In “Popper, Weber, and Hayek,” I claimed that the economic and political world governed by social democracy is too complex to offer hope for rational social‐democratic policy making. I extrapolated this conclusion from the claim, made by Austrian‐school economists in the 1920s and 30s, that central economic planning would face insurmountable “knowledge problems.” Israel Kirzner's Reply indicates the need to keep the Austrians’ cognitivist argument conceptually distinct from more familiar incentives arguments, which can tacitly reintroduce the assumption of omniscience against (...) which the Austrian economists rebelled. Callahan's Reply illustrates the need to keep in mind the hypothetical, conditional nature of economic arguments. Notturno's Reply changes the subject by asserting the intrinsic value of social‐democratic participation, regardless of its outcomes—even while, like Talisse's Reply, ignoring the evidence that public ignorance and elite dogmatism probably can't be mitigated by more information or by appeals to be open minded. And Hill focuses on the very real imperfections of market and other private‐sphere decision making, without weighing the shortcomings of the political alternatives. Markets and other private‐sphere decision arenas don't have to be perfect for them to improve upon public‐sector processes. In the latter, cognitive demands tend to be much greater, because of the divergence of modern social problems from the conditions that would have faced the hunter‐gatherers whose cognitive apparatus we have inherited. (shrink)

Karl Popper's methodology highlights our scientific ignorance: hence the need to institutionalize open‐mindedness through controlled experiments that may falsify our fallible theories about the world. In his endorsement of “piecemeal social engineering,” Popper assumes that the social‐democratic state and its citizens are capable of detecting social problems, and of assessing the results of policies aimed at solving them, through a process of experimentation analogous to that of natural science. But we are not only scientifically but politically ignorant: ignorant of the (...) facts that underpin political debate, which are brought to our attention by theories that, as Max Weber emphasized, can be tested only through counterfactual thought experiments. Public‐opinion and political‐psychology research suggest that human beings are far too unaware, illogical, and doctrinaire to conduct the rigorous theorizing that would be necessary to make piecemeal social engineering work. F.A. Hayek realized that the public could not engage, specifically, in piecemeal economic regulation but failed to draw the conclusion that this was due to a specific type of political ignorance: ignorance of economic theory. (shrink)

In his reply to my critical book review, ?Don't Shoot the Messenger: Caldwell's Hayek and the Insularity of the Austrian Project,? Bruce Caldwell criticizes my account of Carl Menger's ?imaginary goods,? and rejects the line of reasoning I advanced in drawing Keynesian conclusions from Hayekian premises. But Caldwell's proposed methodology for assessing the significance of ?imaginary goods? in advanced market economies is ill conceived; and my pathway from Hayek to Keynes merely pursues a thoroughgoing subjectivism to its inexorable conclusion, which (...) is not, as Caldwell suggests, countercyclical fiscal policy. (shrink)