This issue has been discussed previously on the forum.
Here is a newly revised summary of my argument that Hayek overlooked the implications of his own ideas as expressed in "Economics and Knowledge" and "The Facts of the Social Sciences."
****
Mises, Hayek, and the A Priorism of the Market: Why Mises was right
Mises and Hayek disagreed about the nature of market theory:
What I see only now clearly is the problem of my relation to Mises, which began with my 1937 article on the economics of knowledge, which was an attempt to persuade Mises himself that when he asserted that the market theory was a priori, he was wrong; that what was a priori was only the logic of individual action, but the moment that you passed from this to the interaction of many people, you entered into the empirical field.(Hayek on Hayek, p.72)(emphasis added)
Hayek is referring to his essay in Individualism and Economic Order, page 35:
I have long felt that the concept of equilibrium itself and the methods which we employ in pure analysis have a clear meaning only when confined to the analysis of a single person and that we are really passing into a different sphere and silently introducing a new element of altogether different character when we apply it to the explanation of the interactions of a number of different individuals.(emphasis added)
Here Hayek makes a distinction between the market (an interaction of a number of people) and the logic of individual action. Hayek agrees that the logic of individual action is a priori, but he argues that market theory is empirical, and that Mises was wrong to believe that market theory is a priori.
To understand the issue involved, and to see how Hayek overlooked the implications of his own ideas, we have to consider two essays from his book Individualism and Economic Order: "Economics and Knowledge" and "The Facts of the Social Sciences."
In "The Facts of the Social Sciences," Hayek outlines his concept of the Pure Logic of Choice:
From the fact that......we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons, there follow some very important consequences......we can, from the concepts of the objects, analytically conclude something about what the actions will be. If we define an object in terms of a person's attitude toward it, it follows, of course that the definition of the object implies a statement about the attitude of the person toward the thing. When we say that a person possesses food or money, or that he utters a word, we imply that he knows that the first can be eaten, the second can be used to buy something with, and that the third can be understood---and perhaps many other things.(emphasis added)
Here, Hayek is describing how he conceives of the Pure Logic of Choice. In social science, it is not the physical characteristics of an object that give that object social meaning, but rather the attitude of the acting person toward that thing.
Hayek indicates how this analytic method applies. The attitude a person takes toward an object has a hidden implication. We can analytically conclude something about a person's action(s) based on that person’s opinion or attitude about the object before him. As Hayek writes:
When we say that a person possesses food or money, or that he utters a word, we imply that he knows that the first can be eaten, the second can be used to buy something with, and that the third can be understood—and perhaps many other things.
This is the Pure Logic of Choice which according to Hayek is:
...the system of tautologies—those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start.
Hayek argues in “The Facts of the Social Sciences” that it is not the physical properties of a thing that make it an object of the social sciences, but rather the attitude a person takes toward a thing.
Further, once a person takes an attitude toward a thing, his attitude, belief, or opinion, entails further necessary implications which we can analyze and from which we can draw further conclusions. These analytical conclusions are the exact laws (Menger), a priori propositions (Mises), or necessary truths, as Hayek refers to them. Exact laws, a priori propositions, and necessary truths, are, respectively, the focus of theoretical exact science, praxeology, and the Pure Logic of Choice.
Hayek has granted that based on what the actor believes is before him (food, money, a word, etc.) we can analytically conclude something else, and these two things taken together constitute a necessary truth (a priori proposition, exact law, etc.).
The question we ask is this:
If the object before an actor is a market, why are there no analytical implications to the actor's attitude in this case?
Hayek has said that what makes an object a social object is not its physical characteristics. It is the attitude that an actor takes toward something that determines whether an object is a social object:
If we wish, we could say that all these objects are defined not in terms of their “real” properties but in terms of the opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are.
Once an actor takes a certain attitude toward an object, based on this, we can form a necessary truth by analytically concluding what must also be part of the attitude the actor takes.
Hayek also argues that market theory is empirical and not a priori.
But if a market is a social object (social process, social phenomenon, etc.), then according to Hayek, as a social object it cannot be defined in terms of its physical characteristics. A market can only be defined in terms of the attitude of the person(s) concerned. Hayek writes about the “objects of human activity which constantly occur in the social sciences”:
It is easily seen that all these concepts…refer not to some objective properties possessed by the things, or which the observer can find out about them, but to views which some other person holds about the things. These objects cannot even be defined in physical terms, because there is no single physical property which any one member of a class must possess. These concepts are also not merely abstractions of the kind we use in all physical sciences; they abstract from all the physical properties of the things themselves.(emphasis in the original)
If what Hayek writes is true, then a market, as a social object, is to be defined not in terms of its physical properties, but rather in terms of the attitudes or opinions of the persons concerned. In short, a market is a market if and because somebody thinks it is.
If a market is defined in terms of the opinions and attitudes of the persons concerned, then why are there no analytical conclusions we can draw from this particular attitude a person takes? Why can we draw an analytical conclusion (a tautological transformation) from the fact that a person thinks an object is money, a word, or a cosmetic, but not from the fact that a person thinks something is a market?
Why isn't market theory a priori by virtue of the Pure Logic of Choice when the object before a person is a market, and we draw analytical conclusions (necessary truths) from the actor’s attitude or opinion in this case?
In this sense, by Hayek’s own reasoning, the theory of the market would seem to be a priori not empirical.
The question is whether a nonarbitrary criterion exists for distinguishing those attitudes of an actor from which we can draw analytical conclusions, from those attitudes of an actor from which we cannot draw analytical conclusions. Hayek clearly argues that analytical conclusions can be drawn from the attitude of the actor when the object before the actor is food, money, or a word. But Hayek seems to overlook other kinds of social objects such as markets, language, law, property, etc. If, for example, the market is a social object, then according to Hayek it cannot be defined in terms of its physical properties, but must be defined in terms of the attitudes of the persons concerned. The same principle should hold for language, law, and property, to the extent these are social objects—objects of the social sciences and not objects of the physical sciences.
If things such as markets and property are social objects defined in terms of the opinions of acting persons, then why can no analytical conclusions be drawn from the concepts of these objects, something Hayek claims can be done with respect to the social objects food, money, and words? What principle distinguishes two distinct classes of social objects such that from the conceptions of class A we can draw analytical conclusions, but from the conceptions of class B we cannot draw analytical conclusions?
If Hayek or his supporters cannot provide a principle for distinguishing between these two classes of social objects, then we must assume, based on what Hayek argues in "Economics and Knowledge" and "The Facts of the Social Sciences" that what holds true for one class of social objects holds true for all classes of social objects. If in the Pure Logic of Choice we may draw analytical conclusions from the social concepts food, money, and words, then in the Pure Logic of Choice we may draw analytical conclusions from the social concepts market, language, law, and property.
