Academic journal article The American Journal of Economics and Sociology

New Political Economy, Scientism and Knowledge: A Critique from a Hayekian Perspective, and a Proposal for an Extension of the Research Agenda. (Austrian School Perspectives)

Academic journal article The American Journal of Economics and Sociology

New Political Economy, Scientism and Knowledge: A Critique from a Hayekian Perspective, and a Proposal for an Extension of the Research Agenda. (Austrian School Perspectives)

Article excerpt

I

Introduction

THE PRESENT PAPER IS an attempt to have a close look at the extraordinarily successful research program of New Political Economy (or Public Choice) from a distinctly Hayekian perspective. This involves two important points that have been central to the economic thought of Friedrich August von Hayek. One is the problem of scientism, a term coined to signify the inappropriate transfer of methods from the natural sciences, especially physics, to the social sciences, where the complexity of the object under research is usually much higher. The other point is the knowledge problem. Hayek was a pioneer in making the necessarily incomplete and dispersed knowledge of economic agents the departing point of his economic research. From his point of view, it was never primarily the problem of economic theory to determine the mathematical conditions of general equilibrium,' but rather to explain how the voluntary coordination of individual plans is in fact achieved, i.e., how the price system allows to make efficient use of knowledge that is dispersed throughout the economy.

The argument will proceed as follows: In Sections II and III, the emphasis will be on the problem of scientism. In Section II, we will refute a claim that often at least implicitly shines through in normative Public Choice, namely that Political Economy can be a tool to find an ideal institutional framework for a rational society. This point will be reinforced in Section III, where the knowledge problem is introduced. Furthermore, Hayek's argument concerning the distinction between an evolution of rules and pretentious constructivism aiming at the implementation of an ideal social order is reconstructed with regard to public law, on which, after all, the main focus of Public Choice rests. Section IV will give two examples of how a change of perspective from traditional Public Choice to knowledge-oriented Public Choice may look like. To make this as illustrative as possible, two examples that have already been quite extensively researched from the traditional point of view are chosen: democratic competition fo r office and the competition between jurisdictions for mobile resources. Finally, Section V draws some conclusions.

II

New Political Economy and the Search for an Ideal Institutional Framework

HANS ALBERT, arguably one of the most influential proponents of a criticist social philosophy, has repeatedly challenged neoclassical welfare economics on grounds of its pursuit of an ideal (i.e., perfectly efficient) production and its complete disregard for value judgments that can be made about the mode of production itself. (1) For example, where do the socialist, who prefers massive government intervention and is willing to surrender some efficiency, or the classical liberal, who would rather preserve his personal liberty than have each and every externality corrected by the government, fit into normative welfare economics? Welfare economics is technocratic in the sense that it makes statements about production and exchange efficiency, but disregards the possible quarrels that arise from differing preferences concerning, for instance, the legitimate scope of government in society.

There is no ideal production if the mode of production is itself subject to value judgments, which of course will differ between individuals in an open society. Normative Public Choice theory appears to own a similarity to welfare economics in the sense that the underlying question of many theoretical Public Choice approaches is: "How can we achieve rational collective decision making?" instead of "How can we achieve rational production of commodities?" Both questions are of the same nature because both ask for the necessary conditions for social rationality from the perspective of an omniscient observer, but the meaning of rationality is not as clear in Public Choice as it is in welfare economics: In some contributions, a political process is considered to be rational if its outcome coincides with the median voter's preferences, while others equate rationality with the transitivity of the social preference ordering, and still other contributions continue to use the yardstick of Pareto-efficiency to evaluate the results of the political process and thereby judge its rationality. …

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