5 hayek the counter-revolution of science chap 4

8/3/2019 5 Hayek the Counter-revolution of Science Chap 4

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This book is published by Liberty Fund, Inc., a foundation established toencourage study of the ideal of a society of free and responsible individuals.

The cunei fo rm inscr ip ti on t hat serves as t he des ign mot if fo r ourendpapers i s the ear li es t-known wri tt en appearance of t he word"freedom" (amagi), or "liberty." It is taken from a clay documentwritten about 2300 B.C. in the Sumerian city-stateof Lagash. 1952 by Tbe Free Press. Tbis edition is reprinted by arrangement withTbe Free Press, a division of Macmillan Publishing Co., Inc. All rightsreserved.including the rightof reproduction in whole or in part in any form.Brief quotations may be included in a review, and all inquiries shouldbeaddressed to Liberty Fund. Inc.. 8335 Allison Pointe Trail, Suite 300,Indianapolis, Indiana 46250-1687. Tbis book was manufactured in theUnited States of America.First edition published in1952 by Tbe FreePress, Glencoe, Ill.Second edition published 1979 by Liberty Fund Inc., Indianapolis, Ind.Library ofCongress Cataloging in Publication DataHayek. FriedrichAugust von. 1899Tbe counter-revolutionof science.Includes bibliographical references and index.1. Social sciences-Methodology. I. Title

H61.H33 1979 300'.1 79-21045ISBN 0-913966-66-5 (hardcover edition)ISBN 0-913966-67-6 (paperback edition)01 00 99 98 97 C 6 5 4 3 201 00 99 98 97 P 8 7 6 5 4

The CounterRevolution of ScienceStudies on the Abuse of Reason

F. A. Hayek

~ Liberty Fund

Indianapolis1979


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4

The Individualist and"Compositive" Methodof the Social Sciences

A t this point it becomes necessary briefly to interruptrt themain argument in order to safeguard ourselvesagainst a misconception which might arise from whathas just beensaid. The stress which we have laid on thefact that in the social sciences our data or "facts" arethemselves ideas or concepts must, of course, not beunderstood to mean that all the concepts with whichwe have to deal in the social sciences are of this character. There would be no room for any scientific work ifthis were so; and the social sciences no less than thenatural sciences aim at revising the popular conceptswhich men have formed about the objects of theirstudy, and at replacing them bymore appropriate ones.The special difficulties of the social sciences, and muchconfusion about their character, derive precisely from . I,IVthe fact that in them ideas appear in two capacities, asit were, as part of their object and as ideas about thatobject. While in the natural sciences the contrast be-


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62 The Counter-Revolution 0/ Science The Individualist and "Compositive" Method 6 3tween the object of our study and our explanation of itcoincides with the distinction between ideas and ob-jective facts, in the social sciences it is necessary todraw a distinction between those ideas which are con-stitutive of the phenomena we want to explain and theideas which either we ourselves or the very peoplewhose actions we have to explain may have formedabout these phenomena andwhich are not the cause of,but theories about, the social structures.

This special difficulty of the social sciences is a re-sult, not merely of the fact that we have to distinguishbetween the views held by the people which are theobject of our study and our views about them, but alsoof the fact tha t the people who are our object them-selves not only are motivated by ideas but also formideas about the undesigned results of their actions-popular theories about the various social structures orformations which we share with them and which ourstudy has to revise and improve. The danger of substi-tuting "concepts" (or "theories") for the "facts" is byno means absent in the social sciences and failure toavoid it has exercised as detrimental an effect here asin the natural sciences;1 but it appears on a differentplane and is very inadequatelyexpressedby the contrastbetween ideas and facts. The real contrast is betweenideas which by being held by the people become the1 See the excellent discussions of the effects of conceptual realism(Begrifjsrealismus) on economics in W. Eucken, The Foundations 0/Economics (London, 1950), pp. 51 et seq.

