Wednesday, April 24, 2013

Lewis on Emergent Properties in Hayek’s Work

Lewis (2012) is an interesting study of how two of Hayek’s most important ideas – (1) spontaneous order and (2) his theory of the human mind – are examples of emergent properties, even though Hayek failed to properly recognise the latter idea (although the statement in Hayek 1967: 26 comes close).

An emergent property can be said to be a phenomenon of an aggregate in which the units of the aggregate have complex interactions producing a novel property not displayed by any unit in isolation and possibly not deducible from the behaviour or nature of individual units. While the emergent property is causally dependent on the existence of lower level elements, it is also caused by the relational state or interactions of those lower level elements. An aggregate or whole entity possessing an emergent property can be called a “higher-level entity” (Lewis 2012: 369).

It is clear that emergent properties are important in the natural sciences (Anderson 1972) and in the social world.

Hayek’s theory of mind was presented in The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology (1952). Here Hayek recognised that the brain is composed of neurons and their firings, and complex neural networks.

Hayek’s argues that external stimuli are classified and generated into a type of “sensory order” by the brain as a “structured entity.” This process is produced by the whole “structured entity” and cannot be reduced to the behaviour of individual neurons (Lewis 2012: 371). Therefore Hayek’s “sensory order” is an emergent property.

As for the notion of spontaneous order, Hayek sees the rules of property, contract, tort law, profit and loss and the price system as helping to produce an order in economic life that can be understood as an emergent property (Lewis 2012: 373). In other words, people and their relational interactions under a complex institutional system are both necessary to explain spontaneous order (Lewis 2012: 373–374).

Lewis also points out that, strictly speaking, Hayek’s “spontaneous order” notion and the idea of an “emergent property” are distinct, since Hayek neglects “directed social order or organisation” (institutions), which can also produce “emergent properties” (Lewis 2012: 374). For example, the level of “productivity facilitated by the division of labour within a firm” is not merely spontaneous, but directed. Hayek’s “spontaneous order” concept is flawed, in that many elements of market order are caused by deliberate, conscious direction and design, not spontaneity (Lewis 2012: 374).

Another crucial idea related to “emergent properties” is “downward causation.” A higher-level emergent entity can influence, shape and direct lower-level entities (Lewis 2012: 375).

For example, social rules can shape how people interact, and cause the “habits and dispositions” under which people behave (Lewis 2012: 375).

Lewis argues that in fact “Hayek is committed, if only implicitly, to the view that higher-level emergent phenomena possess the emergent causal power to react back on and shape the parts from which they are formed” (Lewis 2012: 376). That is to say, Hayek is committed to a methodology and ontological view of the world (including the social world) that contains not only individuals, but also social relations and entities with “macro-level emergent [sc. downwards] causal powers” (Lewis 2012: 377).

In short, Hayek cannot invoke and defend some crude “methodological individualism” without severe contradiction. What he really requires is a “methodological pluralism.”

For more on methodological individualism, see my critical posts here:

“Hodgson on Methodological Individualism,” April 3, 2013.

“Greedy Reductionism, Science and Economics,” April 2, 2013.

“King on Post Keynesian Approaches to Microfoundations,” April 1, 2013.

“Hodgson on the Essence of Old Institutional Economics,” April 4, 2013.
Anderson, P. W. 1972. “More is Different: Broken Symmetry and the Nature of the Hierarchical Structure of Science,” Science 177.4047: 393–396.

Hayek, F. A. von. 1952. The Sensory Order: An Inquiry into the Foundations of Theoretical Psychology. Routledge, London.

Hayek, F. A. 1967. Studies in Philosophy, Politics and Economics. Routledge and Kegan Paul, London.

Lewis, Paul. 2012. “Emergent Properties in the Work of Friedrich Hayek,” Journal of Economic Behavior and Organization 82.2–3: 368–378.

1 comment:

  1. It is important to note that spontaneous order comes from the writings of Menger and Hayek just expanded on it. Though, I think Austrians misunderstand the theory that Menger had because he never claimed that spontaneous order was all that was needed for a market system to thrive, nor is a pure market system one with pure spontaneous order. This is quite clear when Menger talks about monetary theory and how he thought that "an advanced economy’s demands on the monetary system are not to be met by a system such as develops automatically."