Absent a nonarbitrary principle that distinguishes two classes of social objects and precludes us from drawing analytical conclusions from one class of concepts, we must conclude that the Pure Logic of Choice applies to the market as it does to other social objects, and in this sense market theory is a priori.
"It would be preposterous to assert apodictically that science will never succeed in developing a praxeological aprioristic doctrine of political organization..." (Mises, UF, p.98)
In other words, we may see the market from the point of view of "individual action", which he called "a priori", by seeing the 'market' as objects of the actions of individuals, instead of as an entity in itself. Is that an accurate characterization of what you are saying in your post?
Based on what you are saying here and what you quoted of him, he appears to have changed his point of view at a certain point from that of individual actors to that of collections of actors making up markets, causing the method of his inquiries to change, and then declared that, at that point, the method changes. But, if we just keep the same point of view, the method does not change, I guess. I think that you were saying what I am saying here when you wrote that we need to see the market as an object of the action of the actor; that is, when you take 'the market' as an object of the action of an individual, you move back into what Hayek considered a point of view that is 'a priori'. So why did he decide to change his point of view at that moment?
Either way, though, I see no reason why switching points from one of those points of view to the other is ever "incorrect" just because of that. In my estimation, we just need to try both of them out and then see what happens. I do not remember what lecture this was in; but I remember Gene Callahan discussing that he did not think that it made sense to say things like that looking just at movements in the external world are just "incorrect" methods for understanding how humans 'behave' but instead that they just happen to be pretty sterile at this moment in comparison to seeing it from the point of view of the internal worlds of the people involved, which is what 'subjectivist' economics does.[1] And that way of seeing things really made sense to me. I think that Mises held a similar view; for his 'justification' of his method was basically saying "it would be crazy to say that, for understanding the movements of people, the method of economics or whatever does not work and the point of view of natural science does":
Ludwig von Mises: Both primitive man and the infant, in a naïve anthropomorphic attitude, consider it quite plausible that every change and event is the outcome of the action of a being acting in the same way as they themselves do. They believe that animals, plants, mountains, rivers, and fountains, even stones and celestial bodies, are, like themselves, feeling, willing, and acting beings. Only at a later stage of cultural development does man renounce these animistic ideas and substitute the mechanistic world view for them. Mechanicalism proves to be so satisfactory a principle of conduct that people finally believe it capable of solving all the problems of thought and scientific research. Materialism and panphysicalism proclaim mechanicalism as the essence of all knowledge and the experimental and mathematical methods of the natural sciences as the sole scientific mode of thinking. All changes are to be comprehended as motions subject to the laws to mechanics. The champions of mechanicalism do not bother about the still unsolved problems of the logical and epistemological basis of the principles of causality and imperfect induction. In their eyes these principles are sound because they work. The fact that experiments in the laboratory bring about the results predicted by the theories and that machines in the factories run in the way predicted by technology proves, they say, the soundness of the methods and findings of modern natural science. Granted that science cannot give us truth--and who knows what truth really means?--at any rate it is certain that it works in leading us to success. But it is precisely when we accept this pragmatic point of view that the emptiness of the panphysicalist dogma becomes manifest. Science, as has been pointed out above, has not succeeded in solving the problems of the mind-body relations. The panphysicalists certainly cannot contend that the procedures they recommend have ever worked in the field of interhuman relations and of the social sciences. But it is beyond doubt that the principle according to which an Ego deals with every human being as if the other were a thinking and acting being like himself has evidenced its usefulness both in mundane life and in scientific research. It cannot be denied that it works. It is beyond doubt that the practice of considering fellow men as beings who think and act as I, the Ego, do has turned out well; on the other hand the prospect seems hopeless of getting a similar pragmatic verification for the postulate requiring them to be treated in the same manner as the objects of the natural sciences. The epistemological problems raised by the comprehension of other people's behavior are no less intricate than those of causality and incomplete induction. It may be admitted that it is impossible to provide conclusive evidence for the propositions that my logic is the logic of all other people and by all means absolutely the only human logic and that the categories of my action are the categories of all other people's action and by all means absolutely the categories of all human action. However, the pragmatist must remember that these propositions work both in practice and in science, and the positivist must not overlook the fact that in addressing his fellow men he presupposes--tacitly and implicitly--the intersubjective validity of logic and thereby the reality of the realm of the alter Ego's thought and action, of his eminent human character.[10]
Both primitive man and the infant, in a naïve anthropomorphic attitude, consider it quite plausible that every change and event is the outcome of the action of a being acting in the same way as they themselves do. They believe that animals, plants, mountains, rivers, and fountains, even stones and celestial bodies, are, like themselves, feeling, willing, and acting beings. Only at a later stage of cultural development does man renounce these animistic ideas and substitute the mechanistic world view for them. Mechanicalism proves to be so satisfactory a principle of conduct that people finally believe it capable of solving all the problems of thought and scientific research. Materialism and panphysicalism proclaim mechanicalism as the essence of all knowledge and the experimental and mathematical methods of the natural sciences as the sole scientific mode of thinking. All changes are to be comprehended as motions subject to the laws to mechanics. The champions of mechanicalism do not bother about the still unsolved problems of the logical and epistemological basis of the principles of causality and imperfect induction. In their eyes these principles are sound because they work. The fact that experiments in the laboratory bring about the results predicted by the theories and that machines in the factories run in the way predicted by technology proves, they say, the soundness of the methods and findings of modern natural science. Granted that science cannot give us truth--and who knows what truth really means?--at any rate it is certain that it works in leading us to success. But it is precisely when we accept this pragmatic point of view that the emptiness of the panphysicalist dogma becomes manifest. Science, as has been pointed out above, has not succeeded in solving the problems of the mind-body relations. The panphysicalists certainly cannot contend that the procedures they recommend have ever worked in the field of interhuman relations and of the social sciences. But it is beyond doubt that the principle according to which an Ego deals with every human being as if the other were a thinking and acting being like himself has evidenced its usefulness both in mundane life and in scientific research. It cannot be denied that it works. It is beyond doubt that the practice of considering fellow men as beings who think and act as I, the Ego, do has turned out well; on the other hand the prospect seems hopeless of getting a similar pragmatic verification for the postulate requiring them to be treated in the same manner as the objects of the natural sciences. The epistemological problems raised by the comprehension of other people's behavior are no less intricate than those of causality and incomplete induction. It may be admitted that it is impossible to provide conclusive evidence for the propositions that my logic is the logic of all other people and by all means absolutely the only human logic and that the categories of my action are the categories of all other people's action and by all means absolutely the categories of all human action. However, the pragmatist must remember that these propositions work both in practice and in science, and the positivist must not overlook the fact that in addressing his fellow men he presupposes--tacitly and implicitly--the intersubjective validity of logic and thereby the reality of the realm of the alter Ego's thought and action, of his eminent human character.[10]
With such a weak justification of his method, then, what justified his serious attacks against other thinkers posing the other method? Why did he not just say "well, it does not seem to be working; so I will just stick with what I am doing"? Well, first of all, he did that a lot. But, second of all, when he did not but instead decided to launch more direct attacks against those people, what justified it was, from what I have seen, one of two things: either (a) they thought that the justification for their method was more than just its expediency, which contradicts what I said that Gene Callahan was saying and what I quoted from Mises, or (b) they acted like they were doing a method opposed to what Mises was doing but they actually were not, they were smuggling in categories of action into what they pretended was just natural science. (Anyway, this passage might have been a bit of a tangent.)
