Abstract
In The Sensory Order (1952), Hayek provided a theory of the process by which the mind perceives the world around it. The sensory order is a classification that takes place via a network of impulse connections. The essence of Hayekâs attempt in theoretical psychology is to show how a structure can be formed which discriminates between different physical stimuli and generates the sensory order that we actually experience. The sensory order is even an incomplete and imperfect representation of the physical world. The subjectivity of individual knowledge finds its foundation in the construction of the mind. The brain is an adaptive system interacting with and adapting to its environment by performing a multi-level classification on the stimuli it receives from the environment.
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Notes
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In the early 1950s, Hayek was led to investigate an ever-broadening range of fields, from biology and evolutionary theory, to systems theory, to cybernetics and theories of communication, all of which offered explanations of the principles underlying the complex phenomena with which they dealt (Caldwell 2000 ).
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According to Fleetwood ( 1995 ), prior to 1936 Hayek might be defined as a positivist; between 1936 and 1960 he adopts a synthesis of subjective idealist epistemology and empirical realist ontology. After 1960 he endorses a position that Fleetwood ( 1995 ) calls quasi-critical realist or transcendental realist.
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It is generally agreed that the 1871 publication of Principles of Economics , by Carl Menger, gave birth to the Austrian school. Mengerâs primary contributions in economics include the subjective theory of value, the discovery of the law of marginal utility, the theory of the spontaneous emergence of institutions, and the conception of the production process as a series of successive temporal stages. Despite his contributions to marginal analysis and to value theory based upon the concept of utility, Menger had a different methodological approach than the other economists who contributed to the marginal revolution. For instance, he rejected the use of mathematization on the grounds that economic theory is not studying âinterdependenciesâ but âessencesâ.
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According to Vaughn ( 1994 ), the Austrians, most fundamentally, agree that economics should make the world intelligible in terms of human action. The first implication is that economics should subscribe to methodological individualism. The second is that economics must explain human action as the individualsâ responses to their subjective interpretations of their internal and external environment.
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From a contemporary Austrian perspective, âknowledge is a multifaceted, heterogenous, disaggregated, often private or tacit and imperfect phenomenonâ (Vaughn 1994 , p. 4).
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This is illustrated by Hayekâs own experience: âI have always regarded myself as a living refutation of the contention that all thinking takes place in word or generally in language. I am as certain as I can be that I have often been aware of having the answer to a problemâof âseeingâ it before me, long before I could express it in words. Indeed, a sort of visual imagination, of symbolic abstract patterns rather than representational pictures, probably played a bigger role in my mental processes than wordsâ (Hayek 1994 , pp. 134â135).
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Mises is responsible fort the Austrian schoolâs most vital practical contributions: the theory of the impossibility of socialism, the theory of economic cycles, the theory of entrepreneurship, the criticism of interventionism, and the systematization of the Austrian methodology.
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See Zwirn ( 2009 ) for Misesâs attempt to establish an epistemological foundation for social sciences.
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In Hodgson ( 2003 , p. 164), â[h]abits themselves are formed through repetition of action and thought. They are influenced by prior activity and have durable self-sustaining qualities. Through their habits, individuals carry the marks of their own unique history.â
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Crawford and Ostrom ( 1995 ) develop the grammar of institutions and propose that all institutional statements are coded using a syntax. According to them, the general syntax of the grammar of institutions contains five components: âAttributes [A],â âDeontic [D],â âAim [I],â âConditions [C],â and âOr else [O].â Rules include all five components (ADICO), norms have four components (ADIC), and shared strategies have only three components (AIC).
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Rizzo ( 2013 , pp. 50â51) lists highly interrelated 8 themes about Austrian economics: (1) the subjective (yet socially embedded) quality of human decision making; (2) the individualâs perception of the passage of time; (3) the radical uncertainty of expectations; (4) the decentralization of explicit and tacit knowledge in society; (5) the dynamic market processes generated by individual action; (6) the function of the price system in transmitting knowledge; (7) the supplementary role of cultural norms and other cultural products (institutions) in conveying knowledge; and (8) the spontaneous evolution of social institutions.
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According to Lachmann, the main task of social theory is to explain observable phenomena by reducing them to the individual plans that typically give rise to them.
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Teraji, S. (2016). The Sensory Order Revisited. In: Evolving Norms. Palgrave Advances in Behavioral Economics. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-50247-6_3
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