causes of a social phenomenon and the ideas whichpeople form about that phenomenon. That these twoclasses of ideas are distinct (although in different con-texts the distinction may have to be drawn differently) 2can easily be shown. The changes in the opinions whichpeople hold about a particular commodity and whichwe recognize as the cause ofa changein the price ofthatcommodity stand clearly in a different class from theideas which the same people may have formed aboutthe causes of the change in price or about the "natureof value" in general. Similarly, the beliefs and opinionswhich lead a number of people regularly to repeatcertain acts, for example, to produce, sell, or buycertainquantities of commodities, are entirely different fromthe ideas theymay have formed about the whole of the"society," or the "economic system," to which they be-long and which the aggregate of all their actions con-stitutes. The first kind of opinions and beliefs is a.2 In some contexts concepts which by another social science aretreated as mere theories to be revised and improved upon may haveto be treated as data. One could, for example, conceive of a "scienceof politics" showing what kind of political action follows from thepeople holding certain views on the nature of society and for whichthese views wou ld have to b e t re at ed as data. But while in man 'sactions toward social phenomena, that is, in explaining his politicalact ions, we have to take his views about the const itut ion of societyas given, we can on a different level of analysis investigate their tftlthor untruth. The fact that a par ticular society may bel ieve that itsinstitutions have been created by divine intervention we would haveto accept as a fact in explainingthe politics of that society; but it neednot prevent us from showing that this view is probably talse.


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64 The Counter-Revolution 0/ Science The Individualist and "Compositive"Method 65

condition of the existence of the "wholes" which wouldnot exist without them; they are, as we have said,"constitutive," essential for the existence of the phenomenon which the people refer to as "society" or the"economic system," but which will exist irrespectivelyof the concepts which the people have formed aboutthesewholes.

It is very important thatwe shouldcarefully distinguish between the motivating or constitutive opinionson the one hand and the speculative or explanatoryviews which people have formed about the wholes;confusion between the two is a source of constantdanger. Is it the ideas which the popular mind hasformed about suchcollectives as society or the economic system, capitalism or imperialism, and othersuch coUective entities, which the social scientist mustregard as no more than provisional theories, popularabstractions, and which he must notmistake for facts?That he consistently refrains from treating thesep s e u d o ~ n t i t i e s as facts, and that he systematicallystartsfrom the concepts which guide individuals in their actions and not from the results of their theorizingabouttheir actions, is the characteristic feature of that methodological individualism which is closely connectedwiththe subjectivism of the social sciences. The scientisticapproach, on the other hand, because it isafraid ofstarting from the subjective concepts determining individual actions, is, as we shall presently see, regularlyled into the very mistake itattempts to avoid, namely

of treating as facts those collectives which are no morethan popular generalizations. Trying to avoid using asdata the concepts held by individuals where they areclearly recognizable and explicitly introduced as whatthey are, people brought up in scientistic views frequently and naively accept the speculative concepts ofpopular usage as definite facts of the kind they arefamiliarwith.We shall have to discuss the nature of this collectivistprejudiceinherent in the scientistic approach more fullyin a later section.A few more remarks must be added about the specifictheoretical method which corresponds to the systematicsubjectivism and individualism of the social sciences.From the fact that it is the concepts and views held byindividuals which are directly known to us and whichform the elements from which we must build up, as itwere, the more complex phenomena, follows anotherimportant difference between the method of the socialdisciplines and the natura l sciences. While in theformer it is the attitudes of individuals which are thefamiliar elements and by the combination of which wetry to reproduce the complex phenomena, the results ofindividual actions, which are much less known-aprocedure which often leads to the discovery of principles of structural coherence of the complex phe-,

I j ~ ~nomenawhich had not been (and perhaps couldnot be)establishedby direct observation-thephysical sciencesnecessarily begin with the complex phenomena of na-


