COGNITION AND ECONOMICS PART 10 pptx

COGNITIVE THEORY AS THE GROUND OF POLITICAL THEORY IN PLATO, POPPER, DEWEY, AND HAYEK $ Richard A. Posner John Dewey and Friedrich Hayek, despite their differences in field, nationality, generation, and politics, have a number o f things in common 1 and among these is the derivation of a comprehensive social, political, and economic theory from a theory abou t t he structure or operation of the human brain, what I am calling ‘‘cognitive theory.’’ In the case of Dewey, a philosopher, one would be i n clined to substitute ‘‘epistemology’’ for ‘‘cognitive theory’’ 2 and in the c ase of Hayek, who dabbled in b iology, one might substitute ‘‘co gnitive science.’’ But the similarity is considerable, and so the choice of a single term for both is warranted. My particular focus is on Hayek’s cognitive theory, with Dewey used mainly as a stalking horse. I begin by situating the Deweyan and Hayekian projects in the broader philosophical tradition o f deriving political from cognitive theory. I end with a brief d iscussion of the bearing of Hayek’s cognitive theory on several current issues in social science. $ This is the expanded text of a talk given at the Third Annual Symposium on the Foundations of the Behavioral Sciences – entitled ‘‘Hayek, Dewey and Embodied Cognition: Experience, Beliefs and Rules’’ – sponsored by the Behavioral Research Council of the American Institute of Economic Research and held on July 18–20, 2003. Cognition and Economics Advances in Austrian Economics, Volume 9, 253–273 Copyright r 2007 by Elsevier Ltd. All rights of reproduction in any form reserved ISSN: 1529-2134/doi:10.1016/S1529-2134(06)09010-7 253 1. PLATO AND POPPER This project of derivation that I have just described may seem strange, but is not. In this as in many respects Plato set the fashion for the millennia to come. The ideal state sketched in the Republic is not only an analogy to the soul (though it is that too); it is an implication of Plato’s conception of human mental capacity, a conception that is ontological as well as episte- mological. It was Plato who, according to Aristotle, first separated a universal (i.e., a concept) from particulars (i.e., a concept’s physical embodiments or expressions). There are a multitude of chairs, very differ- ent in size, shape, color, and design, yet there is also a concept of the ‘‘chair,’’ in which all the physical chairs participate. The concept has no physical body and therefore in a sense exists outside time and space – it is immaterial and eternal. But Plato believed, reasonably as it seems to me, that it is real. It is real in the same way that a line or circle in Euclidean geometry is real even though it is not identical to any physical line or circle and cannot be – the Euclidean line has only one dimension, and the Euclidean circle only two, and there are no one-or two-dimensional objects in the physical world (although electrons are dimensionless), as far as we know. But Plato was a metaphysical realist in a stronger sense than that of someone who merely believes that concepts are real though not ‘‘embod- ied,’’ that is, not located in space, as physical objects are. He was an ‘‘ab- solute’’ realist. That is, he be lieved that what we would call concepts and he Forms or Ideas existed independently of any knowing mind and any phys- ical example. He believed that there was a Heaven of Forms in which these archetypes resided, as it were. It is unclear and unimportant whether he thought one would find there the archetypes of artifacts – the a rchetypical chair or horse, for example, to which actual chairs and horses and circles in our world were mere approxim ations. His emphasis was on abstract no- tions, such as the Just, the Good, the Equal, and the Large, and thus there was, for example, the Just as well as behaviors that were just . And, crucially, he believed that the Forms could be discovered by a human being of rea- sonable intelligence and philosophical aptitude, provided he was rigorously trained in philosophical reasoning. Philosophy was the royal road to moral and political truth and goodness. The leap from numbers, as metaphysical ‘‘reals,’’ to normat ive concepts, as metaphysical ‘‘reals,’’ was highly questionable, because while every com- petent person believes that two plus two equals four, suggesting that two plus two ‘‘really’’ does equal four, compet ent people often disagree on nor- mative moral and political questions, suggesting that there is no reality out RICHARD A. POSNER254 there to force convergence. But the leap was crucial from a political stand- point because it enabled Plato to claim that, through philosophy, what was true and good in politics could be ascertained, just as in mathematics. From here it was only a small step for Plato to advocate that, ideally at least – for he was aware of the practical obstacles 3 – philosophers should rule. Until they did rule, the state would never be well governed. Philosophy alone could distinguish truth from opinion, and it is natural to suppose that the handful of persons who know with certainty what is the right course in politics should be the rulers of the state, rather than that ignorant hoi polloi should be the rulers. The latter have access not to truth but only to opinion and so are radically less competent. The ideal state as sketched in the Re- public is anti-democratic, indeed totalitarian, though disinterestedly so be- cause the philosophers do not have a lust for power. The fiercest, though not the fairest (Hallowell, 1965, p. 273), enemy of Plato’s cognitive-political theory was the philosopher of science Karl Popper (1902–1994) (Popper, 1963, vol. 1; Lessnoff, 1980, p. 99). The f erocity derives in part from the f act that Popper too had a co gnitive theory from which he derived a political theory – what he called the ‘‘open society’’ and corresponds to modern notions of liberal democracy. But it was a cognitive theory that was the opposite of Plato’s, so it is no surprise that it generated a political theory that was the opposite o f Plato’s political theory. Popper was a fallibilist. He believed that we can know error but never truth. 