of a text. As he said:
In the same way that a text is detached from its author, an action is detached from its agent and develops consequences of its own. This autonomization of human action constitutes the social dimension of action. An action is a social phenomenon . . . because our deeds escape us and have effects which we did not intend.32
It is not difficult to see the relevance of these remarks to economics. Like sociology or anthropology, economics is indeed a social science whose concern is the social consequences of economic agency on the part of individual human beings. As Hayek has long insisted, various social orders are "the result of human action but not the result of human design.33 Economics is the study of the unintended consequences of human action.
A social science such as economics is concerned with human action to the degree that such action is a social phenomenon, and action is a social phenomenon to the degree that, as Ricoeur says, "our deeds escape us and have effects which we did not intend." This is another way of saying once again that the meaning of human action which economics or any other social science seeks to discover is not meaning in a subjective or psychological sense. The interpretation of action on the part of economic agents which an interpretive economic science seeks to articulate does not coincide with the interpretation that the agents themselves might proffer. As Alfred Shutz, himself an acquaintance of Ludwig von Mises, remarked: "[T]he constructs used by the social scientist are, so to speak, constructs of the second degree, namely, constructs of the constructs made by the actors on the social scene, whose behavior the scientist observes and tries to explain in accordance with the procedural rules of his science."34 The social sciences thus are doubly interpretive in that they are interpretations of the interpretations that people themselves offer for their actions. Such interpretations often have to be discounted by the social scientist, for Ricoeur has insisted the consciousness we have of ourselves is often a false consciousness.
Strictly speaking, therefore, the meaningful action or, better expressed, the meaningful patterns of action that a social science like economics seeks to understand are neither subjective nor objective. Patterns of meaning or "wholes" such as an economy are certainly not "objective," in that they are not "things" or "facts" in the physicalistic sense of the term and are not "given" in such a way that they could simply be "observed and described," as the empiricist would say. Neither are they "subjective," in that, as the unintended effects of human agency, they are not the same as the meanings or meaning-intentions consciously entertained by the individual actors themselves and which they supposedly could "describe" to us were they asked to do so. Charles Taylor points us in the right direction, beyond both objectivism and subjectivism, when he says:
[W]hat we are dealing with here is not subjective meaning . . . , but rather inter-subjective meanings. It is not just that the people in our society all or most have a given set of ideas in their heads and subscribe to a given set of goals. The meanings and norms implicit in these practices are not just in the minds of the actors but are out there in the practices themselves, practices which cannot be conceived as a set of individual actions, but which are essentially modes of social relation, of mutual action.35
The patterns of meaningful action the social sciences seek to discern exist neither in the "mind" nor in the "external world," as natural scientists conceive of the latter. They are neither "subjective" nor "objective", but constitute rather a kind of entre-monde, as Merleau-Ponty might say, a kind of "in-between" world which, as Taylor says, has its locus "out there" in trans-subjective, social practices. It is this properly social reality or quasi-reality--neither simply mental nor simply physical--that is the proper object of the human sciences. Accordingly, it calls for a "method" which is neither "descriptive" in terms of mental states nor "explanatory" in terms of underlying causal entities, but rather interpretive, that is, aimed at explicating the "logic" embodied in these practices themselves.
It is this entre-monde. this logic embedded in human practices, that neoclassical economics ignores. It adheres to the methodological postulates of modernist reductive or analytic atomism according to which "wholes," physical or otherwise, must be explained solely in terms of the individuals or "atoms" which go to make them up. Hence, neoclassical economics can only conceive of an economy as the mechanical outcome of the actions on the part of a number of isolated, self-contained individuals, or "Robinson Crusoes". That is to say that it is unable to conceive of the "social" in properly social terms, in terms of its own proper logic.
In a curious way, Marxism's own "collectivist" approach also fails to conceive of the social in a way proper to it. For, in an inverse fashion, it too conceives of an economy in individualistic terms, but with the difference that it thinks of the social realm or "society" as one great individual, one immense "Robinson Crusoe". Thus, as one writer remarks: "While the two modes of analysis differ in the all-important details, the similarity of the basic question posed by the two approaches stems from starting with a self-contained, single subject."36
An economic theory such as that of Hayek, on the other hand, points us in a different, and much more promising, direction. Although Hayek employed the term "methodological individualism" to describe his position, this position was anything but "individualistic" in the usual, atomistic sense of the term.37 Unlike his modernist colleagues in economics and other social sciences, Hayek sought, as it were, to start out from the social as something irreducible in its own right and as having a logic of its own. His guiding question was in effect: How is it that a market economy, despite what to a superficial view might appear to be pure anarchy (cf. Marx's "anarchy of the market"), exhibits such a complex and remarkable order? How is this possible when it is evident that, while this order is clearly the result of human action, it is nevertheless most certainly not the conscious product of any number of individual minds?