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66 The Counter-Revolution of Science The Individualist and "Compositive"Method 67

ture and work backward to infer the elements fromwhich they are composed. The pIace where the humanindividual stands in the order of things brings it aboutthat in one direction what he perceives are the comparatively complex phenomena which he analyzes,while in theotherdirectionwhat aregiven to himare elements from which those more complex phenomena arecomposed that he cannot observe as wholes. 3While the3 SeeRobbins, An Essay on the Nature and Significance of EconomicSeience, 2d ed. (1935), p. 105 : "In economics ... the ultimateconstituents of our fundamental generalizations are known to us byimmediate acquaintance. In the natural sciences they are known onlyinferentially." Perhaps the following quotation from an earlier essayof my own (Collectivist Economic Planning [1935], p. 11) may helpfur ther to expla in the s ta tement in the text: "The position of man,midway between natural and social phenomena-of the one of whichhe is an effect and of the other a cause-brings i t about that theessential basic facts which we need for the explanation are part ofcommon experience, par t o f the stuff of our thinking. In the socialsciences i t is the e lements of the complex phenomena which areknown to us beyond the possibility of dispute. In the natural sciencesthey can be at best surmised." See also C. Menger, Untersuchungenber die Methoden der Sozialwissenschaften (1883), p. 157 n: "Dieletzten Elemente, auf welche die exacte theoretische Interpretation derNaturphnomene zurckgehen muss, sind 'Atome' und 'Krfte.' Beidesind unempirischer Natur. Wir vermgen uns 'Atome' berhauptnicht, und die Naturkrfte nur unter einem Bilde vorzusstellen, undverstehen wir in Wahrheit unter den letzteren lediglich die uns unbekannten Ursachen realer Bewegungen. Hieraus ergeben sich f r dieexacte Interpretat ion der Naturphnomene in letzter Linie ganzausserordentliche Schwierigkeiten. Anders in den exacten Sozialwissenschaften. Hier sind die menschlichen Individuen und ihreBestrebungen, die letzten Elemente unserer Analyse, empirischerNatur und die exacten theoretischen Sozialwissenschaften somit ingrossem Vortheil gegenber den exacten Naturwissenschaften, Die

method of the natural sciences is in this sense, analytic,the method of the social sciences is better described ascompositive4 or synthetic. 1t is the so-called wholes, thegroups of elements which are structurally connected,which we learn to single ou t from the totality of observed phenomena only as a result to our systematicfitting together of the elements with familiar properties,and which we build up or reconstruct from the knownproperties of the elements.'Grenzen des Naturerkennens' und die hieraus fr das theoretischeVerstndnis der Naturphnomene sich ergebenden Schwierigkeitenbestehen in Wahrheit nicht fr dieexacte Forschung auf dem Gebieteder Sozialerscheinungen. Wenn A. Comte die 'Gesellschaften' alsreale Organismen, und zwar als Organismen komplicierterer Art,denn die natrlichen, auffasst und ihre theoretische Interpretation alsdas unvergleichlichkompliciertere und schwierigere wissenschaftlicheProblem bezeichnet, so findet er s ich somit in einem schwerenIrrthume. SeineTheorie wre nur gegenber Sozialforschern richtig,welche den, mit Rcksicht auf den heutigenZustand der theoretischenNaturwissenschaften, geradezu wahnwitzigen Gedanken fassen wrden, die Gesellschaftsphnomene nicht in specifisch sozialwissenschaf tl ich, sondern in n a t u r w i s s ~ n s c h a f t l i c h - a t o m i s t i s c h e r Weiseinterpretiren zu wollen."4 I have borrowed the term compositive from a manuscript note ofCarl Menger, who, in his personal annota ted copy of Schmoller 'sreview of his Methoden der Sozia lwissenschaf ten (Jahrbuch frGesetzgebung, eIe., n. f. 7 [1883], p. 42), wrote it above the worddeduetive used by Schmoller. Since writing this I have noticed thatErnst Cassirer in his Philosophie der Aufklrung (1932, pp. 12, 25,341) uses the term eompQsitive in order to point out rightly that theprocedure of the natural sciences presupposes the successive use I ~ . fthe "resolutive" and the "compositive" technique. This is useful andlinks up with the point that, since the elements are directly known tous in the social sciences, we can start here with the compositive procedure.