So, in light of that, I do not think that it makes sense to just say "Hayek was wrong about describing markets being not a priori". I think that it makes more sense to just point out that he changed his point of view and that his assertion that Mises was wrong, indeed, his assertion that he and Mises were in a fundamental disagreement, was wrong, and that, instead, they were just seeing things from two different points of view. But, again, why did he so strongly feel the need to switch his point of view at that moment that he thought that no other point of view existed, indeed, that he did not even switch his point of view? I have no idea.
(With this, I am still supporting a rough template of what I was trying to do in the other thread; I still think that it makes sense to see groups of people as individuals, too. Methodological individualism always holds; the question is just this, what are we considering to be the individual at this moment? By the way, I think that Hoppe was doing a similar sort of thing in this lecture. What do you think about his method in that lecture? Do you think that it makes sense? Do you think that it is similar to what I was doing in that other thread?)
(Just my tentative, disorganized thoughts about this.)
[1] I am still trying to figure out how to answer your challenges of how to define 'internal world' and 'external world' in a non-circular way; but, either way, I am pretty confident that it is an important division.
If I wrote it more than a few weeks ago, I probably hate it by now.
The actions of individuals are a priori because to the extent that we wish to understand them, we can only do so by making reference to means, ends, intentionality and other such concepts knowledge of which we have derived from knowledge of our own mind. Indeed, insofar as we are able to communicate and understand other human actors, we can do so precisely because they, for evolutionary reasons, have a mind that works in the same way as ours. Your argument would imply that we should seek to explain animal behaviour in terms of means and ends simply because "[there] exists for distinguishing those attitudes of an actor from which we can draw analytical conclusions, from those attitudes of an actor from which we cannot draw analytical conclusions", fortunately, I think this is an argument that most educated people would reject.
The market is not an actor, it is a collection of actors, and one could make a good argument for it being more than that. To explain market outcomes one must make reference to a whole host of other empirical facts and use other theoretical tools. Indeed, as another poster pointed out, the market is a spontaneous order, the job of the social scientist is not to elaborate useless tautologies about human action but to explain how this spontaneous order emerges (e.g. relative price signals guiding market actors) and why some spontaneous orders take certain paths and others take others (e.g. North's work on economic history).
"You don't need a weatherman to know which way the wind blows"
Bob Dylan
hayekianxyz: Your argument would imply that we should seek to explain animal behaviour in terms of means and ends simply because "[there] exists for distinguishing those attitudes of an actor from which we can draw analytical conclusions, from those attitudes of an actor from which we cannot draw analytical conclusions", fortunately, I think this is an argument that most educated people would reject.
Your argument would imply that we should seek to explain animal behaviour in terms of means and ends simply because "[there] exists for distinguishing those attitudes of an actor from which we can draw analytical conclusions, from those attitudes of an actor from which we cannot draw analytical conclusions", fortunately, I think this is an argument that most educated people would reject.
Am I not an "educated pe[rson]"? For I do not know what that even means.
Anybody who disagrees with Giles must take a class on economics. [/sarcasm]
I. Ryan:
"In other words, we may see the market from the perspective of "individual action", which he called "a priori", by seeing the 'market' as objects of the actions of individuals, instead of as an entity in itself. Is that an accurate characterization of what you are saying in your post?"
Yes. Thank you for seeing this. Good point about "instead of as an entity in itself."
"Based on what you are saying here and what you quoted of him, he appears to have changed his point of view at a certain point from that of individual actors to that of collections of actors making up markets, causing the method of his inquiries to change, and then declared that, at that point, the method changes. But, if we just keep the same point of view, the method does not change, I guess. I think that you were saying what I am saying here when you wrote that we need to see the market as an object of the action of the actor; that is, when you take 'the market' as an object of the action of an individual, you move back into what Hayek considered a point of view that is 'a priori'."
Yes, that's right. I will argue that this is essentially the same thing Rothbard did, except with ethics theory, rather than market theory.
The switch is from considering things from the point of view of the individual actor, over to considering things, as Hayek writes, in terms of their "real" properties. From considering an object as the individual concerned sees it, to considering an object "as it is in itself."
"Either way, though, I see no reason why switching points from one of those points of view to the other is ever "incorrect" just because of that. In my estimation, we just need to try both of them out and then see what happens."
OK However, Hayek claimed Mises was wrong in asserting study of the market is a priori, just as Rothbard claimed that praxeology is inappropriate for the study of the ethical side of human activity (interpersonal relations, social relations, politics, etc.). My main point was to demonstrate that by Hayek's own reasoning, we can draw analytical conclusions with respect to all social phenomena, not just the limited number he mentions in his essay (food, money, words, etc.). Hayek was wrong in claiming Mises was wrong. Hayek gets mileage out of his claim that he has shown where Mises went wrong:
"Mises never could free himself from that fundamental philosophy, in which we have all grown up, that reason can do everything better than mere habits. From this he could never loose himself." (Hayek on Hayek, p.73)
This is basically an obituary. Hayek is saying that since the logic of action is severly limited in its application (limited to concepts such as food, money, and words), we need to go beyond Mises' outdated beliefs in order to study the interesting social phenomena of markets, law, language, property, etc...
But this notion is based on Hayek missing the implications of his own ideas. I don't think Hayek realized the mistake he was making. Because of his mistake, he seems to have believed that Mises' approach was a kind of relic of the past.
This point is important enough. But it is also important to realize that if Hayek is basing is concept of empirical study on an objective conception of the market (a conception of the market based on its "real properties", or a conception of the market as "a thing in itself" as opposed to something that derives from or is a function of the attitudes of the actors concerned) then this calls the entire notion of empirical market study into question. Because Hayek has clearly argued that social objects cannot be defined in terms of their "real" properties or their physical attributes, and he has argued that social objects can only be defined in terms of the opinions, intentions, attitudes, etc., of the acting persons.
This means that we can only find the market (as a social object) in the opinions and attitudes of the persons concerned. Is this what Hayek has in mind in his notion of empirical market study?
"Economics is not about things and tangible material objects; it is about men, their meanings and actions. Goods, commodities, and wealth and all the other notions of conduct are not elements of nature; they are elements of human meaning and conduct. He who wants to deal with them must not look at the external world; he must search for them in the meaning of acting man." (HA, 3rd. Rev. ed. p.92)
*********************
"...what justified [Mises'] serious attacks against other thinkers posing the other method?"