These are genuinely hermeneutic questions, and the attempt to come to grips with them constitutes the main task of a hermeneutic economics. The task of such an economics is to bring to light, or to conceptualize the particular logic constitutive of what is called a market economy. This, in fact, is a particularly urgent and important task today, now that the idea of a socialist, planned economy has everywhere been discredited. It may be noted as well that there is a strict parallel between explicating the logic of those meaningful patterns of action that are market transactions and bringing to light and explicating the logic of a text, which, of course, is what textual interpretation is all about.
One could fairly well say that the main problem for economic theory is that of enabling us to understand how it is that individual decisions on the part of a multitude of economic agents come, in a spontaneous and uncontrolled way, to be coordinated so as to produce an orderly and viable economy. A great deal of research into the dynamics of market processes has been conducted in recent years by various interpretive economists, building in this regard on the work of Hayek. As this research has now made quite clear, the key factor serving to coordinate the activity of economic agents is price. The unique feature of a market or self-regulating economy is that prices, as established by the give-and-take of free trade, communicate essential information to economic agents, "telling" them, in effect, how best to allocate their limited resources in order to achieve maximum gain. That inter-subjective order which is an "economy" is a kind of body; it is like the lived body (le corps propre) that Merleau-Ponty speaks of in that it too is synergic and possesses a spontanéité enseignante, one which expresses itself in the language of prices. To speak of the "language of prices" is more than a mere metaphor; prices do indeed communicate information and constitute a kind of semiotic code. Those agents perform best who are best able to read and appropriately interpret the message that prices convey. This is a hermeneutic task, indeed!
Prices, therefore, are a form of embodied meaning, a kind of objective logos, as Merleau-Ponty might say. This is, of course, a form of meaning which is decidedly not "subjective". Prices express meanings which as a whole are not explicitly cognizable ("thematizable," as one would say in phenomenology) by any knowing subject, for they exist "out there" in social practices, namely, market transactions themselves. The "message of the marketplace" is, to use Merleau-Ponty's words, a "meaning which is not the work of a universal constituting consciousness, a meaning which clings to certain contents."38
From this hermeneutic state of affairs, an important practical consequence follows. If such is indeed the logic of a market economy, it follows that the information which would be necessary to coordinate a complex, modern economy by means of consciously directed, central planning is, in principle, not available to any individual or group of individuals: the knowledge embodied in prices can never, as it were, be fully "subjectivized". Thus, one of the things that a hermeneutic economics can indeed demonstrate is the nonsensicality of the idea of a planned economy. This is a crucial point that Hayek has argued throughout his long and prolific career, and it would seem to be a message that is finally getting through to more and more people.39
Pointing out in this way the absurdity of the idea of central planning is an example of how basic hermeneutic theory has consequences of the most practical sort. It is worth noting that Hayek himself maintained that there is a direct link between concrete policy issues, on the one hand, and, on the other, the kind of methodological issues having to do with the epistemological (or hermeneutic) status of economics as a science discussed in this paper. As Hayek remarked:
Many of the current disputes with regard to both economic theory and economic policy have their common origin in a misconception about the nature of the economic problem of society. This misconception in turn is due to an erroneous transfer to social phenomena of the habits of thought we have developed in dealing with the phenomena of nature.40
PREDICTION
Such, then, are some of the major scientific consequences which follow from the hermeneutical primacy of action. Before turning to my concluding remarks, I might take note in passing of one particular sort of objection that an unrepentant (but sophisticated) positivist may make to the argument in this paper. I have in mind the rather interesting position developed by Milton Friedman in his justly famous article originally published in the 1950s, "The Methodology of Positive Economics."41 It will be recalled that one of the major objections I have addressed to the "scientistic" approach to economics is that, by reason of its objectivistic method itself, it inescapably ignores certain essential features of human action. This, for instance, is the objection that the interpretive economist Matthew Kibbe also makes. "In an attempt to establish a quantifiable, `objective' science equal to that claimed to have been achieved in the natural sciences," Kibbe writes, "many neoclassical economists are often quite willing to sacrifice the real-world characteristics of their models for analytical tidiness."42
What is most interesting about the position developed by Friedman is that he confronts this objection head on. Yes, he freely confesses, my theory is indeed "unrealistic." But, so what? he in effect asks. What is important in a scientific theory, he argues, is not its "conformity to reality" (whatever that might mean) but its explanatory and above all its predictive power. If a theory or model, however "unrealistic" it be, enables us to make workable predictions and, in this way, enables us to "control" the course of events, then this is surely a sufficient justification of the theory itself, a sufficient guarantee of its "truth-value." Let us then, by way of conclusion, consider briefly the issue of prediction.