4 His model of the reasoning process was scientific inquiry. For him the scientifi c method consisted of pro - posing empirically testable hypotheses and then testing them. If the observed results of a test were inconsistent with the hypothesis being tested, the hy- pothesis was falsified and the scientist would have learned that he was barking up the wrong tree. But if the observe d results were consistent with the hy- pothesis, this did not prove that the hypothesis was true. A future experiment might yield discrepant results, and not just because of a defect in the testing method. Newton’s universal law of gravitation passed empirical tests for cen- turies, but eventually was determined to be erroneous because contradicted by observations designed to test Einstein’s general theory of relativity. The example of Newton’s law is an important one in saving Popper from a charge of epistemological nihilism. Alth ough eventually proved false, Newton’s law yielded and continues to yield useful knowledge, because it was less false than the theories it displaced. A hypothesis that withstands repeated empirical tests demonstrates by this that it has sufficient reliability to warrant action in accordance with it even though the possibili ty that it will someday be ov erthrown cannot be negated, and, in some cases, such as that of Newton’s law, even after it has been overthrown. Cognitive Theory as the Ground of Political Theory 255 If Plato’s capital-T ‘‘truth’’ is not attainable, if instead intellectual progress depends on generating and testing empirically rich hypotheses, the vesting of intellectual and political authority in philosophers makes no sense. Since scientists do not enjoy seeing their hypotheses refuted, scientific progress, depends on the creation of a competitive commun ity dedicated to freedom of inquiry. Since, moreover, it is far more difficult to test hypoth- eses concerning the moral or political Good than it is to test scientific hy- potheses, there is no basis for giving a monopoly of moral and political control to a body of intellectual specialists. Better to have a diversity of inquirers, or what I have elsewhere called ‘‘moral enterpreneurs’’ (Posner, 1999, pp, 7, 8), in the hope that some of their moral and political insights will survive, for a time anyway, the challenge to moral guidance and po- litical governance posed by the actual conditions, personalities, and events of particular societies. 2. DEWEY John Dewey (1859–1952), like Popper though earlier, opposed Plato’s cog- nitive and political theories, proposing his own cognitive theory and the political theory that seemed to him to flow from it. I have written about Dewey’s cognitive and political theorie s at some length elsewhere (Posner, 2003, Chapter 3), so I shall be brief here. Remember that for Plato intel- lectual inquiry is a search for the antecedently real – for that which exists independently of human cognition. The univers e, including mathematical and even moral and political entities or concepts, is basically a passive object waiting to be discovered by huma n beings using the methods of exact reasoning. The quest for its secrets is seen by Plato, at least as understood by Dewey, to be both lofty and lonely, conducted by virtuosi. The qual- ification ‘‘at least as understood by Dewey’’ may be important, because the Socr atic met hod employed in the dialogues presupposes a plurality of inquirers rather than a lone scientist in a la b. On the other hand, the philosopher k ings of the Republic are not envisaged as deliberating in that fashion. Dewey questioned the emphasis that the approach taken by Plato and Plato’s successors placed both on truth and, as Dewey saw it, on the in- dividual. Scientific and other inquiry, he argued, actually is oriented toward the cooperative acquisition of useful knowledge by whatever tools lie to hand, including imagination, common sense, know-how, and intuition. ‘‘A proposition may be said to be verified if it serves as a useful guide to future conduct’’ (MacGilvray, 1999, pp. 542, 545). True knowledge thus includes RICHARD A. POSNER256 tacit (‘‘how to’’) knowledge as well as the articulate knowledge acquired by formal reasoning and systemat ic empirical methods, for both are useful. Dewey rejected what he called ‘‘the wholly at large view of truth which characterises the absolutists’’ (Dewey, 1906, pp. 293, 305 n. 1; emphasis in original), by whom he meant Plato and Plato’s followers in the mainstream Western philosophical tradition. Dewey said that ‘‘it would be a great gain for logic and epistemology, if we would always translate the noun ‘truth’ back into the adjective ‘true,’ and this back into the adverb ‘truly,’’’ for ‘‘truth means truths, that is, specific verifications’’ (pp. 305–306; again, emphasis in original). There is no way of knowing when one has found ‘‘the truth’’ because one cannot step outside the universe and observe the cor- respondence between it and one’s descriptions. All that people are able to do, and all that most of them are interested in doing, is getting better control over their environment, enlarging their horizons, and enriching and im- proving their lives. The knowledge required for these endeavors is collective, being produced by the cooperative efforts of diverse inquirers – intelligence is distributed throughout the community rather than concentrated in an elite – and validated by the community’s judgment of its utility. We might call this theory of knowledge ‘‘epistemic democracy.’’ No elite has a monopoly of truth. In fact, knowledge of truth is always just out of reach, making ‘‘truth’’ a regulatory, an orienting, ideal. (Not that Dewey, any more than Popper, is a skeptic; what they doubt is not that our claims of truth ever correspond to an external reality, but that we can ever be certain of that correspondence.) Thus, to Dewey, the proposal in Plato’s Republic of rule by an elite possessed of ‘‘a comprehensive rational understanding of eternal reality and truth, to be nurtured by a rigorous and extended higher education in all the mathematical sciences from arithmetic to astronomy’’ (Schofield, 2000, pp. 190, 224) was quixotic. Dewey’s skepticism about the truth claims of conventional epistemology is a version of fallibilism quite close to Popper’s. Fallibilists ascribe the success of science in producing useful knowledge to lack of certitude and a resulting insistence that beliefs be tested against evidence – in Popper’s version of fallibilism that hypotheses be confronted by data and abandoned if the data are inconsistent with them. Dewey dubbed his own approach ‘‘experimentalism’’ and the word aptly conveys the tenor of his thought as well as the resemblance to Popper’s cognitive theory, though Popper did not emphasize the communal character of knowledge and inquiry. Dewey is more the ‘‘psychologist,’’ emphasizing the structure of human reasoning; Popper is more the ‘‘sociologist,’’ generalizing from his under- standing of the practices of the scientific community. Dewey commended the Cognitive Theory as the Ground of Political Theory 257 temper that, impatient with convention and the accustomed ways of doing things – the sediment of habit – insists on trying now this, now that, in a creatively restless search for better means. The search yields, as a byproduct, better ends as well. One might take up ballet in order to improve one’s posture and discover that one loved the ballet for its beauty; a means would have become an end. Popper had made a similar point even more strongly. He thought that a great weakness of utopian social engineering, of making over society as the Marxists, for example, wanted to do, besides the inor- dinate demands it made on knowledge, was that in the process of working toward a distant end the social engineer would discover and embrace new ends and discover that the means he would have to employ to achieve them would carry him away from rather than toward the distant end. As Dewey explained under the rubric of ‘‘interactionism,’’ our beliefs are a product not of pure thought but of the interplay of thought and action. When airlines were deregulated, consumers did not ‘‘know’’ what kind of airline service they wanted; they learned what they wanted by experience with the various new services that the airlines, freed from the dead hand of regulation, offered. A central planner could not have designed the optimal configuration of a deregulated airline industry, because the essential infor- mation concerning consumer demands simply did not exist before the de- regulated services were offered, just as the person who took up ballet to improve posture could not know beforehand that the pleasure of ballet would become an end in itself. If experts do not have the lock on knowledge that Plato thought they had, the epistemic basis for authoritarian rule by philosophers (or theologians, or Marxists, or other utopian social engineers, or others who claim the right to rule on the basis of superior wisdom or knowledge) is removed, along with any basis for the censorship of moral and political ideas on the ground that they are false and any legitimating ground for a fixed and durable political hierarchy. Dewey’s philosophical project of overturning Platonic epistemol- ogy provides support for making democracy the default rule of political governance in the same way that Platonic epistemology provides support for the authoritarian political system described in the Republic. Dewey like Pop- per turned Plato on his head by accepting the linkage between knowledge and politics but arguing that knowledge is democratic 5 and so should politics be: Democracy for Dewey is a good form of political organisation because it is the appro- priate political modelling of a more general form of human interaction which has both epistemological and valuative advantages, and which finds its best realisation in a free scientific community devoted to experimental research. Just as such a research commu- nity is trying to invent theories that will allow us to deal with our environment in a RICHARD A. POSNER258 satisfactory way, so a good human society would be one that was a kind of experimental