I think it was the insight Mises had that ultimately we will not succeed if we look for economic phenomena in the empirical world as opposed to in the meaning of acting man.
"So, in light of that, I do not think that it makes sense to just say "Hayek was wrong about describing markets being not a priori". I think that it makes more sense to just point out that he changed his point of view and that his assertion that Mises was wrong, indeed, his assertion that he and Mises were in a fundamental disagreement, was wrong, and that, instead, they were just seeing things from two different points of view."
Here I think it is important to note that Hayek mis-applied his own principles. He is arguing that social phenomena cannot be defined in physical terms, or in terms of their "real" properties, but must be defined in terms of the opinions and attitudes of the actors concerned.
"...all these objects are defined not in terms of their "real" properties but in terms of the opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are." ("The Facts of the Social Sciences")
This notion is in conflict with the notion of empirical market study. There is a huge problem for Hayek here. I don't think people realize the full extent of Hayek's predicament.
******
Regarding the Hoppe method, are there any written versions? Maybe you can start a thread on this idea.
"I am still trying to figure out how to answer your challenges of how to define 'internal world' and 'external world' in a non-circular way; but, either way, I am pretty confident that it is an important division."
I will continue to argue that trying to base social science on the internal/external distinction is a mistake. To the extent Mises was successful, he was successful because he avoided conceiving things this way, and instead conceived things in terms of the state an actor is confronted with, and its relation to the actor's desire for a different state:
"Action results from the fact that the individual "actor" believes that there are other states of being preferable to the one in which he is at present, and from this belief that he may take certain steps which will bring him to a more satisfactory state."
(that quote is from Rothbard circa 1950 while I assume he was a student of Mises. Article: "Praxeology: Reply to Mr. Schuller")
"Action is the search for improvement of conditions from the point of view of the personal value judgments of the individual concerned....Man's aim is to substitute what he considers a better state of affairs for a less satisfactory one. He strives for the substitution of a more satisfactory state of affairs in place of a less satisfactory state of affairs. And in the satisfaction of this desire, he becomes happier than he was before."(The Free Market and its Enemies, p.14)
These defintions and characterizations of human action do not refer to physical attributes (internal, external, physical bodies moving in phyiscal reality, etc...). In general, they do not refer to content. The defintions refer to a state the actor is confronted with, and the actor's desire for a different state.
This view of things is the same thing Hayek is arguing for in his essay "The Facts of the Social Sciences." The fundamental concepts of social science are not those of location or spatial relation. The fundamental concepts of social science are something like "presence" and "desire." They make no reference to position, location, etc.
Faustus:
My understanding of Hayek's general argument would be this:
If a market is something differentiable from other things, then how is a market distinguished or differentiated from other things?
I understand Hayek to argue that, as a social object or social concept, a market cannot be defined in terms of its physical attributes or "real" properties. These are the terms he uses.
What is a "market" about the local farmer's market, is not to be found in the physical characteristics, but in the opinions of the person(s) concerned.
Paraphasing Hayek:
"A market is a market if and because somebody thinks it is."
If this is not a correct understanding or application of Hayek's ideas (if Hayek's argument does not apply to markets), then I assume we will be maintaining that some things are social objects only because someone thinks they are, but there are other social objects which "really are" what a person thinks they are. These other things have a "real" or "empirical" existence not dependent on the attitude of the actor(s) concerned.
What we are saying is that there are some social phenomena (markets, law, language, property) that have "objective" qualities such that they can be defined "objectively," and without reference to the opinions of the person(s) concerned.
I.e., there are some social objects, concepts, processes, phenomena, whatever....., to which Hayek's argument in "The Facts of the Social Sciences" does not apply.
Then, these objects are differentiable and definable by attributes other than the opinions and attitudes of the actor(s) concerned.
If this is the case, then those who disagree that Hayek's argument applies to all social phenomena should be able to provide a method of distinguishing or defining these other objects other than by reference to the actors concerned.
What are the physical attributes of a market by which we recognize something as a market and not something else?
Giles:
"The actions of [other] individuals are a priori because to the extent that we wish to understand them, we can only do so by making reference to means, ends, intentionality and other such concepts knowledge of which we have derived from knowledge of our own mind."
Yes, this is consistent with what Hayek is arguing.
"Indeed, insofar as we are able to communicate and understand other human actors, we can do so precisely because they, for evolutionary reasons, have a mind that works in the same way as ours."
No, this it not at all what Hayek is arguing. He is not talking about evolution or about the way another person's mind works. It would be more consistent with what Hayek argues to say that we are able to communicate and understand other human actors because anything we interpret as a communication from another actor we interpret through the categories of our own mind. Your alternative notion is totally foreign to what Hayek is arguing.
"Your argument would imply that we should seek to explain animal behaviour in terms of means and ends simply because "[there] exists for distinguishing those attitudes of an actor from which we can draw analytical conclusions, from those attitudes of an actor from which we cannot draw analytical conclusions"
I don't understand your point.
"The market is.....a collection of actors" "the market is a spontaneous order"
I don't think you have a determinate and nonambiguous definition of what a market is.
"...the job of the social scientist is not to elaborate useless tautologies about human action but to explain how this spontaneous order emerges (e.g. relative price signals guiding market actors) and why some spontaneous orders take certain paths and others take others (e.g. North's work on economic history)...."
OK I'm going to stop doing what I previously believed was social science, and begin doing what you believe is social science.
“I understand Hayek to argue that, as a social object or social concept, a market cannot be defined in terms of its physical attributes or "real" properties. These are the terms he uses”
Yes quite right, a market is purely formal in nature.
“What is a "market" about the local farmer's market, is not to be found in the physical characteristics, but in the opinions of the person(s) concerned”.
Farmers market?? No. A farmers market is not a market in the economic sense. We must treat the physical events of the farmers market or supermarket or ebay or whatever from the abstract nature of a ‘market’.
When people think of a farmers market they think of a bunch of stall holders in a given area selling there wares. A ‘market’ is purely formal or abstract in nature. The two are distinct. It is obfuscation to confuse the terms.
So when a person comes across a farmers market he is fact coming across a group of farmers/stallholders not our abstract market. That group of stallholders is a market in the colloquial sense because he thinks he can go and buy stuff from the people gathered. If he made a mistake and thought it was something else, then in his mind and for his purposes that thing is not a market. For everyone else who is not mistaken it still is a place they can buy stuff and will be treated as such by them.
“The main reason is that such orders as
that of the market do not obtrude themselves on our senses but
have to be traced by our intellect. We cannot see, or otherwise
intuitively perceive, this order of meaningful actions, but are only
able mentally to reconstruct it by tracing the relations that exist
between the elements. We shall describe this feature by saying that
it is an abstract and not a concrete order”(Law Legislation and Liberty, vol-1 p38)
In Hayek’s example of the Hammer, Hayek states that what makes a hammer(p27 The Counter Revolution of Science) is that it fits into the class of a hammer, that is that it is the intention, or suitableness of an object for a particular purpose that puts it in that class in peoples minds. A market has no purpose. It is a spontaneous order. Spontaneous orders are the result of human action but not human design. It is created by many individual purposes forming consistent orderly regularities. This is what is meant by its formal nature.
