A previous post of mine identified four possible problems with F. A. Hayek’s classic defense of the price system; in this post, I will proceed to the second critique: Hayek does not define “knowledge” in his knowledge paper. Although Hayek does refer to “different kinds of knowledge” in part 3 of his paper, including “scientific knowledge” and “knowledge of the particular circumstances of time and place” (i.e. “local knowledge”), at no point does he provide an overarching definition of what “knowledge” is. (The closest he comes to doing so is when he writes on pp. 521-522 of his paper: “practically every individual … possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation.”)

Why is this glaring omission a problem? Because a lot of so-called knowledge might be “socially constructed” or radically indeterminate. Why? Because knowledge, at a minimum, implies the existence of truth, but the truth of a given proposition, in turn, is often subjective or contested, or both. That is, truth is rarely, if ever, an absolute value; the truth is always up for grabs. (Compare the notion, which is popular today, of “my truth.” By way of example, see my 25 March 2021 blog post on “the social construction of conspiracy theories“. For further reading, you may want to check out “The Social Construction of Reality” by Peter L. Berger and Thomas Luckmann.)

In defense of Hayek, however, one could always reply to a social constructionist by simply asking, So what? Even if knowledge is somehow socially constructed, even if truth is a subjective or contested concept, some propositions are more likely to be more true or more coherent than others by most measures of truth. (As an aside, this is one reason why I prefer to the term “probabilistic truth” and why I favor subjective or personalist methods of probability; see here, for example.) Nevertheless, that said, there are two further points we must address: (1) property rights in ideas or the “commodification of knowledge” problem, and (2) knowledge as belief or the “Keynesian beauty contest” problem. I will address these points in my next two posts.