[발췌: Hayek's Individualism and Economic Order] Economics and Knowledge

출처: F.A. Hayek, Individualism and Economic Order (Univ. of Chicago Press 1948; Reprinted by the Mises Institute 2009)
자료: 구글도서, Mises Institute(PDF)

※ This is a reading note, with some personal annotations or remarks added, in trying to understand the above text . So visit the source links above to see the original.

* * *

차례:

1. Individualism: True and False
2. Economics and Knowledge
3. The Facts of the Social Sciences
4. The Use of Knowledge in Society ─ 발췌/독서메모
5. The Meaning of Competition
6. "Free" Enterprise and Competitive Order
7. Socialist Calculation I: The Nature and History of Problem
8. Socialist Calculation II: The State of the Debate
9. Socialist Calculation III: The Competitive "Solution"
10. A Commodity Reserve Currency
11. The Ricardo Effect
12. The Economic Conditions of Interstate Federalism

* * *

※ 발췌(excerpts):

Chapter 2_ Economics and Knowledge ( 다른 자료: http://mises.org/page/1411 )

[The] main subject is the role which assumptions and propositions about the knowledge possessed by the different members of society play in economic analysis. This is by no means unconnected with the other question[─]to what extent formal economic analysis conveys any knowledge about what happens in the real world. Indeed, my main contention will be that the tautologies, of which formal equilibrium analysis in economics essentially consists, can be turned into propositions which tells us anything about causation in the real world only in so far as we are able to fill those formal propositions with definite statements about how knowledge is acquired and communicated. In short, I shall contend that the empirical element in economic theory [...] consists of propositions about the acquisition of knowledge.[1]

Perhaps I should begin by reminding you of the interesting fact that in a quite a number of the more recent attempts made in different fields to push theoretical investigation beyond the limits of traditional equilibrium analysis, the answer has soon proved to turn on the assumptions which we make [...] with regard to foresight.

• I think that the filed in which ... the discussion of the assumptions concerning foresight first attracted wider attention was the theory of risk.[2] (...) 
• Not much later the assumption to be made concerning foresight proved to be of fundamental importance for the solution of the puzzles of the theory of imperfect competition, the questions of duopoly and oligopoly. 
• Since then, it has become more and more obvious that, in the treatment of the more "dynamic" questions of money and industrial fluctuations, the assumptions to be made about foresight and "anticipations" play an equally central role and that in particular the concepts which were taken over into these fields from pure equilibrium analysis, like those of an equilibrium rate of interest, could be properly defined only in terms of assumptions concerning foresight. 

The situation seems here to be that, before we can explain why people commit mistakes, we must first explain why they should ever be right.

( ... ... )

As I have already suggested, the reason for this seems to me to be that we have to deal here only with a special aspect of a much wider question which we ought to have faced at a much earlier stage. Questions essentially similar to those mentioned arise in fact as soon as we try to apply the system of tautologies--those series of propositions which are necessarily true because they are merely transformations of the assumptions from which we start and which constitute the main content of equilibrium analysis--to the situation of a society consisting of several independent persons. 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 the action 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.

I am certain that there are many who regard with impatience and distrust the whole tendency, which is inherent in all modern equilibrium analysis, to turn economics into a branch of pure logic, a set of self-evident propositions which, like mathematics or geometry, are subject to no other test but internal consistency. But it seems that, if only this process is carried far enough, it carries its own remedy with it. In distilling from our reasoning about the facts of economic life those parts which are truly a priori, we not only isolate one element of our reasoning as a sort of Pure Logic of Choice in all its purity but we also isolate, and emphasize the importance of, another element which has been too much neglected. My criticism of the recent tendencies to make economic theory more and more formal is not that they have gone too far but that they have not yet been carried far enough to complete the isolation of this branch of logic and to restore to its rightful place the investigation of causal processes, using formal economic theory as a tool in the same way as mathematics.

2

But before I can prove my contention that the tautological propositions of pure equilibrium analysis as such are not directly applicable to the explanation of social relations, I must first show that the concepts of equilibrium has a meaning if applied to the actions of a single individual and what this meaning is. [※ 순수 균형분석의 동어반복적 명제들은 사회관계를 설명하는 데 곧바로 적용될 수 없다는 내 주장을 입증하려면, 그 전에 균형이란 개념들은 단 한 사람의 행동에 적용하더라도 의미가 있으며 그 의미 무엇인지를  먼저 설명해야 한다.]