So a market can never be an object of human intention because no man can wield it to any particular purpose. It is just not that kind of thing.
It seems to me that this is your mistake. Confusing a concrete for an abstract order. A mistake that Hayek called the constructivist fallacy.
Faustus: So a market can never be an object of human intention because no man can wield it to any particular purpose. It is just not that kind of thing.
Read this, especially the boldfaced lines:
Ludwig von Mises: The essential teachings of utilitarian philosophy as applied to the problems of society can be restated as follows: Human effort exerted under the principle of the division of labor in social cooperation achieves, other things remaining equal, a greater output per unit of input than the isolated efforts of solitary individuals. Man's reason is capable of recognizing this fact and of adapting his conduct accordingly. Thus social cooperation becomes for almost every man the great means for the attainment of all ends. An eminently human common interest, the preservation and intensification of social bonds, is substituted for pitiless biological competition, the significant mark of animal and plant life. Man becomes a social being. He is no longer forced by the inevitable laws of nature to look upon all other specimens of his animal species as deadly foes. Other people become his fellows. For animals the generation of every new member of the species means the appearance of a new rival in the struggle for life. For man, until the optimum size of population is reached, it means rather an improvement than a deterioration in his quest for material well-being. [...] As social cooperation is for acting man a means and not an end, no unanimity with regard to value judgments is required to make it work. It is a fact that almost all men agree in aiming at certain ends, at those pleasures which ivory-tower moralists disdain as base and shabby. But it is no less a fact that even the most sublime ends cannot be sought by people who have not first satisfied the wants of their animal body. The loftiest exploits of philosophy, art, and literature would never have been performed by men living outside of society.
The essential teachings of utilitarian philosophy as applied to the problems of society can be restated as follows: Human effort exerted under the principle of the division of labor in social cooperation achieves, other things remaining equal, a greater output per unit of input than the isolated efforts of solitary individuals. Man's reason is capable of recognizing this fact and of adapting his conduct accordingly. Thus social cooperation becomes for almost every man the great means for the attainment of all ends. An eminently human common interest, the preservation and intensification of social bonds, is substituted for pitiless biological competition, the significant mark of animal and plant life. Man becomes a social being. He is no longer forced by the inevitable laws of nature to look upon all other specimens of his animal species as deadly foes. Other people become his fellows. For animals the generation of every new member of the species means the appearance of a new rival in the struggle for life. For man, until the optimum size of population is reached, it means rather an improvement than a deterioration in his quest for material well-being. [...] As social cooperation is for acting man a means and not an end, no unanimity with regard to value judgments is required to make it work. It is a fact that almost all men agree in aiming at certain ends, at those pleasures which ivory-tower moralists disdain as base and shabby. But it is no less a fact that even the most sublime ends cannot be sought by people who have not first satisfied the wants of their animal body. The loftiest exploits of philosophy, art, and literature would never have been performed by men living outside of society.
Was he incorrect there?
Faustus: Farmers market?? No. A farmers market is not a market in the economic sense.
Farmers market?? No. A farmers market is not a market in the economic sense.
Then how do we apply what we know from economics to "the real world"?
Faustus: In Hayek’s example of the Hammer, Hayek states that what makes a hammer(p27 The Counter Revolution of Science) is that it fits into the class of a hammer, that is that it is the intention, or suitableness of an object for a particular purpose that puts it in that class in peoples minds. A market has no purpose. It is a spontaneous order. Spontaneous orders are the result of human action but not human design.
In Hayek’s example of the Hammer, Hayek states that what makes a hammer(p27 The Counter Revolution of Science) is that it fits into the class of a hammer, that is that it is the intention, or suitableness of an object for a particular purpose that puts it in that class in peoples minds. A market has no purpose. It is a spontaneous order. Spontaneous orders are the result of human action but not human design.
How would the hammer be considered suitable for a certain purpose without being considered so prior to its classification?
The distinction between human action and design has always seemed specious to me. Individuals are purposeful actors and a market exists only at the point of voluntary exchange between those actors. It would seem therefore that it is designed by the consenting actors.
The atoms tell the atoms so, for I never was or will but atoms forevermore be.
Yours sincerely,
Physiocrat
Physiocrat: The distinction between human action and design has always seemed specious to me. Individuals are purposeful actors and a market exists only at the point of voluntary exchange between those actors. It would seem therefore that it is designed by the consenting actors.
Yes, the only distinction is that between centralized design and decentralized design.
I. Ryan: Yes, the only distinction is that between centralized design and decentralized design.
It depends what you mean. Supposing that one man legitimately owned the entire earth then his decisions would be centrailsed yet pareto optimal. Whereas you could have mini states where one man lords it over a village, there would be more decentralised design than previously yet thus would not be pareto optimal and suffer from the inherent problems of monopoly. Thus the most meaningful distinction is one of competitive versus monopolistic design.
I think it is just semantics about the word design. Hayek was keen to make the distinction between spontaneous and made orders. A made order is specifically created with a goal, end, or purpose. Hayek uses the word design for this. In opposition to a spontaneously generated organisation. If you want to call the market ‘designed’ by is many actors you can. But personally I would not. Design generally carries the connotation of a controlling mind which is not present in spontaneous generations and could cause unnecessarily confusion.
“How would the hammer be considered suitable for a certain purpose without being considered so prior to its classification?”
I am not quite sure what you are getting at. This is the section of text I took the example from. You might find your answer here
“But we not only know this. It would be impossible to explain or
understand human action without making use of this knowledge.
People do behave in the same manner towards things, not because
these things are identical in a physical sense, but because they have
learnt to classify them as belonging to the same group, because they
can put them to the same use or expect from them what to the people
concerned is an equivalent effect”
“This is best shown by an example for which we can choose almost
any object of human action. Take the concept of a "tool" or "instrument,"
or of any particular tool such as a hammer or a barometer.
It is easily seen that these concepts cannot be interpreted to refer to
"objective facts," i.e., to things irrespective of what people think
about them. Careful logical analysis of these concepts will show that
they all express relationships between several (at least three) terms,
of which one is the acting or thinking person, the other some desired
or imagined effect, and the third a thing in the ordinary sense. If the
reader will attempt a definition he will soon find that he cannot give
one without using some terms such as "suitable for" or "intended
for" or some other expression referring to the use for which it is designed
by somebody.20 And a definition which is to comprise all instances
of the class will not contain any reference to its substance, or
shape, or other physical attribute. An ordinary hammer and a steamhammer,
or an aneroid barometer and a mercury barometer, have
nothing in common except the purpose 21 for which men think they
can be used.” (The counter revolution of science p26-27)
"Then how do we apply what we know from economics to "the real world"?"