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68 The Counter-Revolution 0/ Science The Individualist and "Composi!ive" Method 691t is important to observe that in all this the various

types of individual beliefs or attitudes are not them-selves the object of our explanation, but merely theelements from which we build up the structure of pos-sible relationships between individuals. Insofar as weanalyze individual thought in the social sciences thepurpose is not to explain tha t thought bu t merely todistinguish the possible types of elements with whichwe shall have to reckon in the construction of differentpatterns of social relationships. I t is amistake, to whichcareless expressions by social scientists often givecountenance, to believe that their aim is to explainconscious action. This, if i t can be done at all , is adifferent task, the task of psychology. For the socialsciences the types of conscious action are data5 and allthey have to do with regard to these data is to arrangethem in such orderly fashion that they can be effectivelyused for their task.6 The problems which they try to5 As Robbins (op. cit., p. 86) rightly says, economists in particularregard "the things which psychology studies as the data of their owndeductions."6 That this task absorbs a great p a rt o f the economist's energies shouldnot deceive us about the fact t h at b y itself this "pure logic of choice"(o r "economic calculus") does no t explain any facts, or at least doesn o m o re so by itself than does m a t h e m a t i c s ~ Fo r the precise relation-ship between the pure theory of the economic calculus and i ts use inthe explanation of soc ia l phenomena , I aga in r ef er t o my artic1e"Economics and Knowledge" (Economica [February 1937]). Itshould perhaps be added that while economic theory might be veryuseful to the directot of a completely planned system in helping hirnto see what he ought to do to achieve his ends, it would not help us toexplain his actions-except insofar as he was actually guided by it.

answer arise only insofar as the conscious action ofmanymen produce undesigned results, insofar as regularitiesare observed which are not the result of anybody's de-sign. I f social phenomena showed no order exceptinsofar as they were consciously designed, there wouldindeed be no room for theoretical sciences of societyand there wouldbe, as is often argued, only problems ofpsychology. I t is only insofar as some sort of orderarises as a result of individual action but without beingdesigned by any individual that a problem is raisedwhich demands a theoretical explanation. But althoughpeople dominated by the scientistic prejudice are ofteninclined to deny the existence of any such order (andthereby the existence of an object for theoretical sci-ences of society) , few if anywould beprepared to do soconsistently: that at least language shows adefiniteorder which is not the result of any conscious designcan scarcelybe questioned.

The reason for the difficulty which the natural scien-tist experiences in admitting the existence of such anorder in social phenomena is that these orders cannotbe stated in physical terms, that if we define the ele-ments in physical terms no such order is visible, andthat the units which show an orderly arrangement donot (o r at least need not) have any physicaI propertiesin common (except that men react to them in ~ l J . e"same" way-although the "sameness" of different peo-pIe's reaction will again, as a ruIe, not be definabIe inphysical terms). I t is an order in which things behave


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70 The Counter-Revolution 0/ Science The Individualist and "Compositive" Method 71in the same way because they mean the same thing toman. Tf, instead of regarding as alike and unlike whatappears so to the acting man, we were to take for ourunits onlywhat Science shows to be alike or unlike, weshould probably find no recognizable order whatever insocial phenomeria-at least not till the natural scienceshad completed their task of analyzing all natural phenomena into their ultimate constituents and psychologyhad also fully achieved the reverse task of explaining inall detail how the ultimate units of physical sciencecome to appear to man just as they do, that is, how thatapparatus of classification operates which our sensesconstitute.