• Against my contention it might be argued that it is precisely here that the concept of equilibrium is of no significance, because, if one wanted to apply it, all one could say would be that an isolated person was always in equilibrium. But this last statement, although a truism, shows nothing but the way in which the concept of equilibrium is typically misused. 
• What is relevant is not whether a person as such is or is not in equilibrium but which of his actions stand in equilibrium relationships to each other. All propositions of equilibrium analysis, such as the proposition that relative values will correspond to relative costs, or that a person will equalize the marginal returns of any one factor in its different uses, are propositions about the relations between actions.
• Actions of persons can be said to be in equilibrium in so far as they can be understood as part of one plan. Only if this is the case, only if all these actions have been decided upon at one and the same moment, and in consideration of the same set of circumstances, have our statements about their interconnections, which we deduce from our assumptions about the knowledge and the preferences of the person, any application.
• It is important to remember that the so-called "data," from which we set out in this sort of analysis, are (apart from his tastes) all facts given to the person in question, the things as they are known to (or believed by) him to exist, and not, strictly speaking, objective facts. It is only because of this that the propositions we deduce are necessarily a prior valid and  that we preserve the consistency of the argument.[3]

The two main conclusions from these considerations are,[:]

• first, that, since equilibrium relations exist between the successive actions of a person only in so far as they are part of the execution of the same plan, any change in the relevant knowledge of the person, that is, any change which leads him to alter his plan, disrupts the equilibrium relation between his actions taken before and those taken after the change in his knowledge. In other words, the equilibrium relationship comprises only his actions during the period in which his anticipations prove correct. 
• Second, that, since equilibrium is a relationship between actions, and since the actions of one person must necessarily take place successively in time, it is obvious that the passage of time is essential to give the concept of equilibrium any meaning. This deserves mention, since many economists appear to have been unable to find a place for time in equilibrium analysis and consequently have suggested that equilibrium must be conceived as timeless. This seems to me to be a meaningless statement.

3

(...) All I have argued so far is that the sense in which we use the concept of equilibrium to describe the interdependence of the different actions of one person does not immediately admit of application to the relations of different people. The question really is what use we make of it[the concept of equilibrium] when we speak of equilibrium with reference to a competitive system.

(... ...)

The situation is, however, different with plans determined upon simultaneously but independently by a number of persons. In the first instance, in order that all these plans can be carried out, it is necessary for them to be based on the expectation of the same set of external events, since, if different people were to base their plans on conflicting expectations, no set of external events could make the execution of all these plans possible. And, second, in a society based on exchange their plans will to a considerable extent provide for actions which require corresponding actions on the part of other individuals. This means that the plans of different individuals must in a special sense be compatible if it is to be even conceivable that they should be able to carry all of them out.[4] Or, to put the same thing in different words, since some of the data on which any one person will base his plans will be the expectation that other people will act in a particular way, it is essential for the compatibility of the different plans that the plans of the one contain exactly those action which form the data for the plans of the other.

In the traditional treatment of equilibrium analysis part of this difficulty is apparently avoided by the assumption that the data, in the form of demand schedules representing individual tastes and technical facts, are equally given to all individuals, and that their acting on the same premises will somehow lead to their plans becoming adapted to each other. That this does not really overcome the difficulty created by the fact that one person's actions are the other person's data, and that it involves to some degree circular reasoning, has often been pointed out. What, however, seems so far to have escaped notice is that this whole procedure involves a confusion of a much more general character, of which the point just mentioned is merely a special instance, and which is due to an equivocation of the term "datum." The data which here are supposed to be objective facts and the same for all people are evidently no longer the same thing as the data which formed the starting-point for the tautological transformations of the Pure Logic of Choice. There "data" meant those facts, and only those facts, which were present in the mind of the acting person, and only this subjective interpretation of the term "datum" made those propositions necessary truths. "Datum" meant given, known, to the person under consideration. But in the transition from the analysis of the action of an individual to the analysis of the situation in a society the concept has undergone an insidious change of meaning.