All that is meant to mean is that the physical marketplace with its people and stalls and sign saying FARMERS MARKET is not as an entity the ‘market’.
I am not saying that market processes are not taking place within it.
The market is an abstraction we should not equate with concrete things we can identify with.
Other than that I am not sure what you mean.
"Was he incorrect there?"
I do not think Mises was not wrong at all.
Mises is saying that cooperating with other people helps facilitate the attainment of their goals. And is not an end in itself. All fine and dandy.
Social cooperation however is not the same as the abstract concept of the market. Social cooperation is what creates this abstract order. The abstract order itself is not a means to any given end. Even though it is created out of specific examples of people pursuing their ends through cooperation.
I think that you are misunderstanding what Knott is saying. But I will leave it up to him to explain how.
Hayek is arguing that what makes a hammer a hammer, a lever a lever, a pendulum a pendulum, in the social sciences, is not the physical properties of those items, but the opinion or attitude of the actor toward those things.
All of these social things---what Hayek refers to as common objects of the social sciences--- (hammers, levers, pendulums) have perceptual or physical referents. We can see or perceive the objects in question. But it is not these physical aspects that make them the social things they are. They are hammers, levers, and pendulums, as Hayek writes, if and because someone thinks they are.
Hayek then argues that when an actor holds a concept of what is before him, this concept entails implications that analysis can expound. I.e., one concept includes the idea of striking something, one concept includes the idea of lifting something, and one concept includes the idea of (let's say) regulating or timing something.
This view of things is The Pure Logic of Choice, and is clearly outlined in "The Facts of the Social Sciences."
Based on the concept of the object as the actor views things, we can analytically conclude further things, and these further things are necessary truths, since they are simply tautological transformations from the original concept of the object.
This notion could possibly be applied to the concept of 'market' in something like the following way:
What makes a collection of people or an assemblage of people a 'market' is, as with the hammer, not the physical characteristics of this collection or assemblage. Rather, what makes a collection of assemblage of people a market is the attitude or opinion of the person toward this assemblage. Paraphrasing Hayek, just as with money, words, and cosmetics, a market is a market if and because someone thinks it is.
What makes a farmer's market, a supermarket, or E-bay,... markets, is not the physical characteristics of those things as I can perceive them or study them physically, but rather the attitude I take toward those things (the things being: an assemblage of people, a building with windows and signs, a computer screen in front of me, etc.). These things are markets to me because of the attitude I take toward them, not because of their physical characteristics.
This is Hayek's argument were it to be applied to markets, as opposed to hammers, levers, pendulums, words, money, etc....
From this then, it would follow, according to Hayek's argument, that when an actor takes an attitude toward a thing, the concept of this thing includes other things that analysis can uncover. To paraphase Hayek, when we say that a person is going to a market, or is selling something at a market, or is regulating a market, we imply that he knows that things can be exchanged there, that other actors will be there, that actors will be valuing things there, and perhaps many other things.....
This is The Pure Logic of Choice were it to be applied to the concept of 'market' as opposed to the concepts 'food,' or 'money,' or 'word,' (the one's Hayek specifically uses in his essay).
My argument is that Hayek didn't realize that the Pure Logic of Choice would apply to the social object which is the 'market' just as it applies to other social objects such as money, words, hammers, etc.
The Pure Logic of Choice is an a priori discipline, and thus if the Pure Logic of Choice can be applied to the market as indicated, and Hayek didn't realize this, then when he claimed that market theory is empirical and not a priori, this claim may have been based on his not realizing the full scope of the Pure Logic of Choice.
*****
What you seem to be arguing is that the 'market' has no perceptual or physical referent. Your argument seems to be that the view of things I've outlined above is invalid, because, unlike hammers, words, money, or food, 'markets' have no physical or perceptual referents.
You write:
"a market is purely formal in nature"
"we must treat [a market] from the abstract nature of a 'market'"
"A 'market' is purely formal or abstract in nature."
"a market can never be an object of human intention"
"confusing a concrete for an abstract order"
In that case, I would like to ask you about this passage from Hayek:
"...my 1937 article on the economics of knowledge, which was an attempt to persuade Mises himself that when he asserted that the market theory was a priori, he was wrong; that what was a apriori was only the logic of individual action, but the moment that you passed from this to the interaction of many people, you entered into the empirical field." (Hayek on Hayek, p.72, emphasis added)
How do you reconcile your concept of the market and of market order as purely abstract, with Hayek's claim that we can only study the market empirically ?
What is a business cycle?
Money arose not because of any decree or edict, but because numerous entrepreneurial actors sought to better themselves by playing their part in the various parts of the story told by Carl Menger and economists since. The result is the institution of money, an institution that nobody designed or could have foreseen but was nonetheless the result of millions of dispersed actions coordinated by the price system.
Anybody who disagrees with Giles must take a class on economics.
Recently their was a post made by some moderator about snide comments. Pretty sure this post qualifies as just that.
No, this it not at all what Hayek is arguing. He is not talking about evolution or about the way another person's mind works. It would be more consistent with what Hayek argues to say that we are able to communicate and understand other human actors because anything we interpret as a communication from another actor we interpret through the categories of our own mind. Your alternative notion is totally foreign to what Hayek is arguing
In The Counterrevolution of Science Hayek explicitly ascribes our capacity to understand one another to a common evolutionary origin. As, I believe, Mises does in Socialism. I'm not sure how what we said was so different, except for the fact that I postulated some evolutionary reason for the fact that humans share a common structure of the mind. Indeed, according to Hayek an observer from another planet might just be able to write history that is in line with the positivist ideal.
Snarky comments don't take us away from the fact that a set of tautologies are just that, tautologies that without some sort of empirical work really don't help us to understand the empirical world at all.
A few more important points about the implications of Hayek’s essay “The Facts of the Social Sciences.”
For the benefit of those who may not have read Hayek's essay, I will first highlight some important passages.
Hayek writes:
"Take such things as tools, food, medicine, weapons, words, sentences, communications, and acts of production---or any one particular instance of any of these.....It is easily seen that all these concepts (and the same is true of more concrete instances) refer not to some objective properties possessed by the things, or which the observer can find out about them, but to views which some other person holds about the things. These objects cannot even be defined in physical terms, because there is no single physical property which any one member of a class must possess. These concepts are also not merely abstractions of the kind we use in all physical sciences; they abstract from all the physical properties of the things themselves. They are all instances of what are sometimes called "teleological concepts," that is, they can be defined only by indicating relations between three terms: a purpose, somebody who holds that purpose, and an object which that person thinks to be a suitable means for that purpose. If we wish, we could say that all these objects are defined not in terms of their "real" properties but in terms of opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are."
So here, Hayek is revealing the subjective nature of social phenomena. He is arguing that social objects are not social objects because of their physical or "objective" qualities, but because of the view of an acting subject toward the object in question.
