Brian Schutt: Revisiting F.A. Hayek’s prize speech 50 years later

This year is the 50th anniversary of Friedrich A. Hayek’s receiving the Nobel Prize in economics. His speech, “The Pretence of Knowledge,” is as applicable today as it was in 1974, as his caution against centralizing control to experts interested in ordering the economy and society (what he called “scientism”) is needed more than ever.

For the unfamiliar, Hayek was an economist born in Vienna, Austria, in 1899, a major contributor to the Austrian School of Economics with a wide range of research and writing. However, he is most famous for his work in political philosophy, including the book “The Road to Serfdom,” published in 1944.

Thirty years later, Hayek’s selection for the Nobel Prize was surprising, as most of his field had sided with his intellectual rival, John Maynard Keynes, who believed in a more activist policy approach. Hayek used the Nobel platform to take a shot across the bow of the profession and against scientism broadly.

“It seems to me that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences—an attempt which in our field may lead to outright error. … This means that to entrust to science—or to deliberate control according to scientific principles—more than scientific method can achieve may have deplorable effects.”

The “deplorable effects” Hayek observed were that these “men of the system,” as Adam Smith called them, believed so deeply in their capacity for predictive powers, they were rearranging society and eroding liberty in the process. Beyond liberty as a stand-alone value, Hayek believed that liberty and centralization were at odds, with liberty leading to a society organized through norms emerging from the bottom up, creating a “spontaneous order.” That’s contrasted with centralization, which necessarily concentrated knowledge, making society structurally weaker and ripe for failure.

This philosophical framing is missing from current discourse completely. Political debate is so steeped in personality and rhetoric that analysis of candidates and policy is merely a debate about technique and tactics on “how to solve our problems.” Few are even asking, “Is it the state’s role?”

The challenge today in resisting scientism is even more difficult as large data models, computing power and AI make predictive capabilities greater than ever. This increased capacity to tell the future, coupled with a public more conditioned for immediate gratification, makes it a culture ripe for manipulation.

As Hayek observed, “The conflict between what in its present mood the public expects science to achieve in satisfaction of popular hopes and what is really in its power is a serious matter because … so long as the public expects more there will always be some who will pretend, and perhaps honestly believe, that they can do more to meet popular demands than is really in their power.”

Hoping for leaders with humility about what can be known and thus what is good and proper for government to be doing in 2024 is admittedly naive. But as Hayek encouraged, “If old truths are to retain their hold on men’s minds, they must be restated in the language and concepts of successive generations.”

Hayek concludes, “The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson of humility which should guard him against becoming an accomplice in men’s fatal striving to control society—a striving which makes him not only a tyrant over his fellows, but which may well make him the destroyer of a civilization which no brain has designed but which has grown from the free efforts of millions of individuals.”•

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Schutt is co-founder of Homesense Heating & Cooling and Refinery46 and an American Enterprise Institute civic renewal fellow. Send comments to ibjedit@ibj.com.

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