4

The confusion about the concept of a datum is at the bottom of so many of our difficulties in this field that it is necessary to consider it in somewhat more detail. Datum means, of course, something given, but the question which is left open, and which in the social sciences is capable of two different answers, is to whom the facts are supposed to given. Economists appear subconsciously always to have been somewhat uneasy about this point and to have reassured themselves against the feeling that they did not quite know to whom the facts were given by underlining the fact that they were given, even by using such pleonastic expressions as "given data." But this does not answer the question whether the facts referred to are supposed to be given to (1) the observing economist or (2) to the persons whose actions he wants to explain, and, if to the latter, whether it is assumed that the same facts are known (3) to all the different persons in the system or (4) whether the "data" for the different persons may be different.

There seems to be no possible doubt that these two concepts of "data," on the one hand, in the sense of the objective real facts, as the observing economist is supposed to know them, and, on the other, in the subjective sense, as things known to the persons whose behavior we try to explain, are really fundamentally different and ought to be carefully distinguished. And, as we shall see, the question why the data in the subjective sense of the term should ever come to correspond to the objective data is one of the main problems we have to answer.

The usefulness of the distinction becomes immediately apparent when we apply it to the question of what we can mean by the concept of a society being at any one moment in a state of equilibrium. There are evidently two senses in which it can be said that the subjective data, given to the different persons, and the individual plans, which necessarily follow from them, are in agreement.

(1) We may mean merely that these plans are mutually compatible and that there is consequently a conceivable set of external events which will allow all people to carry out their plans and not cause any disappointments. If this mutual compatibility of intentions were not given, and if in consequence no set of external events could satisfy all expectations, we could clearly say that this is not a state of equilibrium. We have a situation where a revision of the plans on the part of at least some people is inevitable, or, to use a phrase which in the past has had a rather vague meaning, but which seems to fit this case perfectly, where "endogenous" disturbances are inevitable.

(2) There still remains, however, the other question of whether the individual sets of subjective data correspond to the objective data and whether, in consequence, the expectations on which plans were based are borne out by the facts. If correspondence between data in this sense were required for equilibrium, it would never be possible to decide otherwise than retrospectively, at the end of the period for which people have planned, whether at the beginning the society has been in equilibrium. It seems to be more in conformity with established usage to say in such a case that the equiibrium, as defined in the first sense, may be disturbed by an unforeseen development of the (objective0 data and to describe this as an exogenous disturbance. In fact, it seems hardly possible to attach any definite meaning to the much used concept of a change in the (objective) data unless we distinguish between external developments in conformity with, and those different from, what has been expected, and define as a "change" any divergence of the actual from the expected development, irrespective of whether it means a "change" in some absolute sense. If, for example, the alterations of the seasons suddenly ceased and the weather remained constant from a certain day onward, this would certainly represent a change of data in our sense, that is a change relative to expectations, although in an absolute sense it would not represent a change but rather an absence of change. But all this means that we can speak of a change in data only if equilibrium in the first sense exists, that is, expectations coincide. If they conflicted, any development of the external facts might bear out somebody's expectations and disappoint those of others, and there would be no possibility of deciding what was a change in the objective data.[5]

5

For a society, then, we can speak of a state of equilibrium at a point of timeㅡbut it means only that the different plans which the individuals composing it[=equilibrium] have made for action in time are mutually compatible. And equilibrium will continue, once it exists, so long as the external data correspond to the common expectations of all the members of the society. The continuance of a state of equilibrium in this sense is then not dependent on the objective data being constant in an absolute sense and is not necessarily confined to a stationary process[*]. Equilibrium analysis becomes in principle applicable to a progressive society and to those intertemporal price relationships which have given us to much trouble in recent times.[6]

These considerations seem to throw considerable light on the relationship between equilibrium and foresight, which has been somewhat hotly debated in recent times.[7]

• It appears that the concept of equilibrium merely means that the foresight of the different members of the society is in a special sense correct. It[=foresight...] must be correct in the sense (1)that every person's plan is based on the expectation of just those actions of other people which those other people intend to perform and (2)that all these plans are based on the expectation of the same set of external facts, so that under certain conditions nobody will have any reason to change his plans. 
• Correct foresight is then (1)not, as it has sometimes been understood, a precondition which must exist in order that equilibrium may be arrived at. It is rather the defining characteristic of a state of equilibrium. (2)Nor need foresight for this purpose be perfect in the sense that it need extend into the indefinite future or that everybody must foresee everything correctly. We should (3)rather say that equilibrium will last so long as the anticipations prove correct and that they need to be correct only on those points which are relevant for the decisions of the individuals. But on this question of what is relevant foresight or knowledge, more later.