(Note: by the term “social object” is meant an object of the social sciences or the science of human action. This would include descriptive psychology. Hayek writes: “Take such things as tools, food, medicine, weapons, words, sentences, communications, and acts of production—or any one particular instance of any of these. I believe these to be fair samples of the kind of objects of human activity which constantly occur in the social sciences.”)
Next, Hayek makes another important point having to do with the Pure Logic of Choice:
"From the fact that whenever we interpret human action as in any sense purposive or meaningful, whether we do so in ordinary life or for the purposes of the social sciences, we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons, there follow some very important consequences; namely, nothing less than that we can, from the concepts of the objects analytically conclude something about what the actions will be. If we define an object in terms of a person's attitude toward it, it follows, of course, that the definition of the object implies a statement about the attitude of the person toward the thing. When we say that a person possesses food or money, or that he utters a word, we imply that he knows that the first can be eaten, that the second can be used to buy something with, and that the third can be understood---and perhaps many other things."
It is important to realize that Hayek argues for the subjective nature of social objects. He does not provide a method for ascertaining whether a particular object "really is" a tool, money, a word, etc... He is arguing that it is impossible to define social objects in terms of their "real" or "objective" (i.e., physical) properties.
This means that social objects, as social objects, exist as the opinions, attitudes, or intentions of the acting person(s) concerned. That is, the social aspect of the object in question—that aspect of things we study in the social sciences—is the attitude of the actor toward the thing in question, not the thing as an independent object (the subject matter of natural science). Independent of the attitudes of actors there are no social objects. That is the implication of what Hayek argues.
The social object is a function of the opinion, attitude, or intention of the individual actor. This is just another way of saying that the social object is a function of the action of the individual actor. Terms such as "opinion," "attitude," "intention," etc., refer to aspects or categories of human action.
Having established the subjective nature of social objects, Hayek argues that once an actor (a subject) views the object present to him in a certain way, we can derive analytical conclusions from this fact.
The two important points are that:
1. The social object is a relation of an object to an individual subject.
2. From the concept an individual has of the object present to him, analysis can yield further conclusions by expounding the implications of the concept in question.
If we apply Hayek’s argument to a common social object such as a written or communicated price, this has implications which Hayek and his followers may not have realized.
By Hayek's argument, a written or communicated price, as an "object of human activity which constantly occurs in the social sciences," cannot be defined in terms of its physical properties. A price exists, and is a function of, an individual actor's opinion or attitude toward the thing present to him (an uttered sound, a black figure on white paper, etc...) What is a "price" does not exist "objectively," but exists as the opinion of the actor(s) concerned.
Further, based on the concept of the object, analysis can yield further conclusions. For example, paraphrasing Hayek, "When we say that a person displays a price, we imply that he intends to make an exchange, that he believes another actor will be party to this exchange, that the exchange can be effected in terms of a numerical ratio—and perhaps many other things....
This is Hayek's Pure Logic of Choice applied to the object which is a written or communicated price, instead of the more mundane objects Hayek uses as illustrative examples. One assumes the same principles Hayek enunciates apply to a written or communicated price as apply to a tool, food, medicine, weapons, words, sentences, communications, and acts of production.
Thus, the first point is that the Pure Logic of Choice applies to a wider range of objects than Hayek seems to have realized, and a “price” is a social object subject to Hayek’s principles. We can, if Hayek’s argument is valid, from the concept “price,” draw further analytical conclusions.
The second point is this:
In the essay in question, Hayek employs descriptions both from the first person and the third person perspective. Sometimes he conceives of things from the point of view of a scientific observer studying the action of another person. And from this third person point of view he conceives, for example, that:
"When another person (an observed person) holds X concept about a thing, we, the observers, can analytically conclude Y from concept X which the observed person holds."
But we have to realize that the same principle applies to thefirst person description, and thus:
"When I hold X concept about a thing, this implies Y which can be analytically deduced from my holding concept X."
This distinction is important, because we can see that if a scientific observer intends to conduct a study of prices, every instance of his apprehending a price will, as a matter of principle, have the same kind of analytic or logical entailments described by Hayek. The scientific observer of any social object is subject to the same principles that Hayek describes. These principles do not apply only to observed actors. The scientific observer, as an actor, does not “transcend” the aspects of human action that he claims are valid for the actors he studies.
Thus, when the scientific observer conducts his study of prices, if Hayek’s argument is valid, we have to remember that the price the scientific observer refers to, is not only a subjective phenomenon for the observed actor, but also for the observing scientist. In short, a price is a price if and because the social scientist believes it is a price. Hayek makes this point clearly.
Second, when what is present to the social scientist is a price, then according to Hayek’s theory, analytical or logical entailments are involved in the concept of the object held by the social scientist. In this sense then, the study of prices could be conducted as part of an a priori discipline. The social scientist, as an actor, is privy to the logical entailments of all social concepts, and it is these logical entailments that are the subject matter of Menger’s theoretical exact science, Mises’ praxeology, and Hayek’s Pure Logic of Choice.
This is the meaning of what Mises writes regarding the procedure of economics:
“The scope of praxeology is the explication of the category of human action. All that is needed for the deduction of all praxeological theorems is knowledge of the essence of human action.”
(Human Action, 3rd Rev. Ed. p.64)
For those interested in the issue of Mises versus Hayek on a priorism and the market, here is a one page summary of the argument I've been making since Spring.
***
"Mises never could free himself from that fundamental philosophy, in which we have all grown up, that reason can do everything better than mere habits. From this he could never loose himself."
I am not as well read in Hayeks methodological philosophy as most of the participants, but allow me my two cents. It seems that this little sentence is much overlooked. I believe Hayeks point can be considered partially behavioral, though not in the explicitly modern sense. He was arguing that habit had a large effect on peoples actions, their choices and decisions. This habit could not be understood a priori. For example, in Japan, there is a specific method of exchanging business cards. This custom cannot be explained a priori, but instead must involve empricisim.
I agree that Hayek contradicts himself in his attempt to differentiate his empiricism and a priorism, and I would agree that there is not a fine line distinguishing where to apply each, for example, Rothbard uses general empirical evidence to give credence to ACBT. He argues that what characterizes recessions are sudden high unemployment, and capital prices falling quicker than other prices, and puts forward these two criterion that any recession theory must satisfy. However, given Hayeks philosophy on spontaneous order and customery law, I believe my interpretation is more in line with his general philosophy.
HurplePazed:
Thank you for your comments.
Here is a brief passage that appears before the one you quote, on page 72 of Hayek on Hayek:
"Capitalism presumes that apart from our rational insight we possess a traditional endowment of moral, which has been tested by evolution but not designed by our intelligence. We have never invented private property because we understood these consequences, nor have we ever invented the family." (bold and italics added)
So here, the two social objects mentioned by Hayek as he levels his critique of Mises are private property and the family.
