Friday , December 15 2017
Home / Coordination Problem / Knowledge Lost in Information

Knowledge Lost in Information

Summary:
Bruce Caldwell reviews Mirowski and Nik-Khah at EH.Net.  Highly recommended. My Presidential address to the Society for the Development of Austrian Economics from the 2001 meetings also addresses this question of what is lost in translation between Austrian-Hayekian rendering of knowledge and the neoclassical-Hurwicz/Stigler/Stiglitz rendering of information.  This is a theme I have addressed a number of places before and since that essay, including my paper with Kyle O'Donnell, as well as the recent Liberty Matters on Hayek. The Mirowski and Nik-Khah book is very interesting and raises a lot of important points, but the book is strangely confusing on Hayek, and to some extent they use me to promote their confused reading on Hayek.  There should really be no confusion on this

Topics:
Peter Boettke considers the following as important:

This could be interesting, too:

Wolf Richter writes The Flattening US “Yield Curve”? NIRP Refugees Did it

Tyler Durden writes Shocking Video Shows What Everyday Life Is Like In Puerto Rico Now

Tyler Durden writes Saudi Arabia Launches Misguided Billion Stimulus In Desperate Bid To Kickstart 2018 Growth

David Stockman writes Chart of the Day: Red Ponzi Update—The Party (Congress) Is Over

Bruce Caldwell reviews Mirowski and Nik-Khah at EH.Net.  Highly recommended.

My Presidential address to the Society for the Development of Austrian Economics from the 2001 meetings also addresses this question of what is lost in translation between Austrian-Hayekian rendering of knowledge and the neoclassical-Hurwicz/Stigler/Stiglitz rendering of information.  This is a theme I have addressed a number of places before and since that essay, including my paper with Kyle O'Donnell, as well as the recent Liberty Matters on Hayek.

The Mirowski and Nik-Khah book is very interesting and raises a lot of important points, but the book is strangely confusing on Hayek, and to some extent they use me to promote their confused reading on Hayek.  There should really be no confusion on this issue, especially if you read not only Caldwell, but Kirzner and Lavoie as part of your secondary literature.  And to be honest I have been in my mind quite clear on this throughout my career as well, though I did use the occasion of the Nobel to the mechanism design thinkers to discuss Hayek's influence, and when we did celebrate Hayek's Nobel we did invite one of those Nobel Prize winners to discuss how Hayek impacted that work.  There is no denying that Hayek influenced Hurwicz and others in their quest to find an economic system design that would be informationally efficient.  But that was not Hayek's main point.  Mirowski and Nik-Khah would have done well to have listened to Vernon Smith's response to Erik Maskin that day at GMU.  Maskin was discussing the "information space" and the informational requirements required for efficiency, whereas Vernon in describing his market experiment pointed to Maskin at one point showing the picture of his groping market processes over 3 rounds and said "There is the information space, and none of the participants knew a damn thing".  See the knowledge within the market was both emergent and contextual.  Now that might be overstating it a bit given the way Smith's market experiment is designed, but the critical point is that this was the theoretical idea he was attempting to capture.

Go back to my discussions referenced above and you will see this point consistently emphasized. The knowledge of the market isn't merely decentralized and dispersed, it is emergent and contextual and without that context it isn't difficult to mobilize, it is rather non-existent.  This knowledge that defies the sort of treatment required to fit it into an information-theoretic account either by Hurwicz, Stigler or Stiglitz.

Anyway, it is my sincere hope that the Mirowski and Nik-Khah book will get folks thinking about these issues and explore these literatures rather than serve as a faithful guide to the issues and interpretation of these literatures.  The book, as Caldwell points out, has a bigger purpose -- one that is ideological in nature, and that is to tar neoliberalism, and with that Hayek as the quintessential leader of the neoliberal thought collective.  This aspect of the project makes for interesting reading as any such wild conspiracy story would, but it does not advance knowledge in the social sciences nor provide a scholarly intellectual history of modern economics and political economy. I take that just to be a call for more serious work and to simply try to enjoy the Mirowski habit of the "all-knowing wink" and "fanciful story-telling" masquerading as serious scholarship.  You can learn a lot from his works, but even dating back to More Heat Than Light, the reader has to always be on alert for the interpretative leap and wild implication drawn.  So warned, again, there is a lot of learn starting with the brilliant title chosen -- The Knowledge Lost in Information -- if only they understood that the greatest casualty of this translation difficult was Hayek and the culprit was correctly identified by Hayek as scientism, what a story indeed could be told.

Peter Boettke

Peter Joseph Boettke (January 3, 1960) is an American economist of the Austrian School. He is currently a University Professor of Economics and Philosophy at George Mason University; the BB&T Professor for the Study of Capitalism, Vice President for Research, and Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at GMU.

Leave a Reply

Your email address will not be published. Required fields are marked *