The relation between Karl Popper and the Austrian School of Economics is not often stressed – more specifically, the relation between Popper and the Austrian School’s greatest representative in the 20th century, Friedrich Hayek. Although the two Vienna-born thinkers would first meet each other in 1935 at the London School of Economics, their common political stances and public commentaries were just the final product of a philosophical-methodological project, one that surprisingly and unconsciously coincided, even before their first meeting.
A Common Enemy and Common Results
In order to really understand Hayek and Popper’s interaction, we must look at one of the most influential groups of 20th-century philosophy: the Vienna Circle. Their main goal was to “reconceptualize empiricism by means of their interpretation of the recent advances in the physical and formal sciences”. In a nutshell, this meant the adoption of a rather crude criterion of significance – verificationism – according to which our statements could only be either tautologies – that is, self-evident truths such as “every bachelor is unmarried” – or synthetic propositions – that is, empirically verifiable.
Popper noticed a fatal flaw in this reasoning. A statement would be scientific – and meaningful – only if it was empirically verifiable but, as Popper notes, science depends on universal statements. This poses a problem to the positivist “verificationism” because while universal statements cannot be derived from singular statements, they can be contradicted by singular statements. For example, one can observe millions of white swans but finding a single black swan will be enough to disprove the statement “all swans are white”. It doesn’t matter how much empirical data we gather; a single instance of a disproving statement is enough to destroy a universal proposition. So, if we are to have a cogent theory of science, it can’t be justified in terms of induction, but rather through falsification by potential negative instances. Instead of trying to find more and more white swans to confirm the statement that “all swans are white”, the scientist should instead look for the black swan that would falsify his theory. Thus, scientific theories are never the final full-fleshed truth: they must be open to reconsideration and falsification.
Curiously, Hayek was a pupil of one of the fiercest opponents of the Vienna Circle: Ludwig von Mises. According to Mises, the great problem of positivistic approaches to knowledge is their overconfidence in what the empirical method can offer us. Discrete data sets can never give us the full picture of reality, no matter how complex or organized. Even if this works in fields such as physics, it quickly falls to pieces when trying to understand human realities. The static mathematical and statistical picture of reality cannot assimilate the dynamic complexities of the real world.
This is something that Hayek had stressed from his first essay, “Monetary Theory and the Trade Cycle,” where he demonstrates the limitations of empirical and statistic tests when applied to economic theory: “It is therefore only in a negative sense that it is possible to verify theory by statistics. Either statistics can demonstrate that there are phenomena that the theory does not sufficiently explain, or it is unable to discover such phenomena. It cannot be expected to confirm the theory in a positive sense. The possibility is completely ruled out by what has been said above since it would presuppose an assertion of necessary interconnections, such as statistics cannot make.”
This passage deeply resonates with Popper’s argument. Experiments can’t positively confirm scientific theories and it would be foolish to expect the empirical method to grant us any form of final truth. What the empirical method can grant us is something much humbler than any kind of certainty: it is the ability to understand and test the real problems of our theories. Hayek and Popper’s view of science is, in fact, a lesson in humility, a continuous stressing of the limits of knowledge and truth, a bridle to the rationalistic phantasies of their time.
The Hayekian Lesson
So, when both first met in 1935, mutual recognition was unavoidable. Both thinkers came to very similar conclusions from different backgrounds and without any prior contact. This is not to say, however, that both perfectly agreed on every topic.
For example, although a critic of the general positivist project of the Vienna Circle, Popper still retained some of their characteristics that Hayek vehemently rejected. One of them was “methodological monism”, the idea that all the sciences should follow the same methodology.
Hayek could not disagree more. One of the crucial lessons he learned from Mises was the irreducibility of human subjectivity, the impossibility of using scientific methodology to reduce the complexity of human action. But, on top of that, Hayek’s own discoveries led him away from any pretense of scientific unity.
It is usually said that to ask the right question is far more important than to receive the answer. In his seminal 1945 article, “The Use of Knowledge in Society”, Hayek asked a remarkably brilliant question: “[…] how can the combination of fragments of knowledge existing in different minds bring about results which, if they were to be brought about deliberately, would require a knowledge on the part of the directing mind which no single person can possess?”
This question set the research program that would direct the entirety of Hayek’s intellectual journey. And asking the right questions may indeed be more important than getting answers, but Hayek’s answer to it also doesn’t fall short of brilliance. According to Hayek, that “combination of fragments of knowledge existing in different minds” brings about spontaneous orders, that is, hyper-objects that are not the product of human design but nevertheless sprout from human action. The economy is a perfect example of a spontaneous order: it is indeed ordered, the groceries are in the market every day and prices adjust according to supply and demand, but there is no single mind commanding or directing it. And this applies to a variety of other areas. Languages, for example, are also spontaneous orders: they emerged from human interaction without any “Primordial Dictionary” guiding their development.
