Scheall, Scott. F. A. Hayek and the Epistemology of Politics: The Curious Task of Economics. Routledge, 2020.
We often think about steps to align policymaker incentives with constituent interests, but principal-agent problems are far from the most pressing issue faced by democratic governments. The problem of policymaker ignorance is “logically prior” and shapes political incentive structures. Hayek’s political epistemology provides a basis for considering the relative epistemic burdens of political actions. Democratic constituents almost certainly ask policymakers to solve problems that are too epistemically weighty; policymakers are impotent, on grounds of their ignorance, to deliver what voters request.
Such is the thrust of Professor Scheall’s argument, and it is a very good argument, as far as it goes. I firmly recommend the book. F. A. Hayek and the Epistemology of Politics is a slim, accessible volume that performs two invaluable functions. First, Scheall describes two of the most important episodes in the history of 20th-century economics: the Calculation Debate between Mises/Hayek and the market socialists, and the aggregate demand management debate between Keynes and Hayek. Here he mainly retreads ground that is well-known to historians of economic thought; the value of his contribution arises from the fact that these episodes are a combination of ignored and badly misunderstood outside of academic economics. Scheall’s account captures their general and philosophic interest without sacrificing much rigor, and I hope his research program brings more non-economists into dialogue with Hayek. Second, he advances the Hayekian line of argument to make what I take to be a mostly novel point in political theory: potential policies are variably epistemically burdensome, in that evaluating the effects and appropriateness of means of one policy might be relatively easy, or it might be impossible. Democracies suffer from policymakers who are charged with acting on the basis of knowledge that they do not, perhaps cannot, have. For obvious reasons, it is bad when policymakers act from a “pretense of knowledge.”
Scheall advances six theses, divided into chapters, which I detail with occasional editorializing below.
(1) The epistemic problem is logically prior to other normative considerations in political decisionmaking, for two reasons. First, a person’s menu of options is always constrained by what a person knows how to do (that is, one cannot be incentivized to do something one does not know how to do). Second, ought implies can (or some weaker relation than implication) means that ought implies knows enough to. So a policymaker can only be obligated to do something she knows how to do.
(2) The Austrian economists (chiefly Mises and Hayek) have developed something approaching a theory of policymaker ignorance, through their work on the Socialist Calculation Debate and business cycle theory. Moreover, they show that “What cannot be realized deliberately… can only be realized if spontaneous forces intervene” (p. 24). Markets coordinate activities – through the price mechanism – in ways that deliberate control of markets cannot, and which deliberate attempts at control will hamper.
I have some concerns about the history of thought in this chapter, though his reading of history on the whole is quite good. It suffers from two kinds of minor deficiency. First, Scheall omits to give Mises due credit on business cycle theory. To be sure, their theories are not identical (and Hayek has two theories), but Hayek is deeply indebted to Mises’ (1911) Theory of Money and Credit, a work that Scheall does not cite. Second, I have numerous, relatively unimportant quibbles with Scheall’s presentation of the Calculation Debate; I refer the curious reader to Lavoie ([1985] 2015) or Boettke, Candela, and Truitt (2024) for accounts of the debate that diverge somewhat from Scheall’s. Of course, Scheall allows up front that his book is not primarily a contribution to the history of thought, and our differences do not affect his main argument.
(3) The Austrian economists confront a challenge in the form of their own argument. If Austrians prefer liberal political order, they must show that policymakers have the requisite knowledge to liberalize. “Neither liberalism nor illiberalism but skepticism… is the ideological implication of the problem of policymaker ignorance. If you have not been shown that policymakers can realize some goal, why would you believe that they can?” (106).
Scheall claims that Austrian-school economists have not recognized the epistemic problem facing liberal transitions, but this is hardly fair. In fact, we would tend to say that we positively do not know how to transform institutions. Boettke, Coyne, and Leeson (2008) develop an argument that I take to be at least roughly representative. Truitt and Burns (forthcoming) advance an argument rather like Scheall’s: the calculation problem makes the establishment of new property rights epistemically burdensome in the absence of thick markets. Leeson (2019) takes a different route to the same conclusion: economists do not know (at least qua economics) how to improve institutions. This is one reason why classically liberal economists have become so fascinated with history. We might be able to use the tools of economics to understand why liberalism appeared when and where it did, even if we cannot engineer it elsewhere. Scheall’s point is a good one, but I am not sure who he is arguing against.
(4) Hayek’s epistemology provides firmer ground for the calculation argument than Mises’. Mises thought social science ought to proceed according to axiomatic-deductive reasoning; economics is fundamentally an a prioristic system of logic, rather like mathematics, or at least holding an epistemic status similar to that of mathematics. Hayek is an empiricist child of the Scottish Enlightenment; his “naturalized empiricism” enables him to explain how a system can make use of knowledge that no member of the system holds.
This chapter is provocative, and I think basically right, but it is also underdeveloped. I am not sure, after reading, exactly what Mises’ epistemology is. To be fair, neither am I sure after reading Mises – though I take Mises to be very much a Kantian, which is a different (if equally, and even for similar reasons, objectionable) thing than the sort of Cartesian rationalist Scheall makes him out to be. Nor am I clear exactly how Hayek’s ontology of emergence relates to his epistemology, nor why Mises’ calculation argument is ultimately in tension with his own epistemology. I like the argument, and I think I buy it, but I am not sure why. Chapter 4 convinced me that there is a congeniality between Hayek’s social ontology, epistemology, and the calculation argument, which in turn is lacking for Mises “rationalism” or, as I see it, his quest for the synthetic a priori science of human action. But congeniality is a vague relation, and I would like to see Scheall’s argument spelled out with much greater precision. (I think Michael Polanyi is the thinker to leverage here.)
(5) Popular sovereignty is rather bad at providing the epistemic mechanisms necessary for policymakers to know what they ought to do or how to do it. We should thus apply Hayekian political epistemology to develop mechanisms for mitigating policymaker ignorance, provided that reforms themselves meet the epistemic burdens they place on policymakers.
(6) We should, moreover, consider constitutional reforms to constrain the scope of political action altogether, such that the decisions confronting policymakers are epistemically manageable.
(5) and (6) are, of course, the most interesting claims advanced in the book, and I spend comparatively little time on them here because I would rather the reader simply see what Scheall has to say for himself. He does not disappoint.
Scheall has assembled an important collection of arguments that should interest philosophers, political scientists, and economists alike. He resources the history of economic thought in accessible prose, and develops a powerful argument for skepticism about the powers of policymakers.
Tegan Truitt is a PhD candidate in the economics department at George Mason University.
References
Boettke, Peter J., Christopher J. Coyne, and Peter T. Leeson. 2008. “Institutional Stickiness and the New Development Economics.” American Journal of Economics and Sociology 67 (2): 331–58.
Boettke, Peter, Rosolino A Candela, and Tegan Lindstrom Truitt. 2024. The Socialist Calculation Debate. Cambridge University Press.
Lavoie, Don. (1985) 2015. Rivalry and Central Planning. Mercatus Center.
Leeson, Peter T. 2019. “Logic Is a Harsh Mistress: Welfare Economics for Economists.” Journal of Institutional Economics 16 (2): 145–50.
Mises, Ludwig von. 2019. Theory of Money & Credit. Liberty Fund.
Truitt, Tegan, and Scott Burns. Forthcoming. “The Role of Prices in Privatization.” Independent Review.