In response to the "Friedmanian challenge", it could be said that since, in the scientistic universe of discourse, "explanation" and "prediction" are two sides of one and the same epistemological coin, to discredit the former is automatically to discredit the latter. The very notion of "prediction," as it commonly is understood, is inseparable from that of "explanation." For instance, one can only predict the precise way a collection of objects (e.g., planets) will be arranged in the future if, in the here and now, one can "explain" in a law-like, mechanistic way the motions of these bodies. Scientific explanation, in the customary sense of the term, is thus part and parcel of a physicalistic, mechanistic universe of discourse.
Now I have argued in this paper that such a universe of discourse, while it is indeed applicable to human affairs, is nevertheless incapable of disclosing that which is most characteristically and irreducibly human. If, like the culture studied by the anthropologist, the economic order is constituted by meaningful patterns of action and is not merely a realm of mechanical action and reaction; if it is, as Clifford Geertz would say, a semiotic web that economic agents themselves have spun, then it would follow that, in Geertz's words, "the analysis of it [is] therefore not an experimental science in search of law but an interpretive one in search of meaning."43 To put the matter another way, if it is the case (as I have argued) that "objective," causalistic explanations can reveal only the most mechanical and thus inessential aspects of the human being, then. it is also necessarily the case that "predictions" can predict only the most mechanical and thus inessential aspects of things.44
Here, once again, one can see how the most practical of consequences follow from basic hermeneutical theory. For what the "impossibility" of prediction means is that all attempts at dirigisme, at controlling human reality in any detailed way are theoretically illegitimate and practically unacceptable. Just as hermeneutic theory "delegitimizes" the idea of central planning (as I have already argued), so also it discredits what could be called "Keyneseanism," i.e., all attempts on the part of governments to "fine tune" an economy by operating, in a purely "objective" way, on certain macro features of the economy, be it on the supply side or the demand side. This consequence of hermeneutical theory as regards economic policy applies, it may be noted, as much to "leftist" interventionism as it does to "right-wing" macroeconomic policies, such as the monetarism long defended by Friedman. Money would seem to be one of the most concrete, "objective," mundane of things--the ideal object for an exact, quantitative science on the "natural science model"--and yet, like language itself, it is one of the most specific and irreducible of human things. The value of money cannot, therefore, be controlled in any purely objective way, contrary to the guiding presupposition of Friedman's monetarism.45
On the subject of prediction, economist Don Lavoie has remarked:
What we find ourselves doing in the social sciences is not so much the testing of ex ante predictions but is more of the nature of what the Austrian economist F.A. Hayek calls an ex post explanation of principles. The only `test' any theory can receive is in the form of a qualitative [emphasis added] judgment of the plausibility of the sequence of events that has been strung together by narrative.46
Hayek himself, in his Nobel Prize acceptance speech, "The Pretence of Knowledge," insisted that in the social sciences in general and in economies in particular the most one can do is to make mere "pattern predictions"--"predictions of some of the general attributes of the structures that will form themselves, but not containing specific statements about the individual elements of which the structures will be made up." The kind of theory appropriate to economics is, he said, one which "allows us to make only very general predictions of the kind of events which we must expect in a given situation."47
As Hayek's remarks suggest, the "impossibility" of prediction in the human sciences does not mean that one cannot, in these disciplines, speculate on what the outcome of a given course of action is likely--even more, is almost certain--to be. One can, in economics, "predict" with confidence that if the government intervenes in the economy in a certain way (for instance, by overissuing paper money) the result inevitably will be of such-and-such a sort (e.g., inflation). Similarly, on the basis of sound political theory, one can fairly well predict that if any individual is accorded absolute power in the long run (N.B. the qualitative qualification!), he or she almost certainly will abuse it. Let me, though, return to the action-text analogy to make my point.