According to Hayek, spontaneous orders are the object of the social sciences. And given their nature, it is impossible to study them with the methodology of the “hard sciences”. One feature of spontaneous orders is their irreducible complexity, the incapacity to nail them down to a few controllable variables. Hayek believes that the increasing complexity of phenomena when we distance ourselves from the inanimate reality of physics or mathematics towards the more highly organized structures of the animate and social realm requires an entirely different methodological approach. And when we add to this the human factor, the uncertainty inherent in the purposes of human actions and their intentional content, things get even more convoluted.
Hayek gives us a perfect example of this methodological divide by drawing an analogy between the physicist and the social scientist:
“The physicist who wishes to understand the problems of the social sciences with the help of an analogy from his own field would have to imagine a world in which he knew by direct observation the inside of the atoms and had neither the possibility of making experiments with lumps of matter nor the opportunity to observe more than the interactions of a comparatively few atoms during a limited period. From his knowledge of the different kinds of atoms he could build up models of all the various ways in which they could combine into larger units and make these models more and more closely reproduce all the features of the few instances in which he was able to observe more complex phenomena. But the laws of the macrocosm which he could derive from his knowledge of the microcosm would always remain “deductive”; they would, because of his limited knowledge of the data of the complex situation, scarcely ever enable him to predict the precise outcome of a particular situation; and he could never confirm them by controlled experiment.”
So, for Hayek, any pretense of scientific unity is ill-founded. One just can’t apply the methods of the physical sciences to the social ones: their objects are different in nature, not just in degree. This is something that, according to Hayek, Popper misses in his analysis. He may be right in arguing that one can never prove a scientific theory by means of verification, but he doesn’t go far enough into the limits of science.
Curiously, Hayek’s continuous discussion and engagement with Popper led to a reconsideration of his thesis of methodological monism. In his later work, Popper says things such as “‘[…] the Newtonian method of explaining and predicting singular events by universal laws and initial conditions is hardly ever applicable in the theoretical social sciences. They operate almost always by the method of constructing typical situations or conditions – that is, by the method of constructing models (This is connected with the fact that in the social sciences there is, in Hayek’s terminology, less ‘explanation in detail’ and more ‘explanation in principle’ than in the physical sciences.)”. Also, in Hayekian fashion, Popper reconsiders the idea that it is possible to predict specific events in the context of social sciences. Because they are complex phenomena, it would be impossible to effectively reduce all the variables and perform an isolated experiment. Popper thus starts to use the term ‘model’ in contrast to the term ‘theory’, denoting an understanding of the peculiarities of spontaneous orders.
This Hayekian lesson brings Popper closer to the Austrians in asserting the limits of science and quantitative methods in investigating the objects of the social sciences. It also shows us that the dream of a unified science disguises the totalitarian drive to fit all phenomena into a single inflexible theoretical scheme. This is the dream that, according to Hayek, animates scientism, the “mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.” And according to Hayek, “the scientistic as distinguished from the scientific view is not an unprejudiced but a very prejudiced approach which, before it has considered its subject, claims to know what is the most appropriate way of investigating it”. Scientism is willful blindness: the conscious ignoring of the complexities that don’t fit our expectations, a reduction of the human to the quantifiable.
It should be clear that this seemingly abstract methodological quarrel has real ethical and political consequences. We can see glimpses of monistic blindness in the recent dealings with the covid vaccine. Countries such as Austria insist on pushing a one-size-fits-all policy program that ignores specific situations and well-established studies on “natural immunity”, for example. The drive for complete uniformity and compliance overrules any exception or shade of complexity.
The recent Chinese “social ranking” system is also a perfect example of a monistic form of thinking. By treating its citizens as variables of an all-encompassing algorithm that watches their actions and decides if they should be rewarded or punished, the Chinese government is effectively reducing the complexities of human action to the variables of a drearily dispirited mathematical model.
As Hayek puts it in his Nobel Prize lecture, “to act on the belief that we possess the knowledge and the power which enable us to shape the processes of society entirely to our liking, knowledge which in fact we do not possess, is likely to make us do much harm”. The Hayekian-Popperian methodological debate is, in fact, a lesson of humility “which should guard [us] against becoming an accomplice in men’s fatal striving to control society”.
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