Hayek argued that the central question of economics is the coordination problem: How does the spontaneous interaction of many purposeful individuals, each having dispersed bits of subjective knowledge, generate an order in which the actors' subjective data are coordinated in a way that enables them to dovetail their plans and activities successfully? In attempting to solve this problem, Hayek outlined an approach to economic theorizing that takes seriously the limited, subjective nature of human knowledge. Despite purporting to have appropriated Hayek's (...) thought by acknowledging the information-transmitting role of prices, mainstream economists have missed Hayek's point. The predominant tool of formal economics—equilibrium analysis—begins by assuming the data held by actors to have been pre-reconciled, and so evades the problem to be solved. Even the more advanced tools for modeling knowledge in economic analysis, such as the economics of information, assume away either the subjectivism of knowledge and expectations (rendering the coordination of beliefs and plans a trivial matter) or the frictions and “imperfections” of reality (rendering the coordination problem indeterminate). (shrink)

ABSTRACT Twenty years ago Leif Lewin made the case that altruistic motives are more common than selfish motives among voters, politicians, and bureaucrats. We propose that motives and beliefs emerge as reactions to immediate feedback from technical-causal, material-economic, and moral-social aspects of the political task environment. In the absence of certain kinds of technical-causal and material-economic feedback, moral-social feedback leads individuals to the altruism Lewin documents, but also to righteousness (moralized regard for the in-group and disregard for the out-group) and (...) myopia (disregard for distant consequences). The mix of altruism, righteousness, and myopia increases the focus on winning the next high-stakes election rather than on discovering or enforcing socially productive institutions. (shrink)

ABSTRACTJack Knight and James Johnson argue in The Priority of Democracy that democracy should be theorized and justified pragmatically: Democratic deliberations should be given a central coordinating role in society not because they realize any particular abstract ideal, but because they would elicit the information needed to solve real-world problems. However, Knight and Johnson rely on a naïve economic understanding of knowledge that assumes implausibly that individuals know what they need to know and need only aggregate thier separate beliefs. It (...) is precisely because we may not know what we need to know that we need to continually test our ideas. Contra Knight and Johnson, moreover, we ought to accept that our ability to interpret social experiments properly is questionable. A pragmatic approach to social inquiry, therefore, ought to investigate what beliefs political actors actually bring to collective decisions rather than how theoretically perfect beliefs ought to be elicited and aggregated. (shrink)

ABSTRACTIlya Somin's Democracy and Political Ignorance represents a missed opportunity to fully examine the implications of public ignorance in modern democracies. Somin persuasively argues that existing levels of public ignorance undermine the main normative accounts of democratic legitimacy, and he demonstrates that neither cognitive shortcuts nor heuristics can provide a quick fix for democracy. However, Somin seeks to find a simple explanation for public ignorance in the conscious, rational choices of voters. He thus commits to the position that voters choose (...) to be ignorant and irrational—and to the simplistic implication that given the right incentives they would choose otherwise. This position is empirically problematic, methodologically flawed, and theoretically redundant. On the more plausible view that ignorance is the inadvertent result of social complexity, it is clear that simply focusing on incentives tells us little about what voters would or would not know under different institutional circumstances. (shrink)