Hayek has already clearly established that with respect to social objects, we cannot define them in terms of their physical properties or attributes, but must define them in terms of the intentions, opinions, or attitudes of the people concerned:
"If we wish, we could say that all these objects are defined not in terms of their "real" properties but in terms of the opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are."
"What I am arguing is that no physical properties can enter into the explicit definition of any of these classes..."
"The common attributes which the elements of any of these classes possess are not physical attributes but must be something else."
"...we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons." (all quotes from "The Facts of the Social Sciences")
Hayek's point is straightforward. We must define social objects in terms of the intentions of the acting persons. And without an articulated principle that distinguishes between those social objects to which this principle applies, and those social objects to which this principle does not apply, we must interpret Hayek to mean that this principle applies to all social objects, not merely an arbitrarily limited number of social objects. And thus we must assume that this principle applies to the social objects which are "private property" and "the family."
Then, according to Hayek:
"From the fact that whenever we interpret human action as in any sense purposive or meaningful....we have to define both the objects of human activity and the different kinds of actions themselves, not in physical terms but in terms of the opinions or intentions of the acting persons, there follow some very important consequences; namely, nothing less than that we can, from the concepts of the objects analytically conclude something about what the actions will be. If we define an object in terms of a person's attitude toward it, it follows, of course, that the definition of the object implies a statement about the attitude of the person toward the thing. When we say that a person possesses food, or money, or that he utters a word, we imply that he knows that the first can be eaten, that the second can be used to buy something with, and that the third can be understood---and perhaps many other things." ("The Facts of the Social Sciences")
Here, Hayek is elaborating his conception of the Pure Logic of Choice (what Mises calls praxeology, and Menger calls theoretical exact science).
The Pure Logic of Choice is "the system of tautologies---those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start" ("Economics and Knowledge")
In the Pure Logic of Choice, we take as our data "those facts, and only those facts, which [are] present in the mind of the acting person, and only this subjective interpretation of the term "datum" [makes] those propositions necessary truths." These data (the intentions, opinions, or attitudes of the acting persons) "[form] the starting point for the tautological transformations of the Pure Logic of Choice." ("Economics and Knowledge)
Thus, we can see clearly Hayek's conception of the Pure Logic of Choice. Social objects cannot be defined with respect to their physical attributes, but are to be defined in terms of the intentions of the acting persons. From the concept of the object thus defined, we can analytically conclude something else. The concept of the object (A), taken together with that which it implies and which we deduce by tautological transformation (B), constitutes the "necessary truth" (Hayek), "a priori proposition" (Mises), and "exact law" (Menger).
By the terms of what Hayek has established, we must assume that this view of things applies to the social objects which are "private property" and "the family," and not only to the social objects which are "food," "money," or "a word." (we must assume this until or unless we have a principle for distinguishing those social objects to which Hayek's principles do not apply)
As Hayek levels his critique of Mises, implying that Mises holds a quaint and antiquated conception of social theory, he fails to realize that the social objects he refers to as proof that Mises is wrong, are themselves objects subject to the principles he clearly enunciates in "The Facts of the Social Sciences." Moreover, these principles will apply to the social objects which are "prices" and "markets," two objects of study that Hayek claims are only accessible to empirical study.
What Hayek has failed to realize is that if social objects cannot be defined in physical terms, and can only be defined in terms of the intentions or opinions of the acting persons, that this principle applies to all acting beings, including the observing scientist himself. The social scientist is not privy to secret information about the "real" or "physical properties" of the social objects in question. The social objects in question, by Hayek's principle, are to be defined in terms of the intentions, opinions, or attitudes of the actor or the social scientist. Hayek provides no method for ascertaining the "real properties" or "physical attributes" of social objects, which the social scientist is privy to, and which other actors are not.
From the concept of the social object thus defined (the concept of the object held by the social scientist, or any other actor), we can analytically conclude something else. By Hayek's own principles then, there must be analytical implications "present" to any and all social objects "intended," "conceived," or "defined" by the actor. And this applies to actors that are social scientists. That is, for any given social object present to an actor, there will be analytical co-presences also "present" (at least by implication). There must be, by Hayek's own principles, an implied "B" to any conceived social object "A".
And thus, there must be a certain "order" to any and all social objects present to the actor, whether the actor is a scientist or not.
The "order" derives from the fact, as explained and demonstrated by Hayek, that social objects, defined in terms of the intentions or opinions of the actor, have analytical co-presences. Thus, all social objects conform to "spontaneous order" in the sense that all social objects appear with "spontaneous analytical co-presences" that we can learn about by analysis.
When Hayek criticizes Mises's views as antiquated, and refers to spontaneous social phenomenon such as the market, the family, and private property, he seems to imply that those objects are somehow "empirically given" to us as physically obvious objects. He implies that we can recognize or define these things objectively, and apparently in terms of their "real" properties.
He seems to overlook the principle he previously established that "Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are." And thus, when he turns to critique Mises, he does so from a point of view in which the conception of the social objects he refers to (markets, family, private property, etc.) has been subtly changed----from something that is a function of the intentions or opinions of the acting persons, to something that is physically and objectively given for our empirical study.
He overlooks the implications of his own ideas; that the spontaneous order which he conceives to arise in such social objects as the family, the market, and private property, may not be a real property or physical attribute of these things, but instead may be a function of the analytical implications of the intentions, opinions, or attitudes of the actors concerned.
He overlooks the possibility that what he considers spontaneous order may be more consistently conceived as the conformance to praxeological law of all social phenomena appearing to or for the individual actor.
"He was arguing that habit had a large effect on peoples actions, their choices and decisions. This habit could not be understood a priori. For example, in Japan, there is a specific method of exchanging business cards. This custom cannot be explained a priori, but instead must involve empiricism."
Assuming what I'm arguing above, any habit, to the extent this is a social object, phenomenon, or process, is to be defined (per Hayek), not in terms of its "real" or physical properties or attributes, but in terms of the intentions, opinions, or attitudes of the acting persons.
It will follow then, by Hayek's reasoning, that from the concept of the object (habit) we can analytically conclude something. This will constitute an a priori understanding of the object in question.
Paraphrasing Hayek in "The Facts of the Social Sciences":
When we say that a person performs a habit, we imply that he has done this activity before, or that he will do it again, etc...
This is the point I'm trying to get across. Hayek's principles apply to all social objects, not just the circumscribed and limited number of social objects that Hayek uses as examples in his essay (food, money, words, etc.). His principle applies to all social objects qua social objects. This means his priniciples apply to social objects such as prices, markets, habits, families, and private property. These are all objects of the social sciences.
If a habit is an object of the social sciences, which we are saying it is, then Hayek's principles apply.
If we're saying that there are some social objects to which Hayek's principles do not apply, then we have to provide a method of distinguishing between two classes of social objects: those to which Hayek's principles apply, and those to which Hayek's principles do not apply.