community devoted to trying to discover worthwhile and satisfying ways of living. (Geuss, 2001, pp. 124–125) This is not a compelling argument. Fr om the fact that Plato was wrong to think rule by philosophers desirable it does not follow that democrac y is the best form of government; for it is not the only alternative to rule by phi- losophers. There is an impermissible leap in the Deweyan claim that ‘‘in- telligence is present most distinctively not in the contemplative life of the leisured elite, but in the workaday practicality of the masses’’ (MacGilvray, 1999, p. 551). The ‘‘leisured elite’’ may well lack the kind of intelligence necessary for good politics, but it does not follow that the kind of practical intelligence possessed by ordinary people for navigating their personal and professional lives equips them to govern or make political judgments. Po- litical democracy has to be defended on its own merits rather than by ref- erence to its consonance with sound cognitive theory. We shall see that from psychological premises much like Dewey’s, Hayek reasoned not that the people should rule, but that the scope of government – the domain of dem- ocratic rule – should be contracted. Given the history of democracy, and its virtual disappearance from the political scene between the fourth century B.C. and the eighteenth century A.D., it is doubtful that ‘‘the workaday practicality of the masses’’ is always and everywhere a superior basis for political governance to the knowledge possessed by an elite. Dewey wrote extensively on law and public policy in an effort to defend political democracy and a socialistic organization of the economy. But these writings, while some of them, especially those on law, are excellent, owe little to his cognitive theory (Posner, 2003, Chapter 3). The social significance of that theory seems to have been largely negative, in undermining the Platonic approach to political governance. Yet not completely negative, for Dewey in sharp contrast to Hayek was a socialist, that is, one who believed in col- lective action as the answer to society’s social and economic problems; and he may have thought that since thinking was a collective activity, solutions to social and economic problems should be collective as well. But the con- clusion does not follow from the premise. Dewey’s cognitive theory that I have been describing is Darwinian in the sense of being derived from reflection on the type of mental operations that would be adaptive in the environment of early man. As Richard Rorty explains, speaking of pragma tists, such as Dewey: Pragmatists are committed to taking Darwin seriously. They grant that human beings are unique in the animal kingdom in having language, but they urge that language be understood as a tool rather than as a picture. A species’ gradual development of Cognitive Theory as the Ground of Political Theory 259 language is as readily explicable in Darwinian terms as its gradual development of spears or pots, but it is harder to explain how a species could have acquired the ability to represent the universe – especially the universe as it really is (as opposed to how it is usefully described, relative to the particular needs of that species). (Routledge Encyclo- pedia of Philosophy, 1998, vol. 7; s.v. ‘‘Pragmatism,’’ emphasis in original) That is, language, and mental operati ons more broadly, are a tool for coping with the environment rather than a method for establishing the strong sense of truth (‘‘the universe as it really is’’) that Plato thought attainable by philosophers. 3. HAYEK Dewey’s cognitive theory is abstract in the sense that, while characterizing human mental processes in a certain way (what I am calling epistemic de- mocracy) and attributing the characterization to selection pressures, it does not specify the mechanism by which the brain operates; and that is equally true of the cognitive theories of Plato and Popper. One hesitates to call these philosophers ‘‘cognitive scientists.’’ Yet that appellation just might be at- tached to Hayek, to whose cognitive theory I now turn. On a superficial analysis, Hayek’s cognitive theory consists of just two propositions, and both are empirical (inductive or observational) rather than theory-based. The first is that human knowledge is so widely distrib- uted throughout the human population that no single person or agency (‘‘central planner’’) could acquire enough of it to allocate the society’s re- sources efficiently. This is a result of the division of labor, which has been carried to an extreme in modern society and greatly increases efficiency by enabling specialization, but which has brought abou t, as an unavoidable byproduct of specialization, a narrowing (along with a deepening) of the knowledge possessed by any single individual. He knows more about less. So far there is close convergence between Dewey and Hayek, both em- phasizing the radical disper sion of knowledge across persons under the conditions of modernity. But they quickly diverge because Hayek, unlike Dewey (who was not an economist, as Hayek was), saw that the price system was a method, probably the best method and certainly a better method than central planning, of aggregating this dispersed knowledge. An individual may realize that a particular input that he needs in his business is likely to become scarce, so he buys up a large quantity and stores it. His action forces up the price of the input, and the higher price increases the costs of other users and leads them to raise their prices. Price thus operates as a method (Hayek would say the method) by which private information is diffused throughout the entire market . 