1t is only in the very simplest instances that it can beshown briefly andwithout any technical apparatus howthe independent actions of individuals will produce anorder which is no part of their intentions; and in thoseinstances the explanation is usually so obvious that wenever stop to examine the type of argument which leadsus to it. The way in which footpaths are formed in awild broken country is such an instance. At first everyone will seek for hirnself what seems to hirn the bestpath. But the fact that such a path has been used onceis likely to make it easier to traverse and thereforemorelikely to be used again; and thus gradually more andmore clearly defined tracks arise and come to be usedto the exclusion of other possible ways. Human movements through the region come to conform to adefinitepattern which, although the result of deliberate de-

cisions of many people, has yet not been consciouslydesigned by anyone. This explanation of how this happens is an elementary "theory" applicable to hundredsof particular historical instances; and it is not the observation of the actual growth of any particular track,and still less of many, from which this explanationderives its cogency, but from our general knowledge ofhowwe and other people behave in thekind of situationin which the successive people find themselves who haveto seek their way and who by the cumulative effectof their action create the path. It is the elements of thecomplex of events which are familiar to us from everyday experience, but it is only by a deliberate effort ofdirected thought tha t we come to see the necessaryeffects of the combination of such actions by manypeople. We "understand" the way in which the resultwe observe can be produced, although we may never bein a positionto watch the whole process or to predict itsprecisecourse and result.

It makes no difference for our present purposewhether the process extends over a long period of time,as it does in such cases as the evolution of money or theformation of language, or whether it is a process whichis constantlyrepeated anew, as in the case of the formation of prices or the direction of production undercompetition. The former instances raise t h e o r e t i ~ a l(that is, generic) problems (as distinguished from thespecifically historical problems in the precise sensewhich we shall have to define later) which are funda-


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72 The Counter-Revolution 01 Science The Individualist and "Compositive"Method 73

mentally similar to the problems raised by such recurring phenomena as the determination of prices.Although in the study of any particular instance of theevolution of an "institution" likemoneyor the languagethe theoretical problem will frequently be so overlaidby the consideration of the particular circumstancesinvolved (the properly historical task), this does notalter the fact that anyexplanation of a historical processinvolves assumptions about the kind of circumstancesthat can produce certain kinds of effects-assumptionswhich, where we have to deal with results which werenot directly willed by somebody, can only be stated inthe form of a generic scheme, in other words a theory.

The physicist whowishes to understand the problemsof the social sciences with the help of an analogy fromhis own field would have to imagine a world in whichhe knew by direct observation the inside of the atomsand had neither the possibility of making experimentswith lumps of matter nor the opportunity to observemore than the interactions of a comparatively fewatoms during a limited period. From his knowledge ofthe different kinds of atoms he could build up modelsof all the various ways in which they could combine intolarger units and make these models more and moreclosely reproduce an the features of the few instancesin which he was able to observe more complex phenomena. But the laws of themacrocosm which he couldderive from his knowledge of the microcosm wouldalways remain "deductive"; they would, because of his

limited knowledge of the data of the complex situation,scarcely ever enable him to predict the precise outcomeof a particular situation; and he could never confirmthem by controlled experiment-although they mightbe disproved by the observation of events which according to his theory are impossible.

In a sense some problems of theoretical astronomyare more similar to those of the social sciences thanthose of any of the experimental sciences. Yet thereremain important differences. While the astronomeraims at knowing all the elements of which his universeis composed, the student of social phenomena cannothope to know more than the types of elements fromwhich his universe is made up. He will scarcely everknow even an of the elements of which it consists andhe will certainly never know an the relevant propertiesof each of them. The inevitable imperfection of thehuman mind becomes here not only a basic datumabout the object of explanation but, since it applies noless to the observer, also a l imita tion on what he canhope to accomplish in his attempt to explain the observed facts. The number of separate variables whichin any particular social phenomenon will determine theresult of a given change will as a rule be far too largefor any human mind to master and manipulate themeffectively.7 In consequence our knowledge of the pr,in-7 Cf. M. R. Cohen, Reason and Nature, p. 356: "H, then , socialphenomena depend upon more factors than we readi ly manipulate, even the doctrine of universal determinism will not guarantee an