{{

Before I proceed further I should probably stop for a moment to illustrate by a concrete example what I have just said about the meaning of a state of equilibrium and how it can be disturbed. Consider the preparations which will be going on at any moment for the production of houses.[:] 

1. Brickmakers, plumbers, and others will all be producing materials which in each case will correspond to a certain quantity of houses for which just this quantity of the particular material will be required. 
2. Similarly we may conceive of prospective buyers as accumulating savings which will enable them at certain dates to buy a certain number of houses. 
3. If all these activities represent preparations for the production (and acquisition) of the same amount of houses, we can say that there is equilibrium between them in the sense that all the people engaged in them may find that they can carry out their plans.[8] 
4. This need not be so, { because other circumstances which are not part of their plan of action may turn out to be different from what they expected. Part of the materials may be destroyed by an accident, weather conditions may make building impossible, or an invention may alter the proportions in which the different factors are wanted. This is what we call a change in the (external) data, which disturbs the equilibrium which has existed. But if the different plans were from the beginning incompatible, it is inevitable, whatever happens, that somebody's plans will be upset and have to be altered and that in consequence the whole complex of actions over the period will not show those characteristics which apply if all the actions of each individual can be understood as part of a single individual plan }, which he has made at the beginning[9] 

}}

6

When in all this I emphasize the distinction between (1)mere intercompatibility of the individual plans[10] and (2)the correspondence between them and the actual external facts or objective data, I do not, of course, mean to suggest that the subjective interagreement is not in some way brought about by the external facts.

• There would, of course, be no reason why the subjective data of different people should ever correspond unless they were due to the experience of the same objective facts. 
• But the point is that pure equilibrium analysis is not concerned with the way in which this correspondence is brought about. In the description of an existing state of equilibrium which it provides, it is simply assumed that the subjective data coincide with the objective facts. [Why? Because:]
  (a) The equilibrium relationships cannot be deduced merely from the objective facts, since the analysis of what people will do can start only from what is known to them.
  (b) Nor can equilibrium analysis start merely from a given set of subjective data, since the subjective data of different people would be either compatible or incompatible, that is, they would already determine whether equilibrium did or did not exist. 

  We shall not get much further here unless we ask for the reasons for our concern with the admittedly fictitious state of equilibrium. Whatever may occasionally have been said by overpure economists, there seems to be no possible doubt that the only justification for this is the supposed existence of a tendency toward equilibrium. It is only by this assertion that such a tendency exists that economics ceases to be an exercise in pure logic and becomes an empirical science; and it is to economics as an empirical science that we must now turn.

In the light of our analysis of the meaning of a state of equilibrium it should be easy to say what is the real content of the assertion that a tendency toward equilibrium exists. It can hardly mean anything but that, under certain conditions, the knowledge and intentions of the different members of society are supposed to come more and more into agreement or, to put the same thing in less general and less exact but more concrete terms, that the expectations of the people and particularly of the entrepreneurs will become more and more correct. In this form the assertion of the existence of a tendency toward equilibrium is clearly an empirical proposition, that is, an assertion about what happens in the real world which ought, at least in principle, to be capable of verification. And it gives our somewhat abstract statement a rather plausible common-sense meaning. The only trouble is that we are still pretty much in the dark about (a) the conditions under which this tendency is supposed to exist and (b) the nature of the process by which individual knowledge is changed.