6 RICHARD A. POSNER260 The second proposition of Hayek’s cognitive theory is that private or local information (the sort of unsystematized information possessed by an individual and illustrated in the preceding paragraph, as distinct from in- formation that is codified in general principles stated in books or articles and thus is readily accessible) is impounded not only in price but also in rules. 7 A firm adopts a new practice – it might be a new method of com- pensating its employees. The firm might have hit on the new practice by accident or by hunch rather than by explicit cost–benefit analysis or other conscious reflection on how best to fit means to ends. Suppose the practice, whatever brought it about, results in lower costs and higher profits for the firm. That is impor tant information to which the firm is likely to respond by codifying the practice as a rule. The difference between a rule and a standard (‘‘profit maximization,’’ for example) that requires fresh analysis in every case is that a rule singles out one or a small number of facts to be outcome determining. The person applying the rule does not have to know its pur- pose, or the net benefits of applying it in a parti cular case; all he has to know is wheth er the fact that triggers application of the rule is present or absent. Eventually the reason for the rule may be forgotten (and there may have been no reason , or at least no articulable reason), yet this may not matter; continued adherence to the rule will be a way of exploiting the information impounded in the rule without need for thought beyond what is necessary to determine whether the condition for the application of the rule is satisfied. Complying with a rule, like responding to a change in price, can be a method of utilizing knowledge without actually possessing knowledge. I said that the practice might have been hit upon by accident or by hunch. The first possibility woul d represent the operation of trial and error, the Popperian method of acquiring useful knowledge. The second belongs to the domain of ‘‘tacit knowledge.’’ 8 People know how to do many things that they cannot ‘‘package’’ as transferable knowledge. A person who knows how to ride a bicycle cannot convey his know-how in words to another person in a way that a person who knows how to bake a cake can convey that know-how just by handing the other person a detailed recipe. Hayek sensibly believed that a great deal of knowledge, including a great deal of the knowledge utilized in business, is nontransferable just as knowledge of rid- ing a bike is. (He believed this in part because he thought a complex system could be understood by only a more complex system, and hence the mind could never fully understand itself. I don’t know whether that makes any sense.) This belief strengthened his challenge to the feasibility of central planning. If much of the knowledge that is scattered across the millions of economically active persons in a society is tacit, then no matter how great Cognitive Theory as the Ground of Political Theory 261 the intellectual capacity of the central planner is, he (or it, if we speak more realistically of an agency rather than of an individual) will not be able to obtain all the information needed because much of it will be in uncommu- nicable form – uncommunicable except by pricing. The price system is the alternative to central planning, and to the extent that knowledge is tacit it would be a superior alternative even if the central planner had an unlimited capacity to absorb and analyze data. Hayek – this is his most important contribution to economics, and it comes directly from his cognitive theory – thus offered a new rationale for the price (or market) system. The old rationale, the rationale associated with classical or neoclassical economics (as distinct from ‘‘Austrian’’ economics, the economics of Hayek, his predecessors Karl Menger and Ludwig von Mises, and his relatively few successors), was that the price system was the method of overcoming self-interest, of turni ng private vice into public vir- tue, of leading selfish individuals by an invisible hand to serve the public interest. People on this view are rational not only in the sense of being committed to means-end reasoning but also in the sense of having a clear perception of the end and of the costs and benefits of the alternative means to that end. However, they are too self-interested, too deficient in altruism, to be trusted to use their knowledge for social ends and so the trick is to induce them to behave in a way that will maximize social welfare as a whole; and the price system is the trick. Hayek did not think the main problem of which the price system was the solution was self-interest and a resulting shortage of altruism; he thought that people needed the price system in order to overcome the deficits in their knowledge. The power of that insight was that it denied the feasibility of central planning, which at the time that Hayek began propounding his thesis, namely in the 1930s, the depression decade, was considered by most econ- omists a viable and by many a more efficient method of allocating resources than the price system. Hayek was one of the first to see that, and to explain cogently why, this was incorrect. Hayek’s second proposition, about the importance of rules as a method for dealing with the knowledge deficits that gave rise to his defense of the price system, belongs to the last part of his career, beginning in the 1960s. 9 Whereas the first proposition undergirds Hayek’s defense of free markets, the second is the key to his political and legal theory. With knowledge dispersed and much of it tacit, there is no way in which a central authority, such as a legislature or a court, can gather and marshal the knowledge necessary for sensible deci- sions on issues of law or policy. The dispersed and tacit knowledge will, however, be found aggregated in rules that grow out of the practices of the RICHARD A. POSNER262 [...]