As any accomplished hermeneut or interpreter of texts knows, all literary or philosophical texts (the good ones, at least) have a "logic" of their own. It is precisely this logic that a reading of the text seeks to unfold. The more accomplished one is as a reader, the more readily after reading a certain number of pages can one anticipate ("predict") the sort of things an author is going to say. This is one aspect of what is commonly referred to as the "hermeneutic circle". Once one knows an author well, one can even "correct" him, for sometimes an author, by inadvertence, says things he shouldn't say, i.e., which do not fit into the logic of his thoughts. It is the same with those meaningful patterns of action which constitute a social "whole," such as an economy. Here, too, a good reader of human action can legitimately "predict" what, in any given context, i.e., given the "logic" of the order in question, is or is not likely to be the consequence of any given course of action.
Consider the following example: Let us assume that due to a long delayed enlightenment a country which has been mired in socialism decides that it is finally time for it to convert to a market economy. It can safely be said that nothing but chagrin awaits anyone who, ignorant of the structural dynamics or the logic of socialist economies,48 tries to introduce market (e.g., pricing) mechanisms into the existing system. This simply will not work. The structural inertia of the system will prevent these well meaning measures from having the desired effect. There is empirical confirmation for this in the grandiose and foreseeable failure of the way President Gorbachev went about attempting to "restructure" the Soviet economy.49
My bottom line in this paper (to speak like an economist) is that theory does indeed have important practical consequences. While hermeneutic theory differs from scientific theory in that it does not issue in productive technology, and thus does not enable us to control directly the course of human events, it does nevertheless enable us to improve upon our practices. For once we have understood the organizational principles of a given social order, such as the market economy or liberal democracy, we are in a position to alter existing practices in such a way as, on the one hand, to eliminate factors which are contrary to the "logic" of the system, and which thus tend to result in a malfunctioning of the system. On the other hand, it becomes possible to devise new, institutional structures which allow the system to function in a smoother manner and to develop further. To employ a distinction of Hayek's, although hermeneutic theory does not allow us to control them, it does allow us to cultivate better the various social orders which make up the human life-world.50 If, as an interpretive economist might wish to argue,51 the market process is comparable to a conversation in the Gadamerian sense, then (even though, as Gadamer points out, "no one knows what will `come out' in a conversation"52 practical measures of a "cultivating" sort may nevertheless serve to facilitate the dialogical process, furthering thereby that great "conversation of mankind" we call civilization.
McMaster University &
The University of Toronto
1. English translation included in Maurice Merleau-Ponty, The Privacy of Perception, ed. James M. Edie (Evanston, Ill.: Northwestern University Press, 1954).
2. See in this regard my "Did Merleau-Ponty Have a Theory of Perception?" in T. Busch & S. Gallagher, eds., Merleau-Ponty: Hermeneutics and Post-Modernism (Albany, NY: The State University of New York Press, 1992).
3. See my The Hermeneutics of Postmodernity: Figures and Themes (Bloomington: Indiana University Press, 1988), Prologue and Ch. 4, "Merleau-Ponty and Postmodernity."
4. Merleau-Ponty, Phenomenology of Perception, trans. C. Smith (London: Routledge & Kegan Paul, 1962), p. 456. See also p. 383: "All inner perception is inadequate because I am not an object that can be perceived, because I make my reality and find myself only in the act."
5. Ludwig von Mises, Human Action: A Treatise on Economics (3rd revised ed.; Chicago: Contemporary Books, 1963). On p. 357 von Mises writes: "Economics is not about goods and services, it is about the actions of living men. . . . The sole task of economics is analysis of the actions of men, is the analysis of processes.
6. Paul Ricoeur, "The Model of the Text: Meaningful Action Considered As A Text" in Hermeneutics and the Human Sciences, ed. J.B. Thompson (Cambridge: Cambridge University Press, 1981).
7. G.B. Madison, "Ricoeur and the Hermeneutics of the Subject" in The Hermeneutics of Postmodernity, p. 97.
8. Lewis White Beck, `The 'Natural Science Ideal' in the Social Sciences," Scientific Monthly, 68 (1949); reprinted in R.A. Manners and D. Kaplan, eds., Theory in Anthropology: A Sourcebook (Chicago: Aldine, 1971).
9. Ludwig M. Lachmann, "Economic Theory in Tempestuous Season" in The Market as an Economic Process (New York: Basil Blackwell, 1986).
