Epistemological foundations
In retrospect and with the benefit of hindsight, it is apparent that Hayek’s approach to the social sciences is rooted in a physiologically derived epistemological basis, the foundation of which he worked out during the 1920s.
It was further developed in the time thereafter and finally published in 1952 as The Sensory Order. Although the book has for a long time been neglected, several commentators have recently recognized its importance (Bouillon, 1991; Streit, 1993; Caldwell, 1997). Hayek himself had already pointed out that his work on The Sensory Order had greatly helped him in developing his conception of evolution and of a spontaneous order and in analysing the methods and limits of our endeavours to explain complex phenomena (Hayek, 1979, pp. 199-200, fn 26). One of the central arguments of The Sensory Order is that our perception of the world around us is theory guided or conjectural, in the sense that it is informed by a pre-existing system of classification - or set of classificatory dispositions - which is itself the product of a kind of ‘learning’, the outcome of an evolutionary process that can be said to reflect the accumulated ‘experience’ of the species. Thus Hayek’s views as expounded in The Sensory Order come close to some of the tenets of what later became known as ‘evolutionary epistemology’. In fact, Hayek’s work can be interpreted as a systematic elaboration of the consequences that follow from an evolutionary epistemology for the issue of socioeconomic-political organization. His main subject is the social dimension of the knowledge problem, the problem of social learning; that is, the nature of the process by which knowledge is accumulated and utilized in society.Hayek’s concept of perception as classification has a systematic counterpart in his concepts of rules and rule-following behaviour (see also Hayek, 1967, pp.
43-65). Both our perception and our behavioural responses to situations are a matter of classification. Both are abstract in the sense that we respond not to the unique properties, but to typical features of situations with certain kinds of actions. In both realms, learning is a matter of reclassification. If, at the level of our cognitive apparatus, the existing classification system generates expectations which are disappointed, there will be a tendency for the mind to reclassify experience. The mind will rearrange sensory experiences into new configurations that allow better predictions to be made about reality. Those expectations that are ‘fit’ tend to survive while those that are ‘unfit’ tend to be weeded out. This selection process clearly has a counterpart operating at the social level. As will be seen, the role of the judge consists in upholding those rules that will ‘maximize’ the matching of expectations. Rules in effect draw the demarcation line between ‘legitimate’ expectations and ‘illegitimate’ expectations, thus defining the kind of expectations that can be expected to enjoy social protection. On all levels, expectations have a tendency towards coherence and coordination. The criterion of fitness is confirmation of expectations as indicated by the success of our actions. Expectations more consistent with social reality give a competitive advantage to the individuals holding them. Rules are thus valued for instrumental reasons.To conclude this introductory section about Hayek’s epistemology, The Sensory Order constituted Hayek’s decisive step away from standard economic theorizing. It marked Hayek’s further movement away from the equilibrium and rationality constructs used by economists to understand the market order. It paved the way for his rejection of homo economicus and ultimately also for the constitutional reorientation of his work, that is, his proposal that we examine the role of various institutions in assisting the creation, discovery, use, conveyance and conservation of knowledge.
The mind of the individual described in The Sensory Order is a complex adaptive self-organizing neural order. The study of such complex orders led Hayek to criticize particular uses of the equilibrium construct in economics and to question quantitative economics. The newly acquired philosophy also permeates his mature work on legal theory. As he wrote in volume 3 of Law, Legislation and Liberty, Hayek (1979), in a section entitled ‘The evolution of self-maintaining complex structures’:These changes in structure are brought about by their elements possessing such regularities of conduct, or such capacities to follow rules, that the result of their individual actions will be to restore the order of the whole if it is disturbed by external influences....
There is now, in particular, no justification for believing that the search for quantitative relationships, which proved so effective for accounting for the interdependence of two or three different variables, can be of much help in the explanation of the self-maintaining structures that exist only because of their selfmaintaining attributes.. In particular, in order to explain the economic aspects of large social systems, we have to account for the course of a flowing stream, constantly adapting itself as a whole to changes in circumstances of which each participant can know only a small fraction, and not for a hypothetical state of equilibrium determined by a set of ascertainable data. And the numerical measurements with which the majority of economists are still occupied today may be of interest as historical facts. With the functions of the system these magnitudes have evidently very little to do. (pp. 158-9)