... planning’’ (and an organization is a little central planned economy) that he was so acutely aware of The challenge is to minimize those costs, and Hayek’s thought can help in this task 4 HAYEK’S LEGACY It remains to consider briefly the significance of Hayek’s cognitive theory for three current movements in social science: Austrian economics; the law and economics movement; and behavioral economics I... we and most other nations have, and Hayek offers only limited assistance in evaluating such a system We can see this by considering for a moment an economist who shares Hayek’s skepticism about the utility of the key concepts in neoclassical economics of maximization and equilibrium Hayek is skeptical because both maximization and equilibrium imply positions, achieved by the firm or the individual, and. .. impounded in customs, the proper function of legislatures and courts is in the main merely to ascertain and enforce them Hayek acknowledges that legislatures also have to pass tax and other laws relating to the operation of the government and that the courts have from time to time to tidy up the customary rules that they enforce But for the most part law and policy in his conception of the ideal state are... (Horwitz, 2000, p 29) is to misunderstand neoclassical economics as it is practiced today Austrian economics is attacking a dirigiste version of neoclassical economics that vanished long ago The rational-choice model is dominant in the economic analysis of law for reasons unrelated to insensitivity to costs of information Austrian economists misunderstand this and as a result criticize economic analysis... 270 RICHARD A POSNER and determination of the person who launches the hypothesis into the world’’ (Ryan, 1995, p 101 ) 6 The clearest exposition of Hayek’s theory of price is Hayek’s (1945) ‘‘The Use of Knowledge in Society’’ 7 See, for example, Hayek (1978, pp 3, 7, 10) , New Studies in Philosophy, Politics, Economics and the History of Ideas; Hayek (1963, p 321) ‘‘Rules, Perception, and Intelligibility’’... some productive process Of course the command and control method is not always more efficient than the price system, for if it were, society-wide central planning would be feasible after all, and Hayek had shown that it is not But sometimes it is the more efficient method, and the important question once the extremes are rejected is when is it more efficient And similarly with custom Sometimes it makes... apt and powerful weapons, defeating them resoundingly, and earning in consequence an honored place in the history of political and economic thought, but not setting forth principles or methods that could be used to solve the problems of the next stage, the postsocialist stage, of economic and political ordering He has a keen sense of how individuals coordinate their activities through contract and. .. mind-generated categories such as causation and time Hayek’s categories differ in two ways: the individual’s classificatory apparatus is the product of idiosyncratic factors of personality and culture rather than just of basic hard-wired features of the brain (presumably the capacity to perceive two events as cause and effect is hard-wired) and thus differs across individuals; and the apparatus is not fixed but... knowledge of the costs and benefits of alternative methods of satisfying human wants as to make the omniscient central planner a realistic aspiration There was a time that many neoclassical economists believed this The heyday of that belief was the 1930s, and so it is no surprise that Hayek and Coase should have associated core concepts of neoclassical economics, such as maximization and equilibrium, with... the locus (dispersed) and character (often tacit and hence uncommunicable in words) of knowledge But there is more There is a theory of mind that has no close counterpart in Plato, Popper, or Dewey The theory regards perceptions as the product of the interaction between sensory impressions – the impact of the external world on the organs of sense, such as sight and hearing – and a classificatory apparatus . Austrian economics; the law and economics movement; and behavioral economics. I have already suggested its significance for organizational economics – a significance that seems to me wholly and uncontroversially. associated with classical or neoclassical economics (as distinct from ‘‘Austrian’’ economics, the economics of Hayek, his predecessors Karl Menger and Ludwig von Mises, and his relatively few successors),. more efficient way of organizing production and sometimes the com- mand and control method of production within a firm is more efficient. But the command and control method of directing production