7

In the usual presentations of equilibrium analysis it is generally made to appear as if these questions of how the equilibrium comes about were solved. But if we look closer, it soon becomes evident that these apparent demonstrations amount to no more that the apparent proof of what is already assumed.[11] [:]

• The device generally adopted for this purpose is the assumption of a perfect market where every event become known instantaneously to every member. It is necessary to remember here that the perfect market which is required to satisfy the assumptions of equilibrium analysis must not be confined to the particular markets of all the individual commodities; the whole economic system must be assumed to be one perfect market in which everybody knows everything. The assumption of a perfect market, then, means nothing less than that all the members of the community, even if they are not supposed to be strictly omniscient, are at least supposed to know automatically all that is relevant for their decisions. It seems that that skeleton in our cupboard, the "economic man," whom we have exorcised with prayer and fasting, has returned through the back door in the form of quasi-omniscient individual.

  The statement that, if people know everything, they are in equilibrium is true simply because that is how we define equilibrium. The assumption of a perfect market in this sense is just another way of saying that equilibrium exists but does not get us any nearer an explanation of when and how such a state will come about. It is clear that, if we want to make the assertion that, under certain conditions, people will approach that state, we must explain by what process they will acquire the necessary knowledge. Of course, any assumption about the actual acquisition of knowledge in the course of this process will also be of a hypothetical character. But this does not mean that all such assumptions are equally justified. We have to deal here with assumptions about causation, so that what we assume must not only be regarded as possible (which is certainly not the case if we just regard people as omniscient) but must also be regarded as likely to be true; and it must be possible, at least in principle, to demonstrate that it is true in particular case.

  The significant point here is that it is these apparently subsidiary hypotheses or assumptions that people do learn from experience, and about how they acquire knowledge, which constitute the empirical content of our propositions about what happens in the real world. They usually appear disguised and incomplete as a description of the type of market to which our proposition refers; but this is only one, though perhaps the most important, aspect of the more general problem of how knowledge is acquired and communicated. The important point of which economists frequently do not seem to be aware is that the nature of these hypotheses is in many respects rather different from the more general assumptions from which the Pure Logic of Choice starts. The main differences seem to me to be two:

  First, (... ...) But the assumptions or hypotheses, which we have to introduce when we want to explain the social processes, concern the relation of the thought of an individual to the outer world, the question to what extent and how his knowledge corresponds to the external facts. And the hypotheses must necessarily run in terms of assertions about causal connections, about how experience creates knowledge.

  Second, (... ...)

8

(... ...) But I am afraid that I am now getting to a stge where it becomes exceedingly difficult to say what exactly are the assumptions on the basis of which we assert that there will be a tendency toward equilibrium and to claim that our analysis has an application to the real world.[13] (...) all I can do is to ask a number of questions to which we shall have to find an answer if we want to be clear about the significance of our argument.

The only condition about the necessity of which for the establishment of an equilibrium economists seem to be fairly agreed is the "consistancy of the data." (... ...)

9

(...) But there is further question which seems to me to be at least equally important but which appears to have received no attention at all, and that is how much knowledge and what sort of knowledge the different individuals must possess in order that we may be able to speak of equilibrium. It is clear that, if the concept is to have any empirical significance, it cannot presuppose that everybody knows everything. I have already had to use the undefined term "relevant knowledge," that is, the knowledge which is relevant to a particular person. But what is this relevant knowledge? (... ...)

  Clearly there is here a problem of the division of knowledge[16] which is quite analogous to, and at least as important as, the problem of the division of labor. (...) it seems to me to be the really central problem of economics as a social science. The problem which we pretend to solve is how the spontaneous interaction of a number of people, each possessing only bits of knowledge, brings about a state of affairs in which prices correspond to costs, etc., and which could be brought about by deliberate direction only by somebody who possessed the combined knowledge of all those individuals. (...)

( ... ...)

  There is only one more point in this connection which I should like to mention. This is that, if the tendency toward equilibrium [...] is only toward an equilibrium relative to that knowledge which people will acquire in the course of their economic activity, and if any other change of knowledge must be regarded as a "change in the data" in the usual sense of the term, which falls outside of the sphere of equilibrium analysis, this would mean that equilibrium analysis can really tell us nothing about the significance of such changes in knowledge, and it would also go far to account for the fact that pure analysis seems to have so extraordinarily little to say about institutions, such as the press, the purpose of which is to communicate knowledge. It might even explain why the preoccupation with pure analysis should so frequently create a peculiar blindness to the role played in real life by such institutions as adevertising.

10

(... ...)