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74 The Counter-Revolution0/ Science The Individualist and "Compositive" Method 75ciple by whieh these phenomena are produeed willrarely if ever enable us to prediet the preeise result ofany eonerete situation. While we ean explain the prin-eiple on whieh eertain phenomena are produeed andean from this knowledge exelude the possibility ofeertain results, for example, of eertain events oecurringtogether, ourknowledge will in a sense be only negative;tha t is, i t will merely enable us to preclude eertainresults but not enable us to narrow the range of possi-bilities suffieiently so that only one remains.

The distinetion between an explanation merely of theprinciple on whieh a phenomenon is produeed and anexplanation whieh enables us to prediet the preeiseresult is of great importanee for the understanding ofthe theoretieal methods of the social seienees. I t arises,I believe, also elsewhere, for example, in biology and eer-tainly in psyehology. It is, however, somewhat un-familiar and 1 know no plaee where i t is adequatelyexplained. The best illustration in the field of the socialseienees is probably the general theory of priees asrepresented, for example, by the Walrasian or Paretiansystems of equations. These systems show merely theprineiple of eoherenee between the priees of the varioustypes of eommodities of whieh the system is eomposed;but without knowledge of the numerieal values of allthe eonstants whieh oeeur in it and whieh we never doattainable expression of laws governing the specific phenomena ofsocial life. Social phenomena, though determined, might not to afinite mindin limitedtime display any laws at alL"

know, this does no t enable us to predie t the preeiseresults which any particular change will have.8 Apartfrom this particular ease, a set of equationswhieh showsmerely the form of a system of relationships but doesnot give the values of the eonstants eontained in it, isperhaps the best general illustration of an explanation8 Pareto himself has c1early seen this. After stating the nature of thefactors determining the prices in his system of equations, he adds(Manuel d'economie politique, 2d ed. [1927], pp. 233-34): "I t maybe mentioned here that this determination has by no means thepurpose of arriving at a numerical calculation of prices. Let us makethe most favorable assumptions for such a calculation; letus assumethat we have triumphed over all the difficulties of finding the data ofthe problem and tha t we know the ophelimites of alI the differentcommodities for each individual, and all the conditions of productionof all the commodities, etc. This is already an absurd hypothesis tomake. Yet i t i s not sufficient to make the solution of the problem pos-sible. We have seen that inthe case of 100 persons and 700 commodi-ties there will be 70,699 condi tions (actual ly a great number ofcircumstances which wehave so fa r neglected will still increase thatnumber); we shall , therefore, have to solve a sys tem of 70,699equations. This exceeds practically the power of algebraic analysis,and this is even moret ruei f one contemplates the fabulous number ofequations which one obtains for a population of forty million andseveral thousand commodities. In t hi s case the roles would bechanged: i t wou ld be not mathematics which would assist politicaleconomy, bu t political economy which would assist mathematics. Inother words, i f one really could know all these equations, the onlymeans to solve them which is available to human powers is to observethe pract ical solut ion given by the marke t. " Cf. also A. Cournot ,Researches into the Mathematical Principles 0/ the Theory 0/ Wealth(1838), trans. N. T. Bacon (New York, 1927), p. 127, whery,l'hesays t ha t i f i n our equations we took the entire economic system intoconsideration, "this would surpass the powers of mathematical an-alysis and of our practical methods of calculation, even i f t he valuesof alI the constants could be assigned to them numerically."


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76 The Counter-Revolution 0/ Science

merely of the principle on which any phenomenon isproduced.

This must suffice as a positive description of thecharacteristic problems of the social sciences. It willbecome clearer as we contrast in the following sectionsthe specific procedure of the social sciences with themost characteristic aspects of the attempts to treat theirobject after the fashion of the natural sciences.

5 hayek the counter-revolution of science chap 4

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