10. See in this regard the collection of essays edited by Don Lavoie, Economics and Hermeneutics (London: Routledge, 1991). Lavoie is an adherent to what is called the "Austrian School" of economics, whose members have been particularly interested in hermeneutical theory. Lavoie characterizes Austrian economics in the following way:
The Austrian school is one of the three famous branches of neoclassical economics, and along with the Marshallian and the Walrasian branches it shares a basic "principles" level understanding of the workings of the economy. On the level of issues like the importance of scarcity, the logic of supply and demand, or the chief causes of inflation, Austrians agree with most contemporary economists. But in a sense this school is really a radically different view of economics from the mainstream neoclassicism. The fundamental point of the revolution in value theory which transformed economics from classical into neoclassical (is that) economics is understood very differently by the Austrian branch. Mainstream neoclassicism tends to view the revolution as a narrowly technical point in the logic of value theory, calling it the "marginalist" revolution, whereas the Austrians view it as involving broader and more philosophical issues, calling it the "subjectivist" revolution. By "subjective" Austrians mean essentially what hermeneutical philosophers mean by interpretive. Austrians are saying economics is not about some external objective reality independent of human purposes. It is about how this objective world is perceived through what Lachmann likes to call the "filter of the human mind." Value, for example, is not a physical attribute of things but a result of valuing minds. Austrian economics is the hermeneutical mode of neoclassical economics ("The Accounting of Interpretations and the Interpretation or Accounts: The Communicative Function of `The Language of Business'," Accounting, Organizations and Society, 12 (no. 6), 596-97.
11. See in this regard the detailed historical study of Philip Mirowski, More Heat than Light: Economics as Social Physics, Physics as Nature's Economics (Cambridge: Cambridge University Press, 1989).
12. Philip Mirowski, "Shall I Compare Thee to a Minkowski-Ricardo-Leontief-Metzler Matrix of the Mosak-Hicks Type: Or, Rhetoric, Mathematics, and the Nature of Neoclassical Economic Theory" in A. Kramer, D.N. McCluskey, and R. M. Solow, eds., The Consequences of Economic Rhetoric (Cambridge: Cambridge University Press, 1988), p. 120.
13. Friedrich A. Hayek, The Counter-Revolution of Science: Studies on the Abuse of Reason (2nd ed.; Indianapolis: Liberty Press, 1979), p. 24. In this book, the text of which was written in the 1940s, Hayek attacked what he called the "scientism" and the "physicalism" infecting economic theory and methodology and argued for an alternative approach, one which today would be labelled interpretive or hermeneutical. For a discussion of the position adopted by Hayek in this book see my "Hayek and the Interpretive Turn," Critical Review, 3 (no. 2, Spring 1989).
14. Edmund Husserl, The Crisis of European Sciences and Transcendental Phenomenology, trans. David Carr (Evanston, Ill.: Northwestern University Press, 1970), p. 52.
15. Ibid., p. 51.
16. David Carr, Phenomenology and the Problem of History (Evanston, Ill.: Northwestern University Press, 1974), p. 131.
17. Husserl, Experience and Judgment, trans. J.S. Churchill and K. Ameriks (Evanston, Ill.: Northwestern University Press, 1973), pp. 44-45.
18. See Martin Heidegger, "The Age of the World Picture" in The Question Concerning Technology and Other Essay, trans. W. Levitt (New York: Harper Colophon Books, 1977).
19. Ludwig von Mises, The Ultimate Foundation of Economic Science: An Essay on Method (Kansas City: Sheed, Andres and McMeel, 1978), p. 71.
20. A notable exception to this state of affairs is the work of Frank H. Knight earlier in this century (Knight's Ph.D. thesis [Cornell, 1916] was entitled "Risk, Uncertainty, and Profit"). For a sampling of Knight's views see Freedom and Reform: Essays in Economics and Social Philosophy (Indianapolis: Liberty Press, 1982) and On the History and Method of Economics (Chicago: University of Chicago Press, 1966). For a more recent treatment of economic "ignorance" see Gerald P. O'Driscoll and Mario J. Rizzo, The Economics of Time and Ignorance (New York: Basil Blackwell, 1985).
21. Cf. the following remarks of Matthew Kibbe: "Any concept of a historical process in the imaginary world of Newtonian time is nonsensical. All adjustment, if it can be discussed at all, is contained within the world from its very beginning. `The initial state of the system must contain within it all that is necessary to produce "change". Time adds literally nothing' (O'Driscoll and Rizzo, 1985 [for further bibliographical information, see note 20 above]). Problems of expectations formation and the process of price determination, for either commodities or money, are eliminated by definition in this bizarre world of Newtonian time" ("Mind, Historical Time and the Value of Money: A Tale of Two Methods," Market Process, 6 (no. 1, Spring, 1988), p. 24.
