Economic Theory and Public Policy

Hayek’s account of human knowledge, in which a thesis of the primacy of practice supports the claim that theoretical knowledge is always of a highly abstract and necessarily incomplete order, has important implications for the proper method for the practice of social science. To begin with, Hayek’s affirmation of ‘the primacy of the abstract’ in all human knowledge means that social science is always a theory-laden activity and can never aspire to an exhaustive description of concrete social facts. More, the predictive aspirations of social science must be qualified: not even the most developed of the social sciences, economics, can ever do more than predict the occurrence of general classes of events. Indeed, in his strong emphasis on the primacy of the abstract, Hayek goes so far as to question the adequacy of the nomothetic or nomological model of science (i.e. exact prediction through ‘laws’), including social science. At least in respect of complex phenomena, all science can aim at is an ‘explanation of the principle’, or the recognition of a pattern—‘the explanation not of the individual events but merely of the appearance of certain patterns or orders. Whether we call these merely explanations of the principle or mere pattern predictions or higher level theories does not matter.’ ¹ Such recognitions of 77orders or pattern predictions are, Hayek observes, fully theoretical claims, testable and falsifiable: but they correspond badly with the usual cause—effect structure of nomothetic or lawgoverned explanation.