22. I am, of course, referring here to B.F. Skinner, Beyond Freedom and Dignity (New York, N.Y.: Alfred A. Knopf, 1971).
23. Mirowski writes: "Human beings within this sphere of social life [the economy] behave as if they were automatons, in that their rationality is conflated with the existence of mechanical decision rules, most notably constrained maximization over a conserved vector field. Humans may behave differently in other spheres of social life, but since that behavior is `irrational' by definition, there is nothing left to be explained." ("Shall I Compare Thee . . . ," p. 141.)
24. Knight describes "economic man" in the following terms:
This analytical device [the isolated individual, a "Crusoe"] is familiar in economic theory, and the essential point here is that "Crusoe" epistemology goes with "Crusoe" economics. The purely individualistic individual--a purely hypothetical and analytical conception, of course--is simply the economic man. He knows, or would know, only useful facts, about inert things and processes of change, and would solve problems only in the instrumental sense. He would be a "pragmatist" only in the crudest meaning. He would deliberate--act, exercise freedom, solve problems, in contrast with cause-andeffect behavior but only in connection with the use of given means to realize given concrete ends. The ends would be biological, or possibly psychological, in the phenomenal sense of experiences intrinsically desired. Ends, including their magnitudes, would be known immediately. Our hypothetical "Crusoe" would have no interest in truth as a value, no intellectual curiosity--and, of course, no moral interests or values. His knowledge would be exclusively scientific, at the, instrumental or "economistic" level. Its content would be the useful properties of things, their responses to manipulative treatment, and the effects upon himself. His thinking would deal with the problems of such knowledge and the skills required for its application. The economic man may only in a rather unrealistic sense be said to work, and he does not play; he maximizes satisfaction, subject to the condition of the "resources" at his command (Freedom and Reform, pp. 246-47).
25. See Karl Mittermaier, "Mechanomorphism" in Israel M. Kirzner, ed., Subjectivism, Intelligibility and Economic Understanding (New York: New York University Press, 1986). Mittermaier remarks:
[A]n economist engages in mechanomorphism when he ascribes mechanical properties to what is otherwise recognized as an aspect of human affairs or when he treats an economic system as though it were a mechanical system. In its most general sense we may understand mechanics to be concerned with matter in motion. In the Newtonian formulation, a mechanical system involves concepts of space, time, force, point mass, and derivations from these. Equilibrium clearly comes from this domain of thought and talk of equilibrating or market forces must be regarded as mechanomorphic. Consumption and saving, which normally are regarded as activities, acquire a mechanical aspect as macroeconomic aggregates. They are treated as though they were quantities of a substance, perhaps a liquid flowing through some kind of system--the conception Coddington called hydraulicism (p. 237).
26. Peter Boettke, Steven Horwitz, and David L. Prychitko, "Beyond Equilibrium Economics: Reflections on the Uniqueness of the Austrian Tradition," Market Process, 4 (1986), 6, 20.
27. See the following writings of Winch: The Idea of a Social Science and Its Relation to Philosophy (London: Routledge and Kegan Paul, 1958); and "The Idea of a Social Science" and "Understanding a Primitive Society," both in Rationality, ed. B.R. Wilson (New York: Harper Torchbooks, 1971).
28. See Ricoeur, "What Is a Text? Explanation and Understanding" in Hermeneutics and the Human Sciences.
29. Mittermaier aptly describes the kind of schizophrenic situation in which the objectivistic economist finds himself in the following way:
What is disconcerting about textbook expositions of economics, at least to one who is not impressed by the idea of testable hypotheses, is that the coherence rule is not followed. The student is introduced to a topic reeking with the richness of social life. He is then taken by a little legerdemain through a blur and suddenly finds himself in an eerie world of continuous functions. He watches the functions shift about and, when they have stopped, notes down the coordinates of their points of intersection. He is then taken again through the blur and, behold, he finds himself once more among familiar human faces. The recommendation of this paper is that the subjectivist ["Austrian"] case against mechanomorphism be based on the ideal that such blurs be removed. In itself, however, that is not enough. One should also be able to show how it may be done ("Mechanomorphism," p. 249).
In regard to Mittermaier's last remark, I would suggest that one of the beneficial things hermeneutical theory may be able to do for economists is indeed "to show how it may be done."
30. See my "A Critique of Hirsch's Validity" in The Hermeneutics of Post-modernity.
31. "The Model of the Text," p. 201.
32. Ibid., p. 206.
33. Hayek, Individualism and Economic Order (London: Routledge & Kegan Paul, 1976), p. 7.
34. Alfred Schutz, "Common-Sense and Scientific Interpretation of Human Action" in M. Natanson, ed., Collected Papers, vol. 1 (The Hague: Martinus Nijhoff, 1973), p. 6. Lavoie remarks:
The fact that the objects of our study already have an interpretation of what is going on does not release the social scientist from the responsibility to develop and defend her own explication of what is going on. The interpreter should not try to rid herself of her own perspective in order to "adopt" that of the interpreted, but must try to find new ways to use her presuppositions to attain a better understanding of the human activities under study. . . . Thus interpretation always means adding to what is said through a mediation of the "horizons" of the interpreter and the interpreted ("The Accounting of Interpretations and the Interpretation of Accounts," p. 594).
35. Charles Taylor, "Interpretation and the Sciences of Man" in P. Rabinow and W.M. Sullivan, Interpretive Social Science: A Reader (Berkeley: University of California Press, 1979), p. 48.
36. Elias L. Khalil, "Rationality and Social Labor in Marx," Critical Review, 4 (1990), 247. Khalil remarks in more detail on the same page:
The atomistic framework of neoclassical economics, which commences with the average individual, is far different from Marx's collective approach. Put in simplified terms, the former tradition conceives the market as the sum of the choices made by single subjects; while the latter approach views production activity of individuals as charged by one single subject, society. While neoclassical economic theory has to aggregate decisions, Marx's framework has to disaggregate decisions. However, these opposite approaches are similar. Both traditions, at the highest theoretical level, begin with single subjects. In one case, it is the isolated agent; in the other case, it is the self-defined society.
37. See in this regard my "How Individualistic Is Methodological Individualism?, " Critical Review, 4 (1990).
38. Phenomenology of Perception, p. 147. The economic world is like the phenomenological world Merleau-Ponty speaks of: "a system of meanings whose reciprocities, relationships and involvements do not require to be made explicit in order to be exploited" (Phenomenology, p. 129). Thus, as one could also say, the consciousness that an economic agent has of his or her world "is in the first place not a matter of `I think that' but of `I can'" (Phenomenology, p. 137).
39. For a comprehensive critique of the idea of economic planning in its various forms, see Don Lavoie, Rivalry and Central Planning: The Socialist Calculation Debate Reconsidered (New York: Cambridge University Press, 1985) and National Economic Planning: What is Left? (Cambridge, Mass.: Ballinger Publishing, 1985). In the latter work Lavoie, following much the same tactic as I have employed in this paper, remarks:
The fundamental defect of virtually all proposals for planning--from Marx to Leontief--lies in what Michael Polanyi calls their "objectivist," or what F.B. Hayek calls their "rationalistic," concept of the nature of human knowledge. This epistemological [let us read here: hermeneutic] issue contains both the key to understanding most contemporary policy failures as well as the basic obstacle that stands in the way of all national planning proposals. . . . The knowledge relevant for economic decision-making exists in a dispersed form that cannot be fully extracted by any single agent in society. But such extraction is precisely what would be required if this knowledge were to be made usable for a single planning agency. . . . In short, the whole case against Planning that is being developed here is rooted in a critique of objectivist theories of knowledge (pp. 56-57).
40. Hayek, "The Use of Knowledge in Society" in Individualism and Economic Order (London: Routledge & Kegan Paul, 1976), p. 78. On pp. 77-78 Hayek describes "the fundamental problem" of economics (the problem that I have been talking about in the preceding paragraphs) as follows:
[T]he "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.
The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess. The economic problem of society is thus not merely a problem of how to allocate "given" resources--if "given" is taken to mean given to a single mind which deliberately solves the problem set by these "data." It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.
41. See Milton Friedman, Essays in Positive Economics (Chicago: University of Chicago Press, 1953).
42. Matthew B. Kibbe, "Mind, Historical Time and the Value of Money: A tale of Two Methods," Market Process (1988), p. 23.
43. Clifford Geertz, The Interpretation of Cultures (New York: Basic Books, 1973), p. 5.
44. Hayek remarks in this regard:
[W]hile in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes.
It can hardly be denied that such a demand quite arbitrarily limits the facts where are to be admitted as possible causes of the events which occur in the real world ("The Pretence of Knowledge" in New Studies in Philosophy, Politics, Economics and the History of Ideas [Chicago: University of Chicago Press, 1978], p. 24).
An additional objection can be raised to Friedman's seductively sophisticated position. Friedman freely admits that his methodological constructs are not "literally" true; he is merely, by means of his models, viewing human reality "as if" it were of such-and-such a(n objectivistic) sort. Fine and good, one might be inclined to reply. What's wrong with that? Nothing, of course--in a certain sense. The use of "as if's," i.e., metaphorical, analogical reasoning, is the very heart and soul of all thinking having insight value (in his article "Shall I Compare Thee . . . Mirowski comments extensively on the role of metaphorical thinking in science; I have also studied the centrality of metaphor in human understanding in my Understanding: A Phenomenological-Pragmatic Analysis [Westport, Conn.: Greenwood Press, 1982]). The problem lies elsewhere.
While analogical reasoning is as valid in science as in any other human undertaking, I am not at all certain that, given the nature of scientific, objectivistic thinking itself, scientists can keep from confusing their methodological, "as if" constructs with reality itself, from, as Husserl would say, taking for true being what in fact is only a method. And when they do so, the consequences are, or can be, disastrous--one has only to consider the example of Artificial Intelligence researchers who all too readily leap from the (valid) premise that the "mind" can be viewed as a computational machine to the (altogether invalid) conclusion that the mind is a computer. Just as, in political theory, it is a law of human affairs that power tends to corrupt, so, in epistemic matters, I believe that science, when not counterbalanced by other modes of understanding, tends inevitably towards the corruption of human understanding. Can you have science with scientism? I don't know; I leave the question open. I think, though, there is a real and immense problem here--if it is indeed the case, as Merleau-Ponty believed it was, that human understanding tends inevitably to misunderstand itself (see my "Merleau-Ponty's Deconstruction of Logocentrism").
45. See Friedman's statement of his position at the 1983 Regional Meeting of the Mont Pelerin Society, "What Could Reasonably Have Been Expected from Monetarism: The United States," Focus: Challenging Complacency/Monetarism: Any Verdict Yet? (Vancouver: The Fraser Institute, 1983). See also my "Communicating the Ideas of a Free Society" in Focus: Challenging Complacency/communicating the Ideas of a Free Society (Vancouver: The Fraser Institute, 1983). For an excellent, detailed analysis of money from a hermeneutical point of view, see Steven G. Horowitz, The Private Basis of Monetary Order: An Evolutionary Approach to Money and the Market Process (Ph.D. thesis; Arlington, Va. George Mason University, 1989). In regard to monetarism the economist Henry Hazlitt remarks:
The monetarists outlook, as proposed by Milton Friedman, is, in fact, a mechanical quantity theory of money. He assumes that "the" price level--that is to say, an average of prices--will rise proportionately to the amount of paper money that is issued. That can happen for a certain period, but the value of money is not determined mechanically and proportionately with the amount issued. It is determined by public psychological forces (thus the need, as I would maintain, for an interpretive economics]. A panic can break out when people suddenly expect the value of money to collapse. That was illustrated by the German inflation of 1920 to 1923. Prices rose for a time roughly proportional with the amount of money issued. But suddenly prices soared far faster than the money supply because the public got panicky. It is psychological forces that determine the value of money as other commodities [cf. the "subjective theory of value" or Austrian economics], although influenced, of course, by quantitative considerations ("An Interview with Henry Hazlitt," Austrian Economics Newsletter, Spring, 1984 [Auburn, Al.: The Ludwig von Mises Institute of Auburn University], p. 4).
46. Don Lavoie, "The Accounting of Interpretations . . .", p. 596.
47. Hayek, "The Pretence of Knowledge," pp. 27 & 29.
48. For a detailed analysis of socialist economic systems see the work of the Hungarian economist Janos Kornai.
49. For an excellent study of the structural dynamics of economic systems and the problem of reform, see Branko Milanovic, Liberalization and Entrepreneurship: Dynamics of Reform in Socialism and Capitalism (Armonk, N.Y.: M.E. Sharp, 1989).
50. See in this regard my "Between Theory and Practice: Hayek on the Logic of Cultural Dynamics," forthcoming in Cultural Dynamics. Hayek writes: "He [the social reformer] will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants. There is danger in the exuberant feeling of ever growing power, which the advance of the physical sciences has engendered and which tempts man to try, `dizzy with success', to use a characteristic phrase of early communism, to subject not only our natural but also our human environment to the control of a human will" ("The Pretense of Knowledge," p. 34).
51. See David L. Prychitko, "Marxism and Decentralized Socialism," Critical Review, 2 (1988), 137-138.
52. Hans-Georg Gadamer, Truth and Method (New York: Crossroad, 1985), p. 345.