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Quotation of the Day…

… is from page 201 of the 2014 collection, The Market and Other Orders (Bruce Caldwell, ed.), of some of F.A. Hayek’s essays on spontaneous-ordering forces; specifically, it’s from Hayek’s deep 1955 article “Degrees of Explanation,” which first appeared in the British Journal for the Philosophy of Science:

In ordinary usage we are inclined to admit as predictions only statements which narrow down the admitted phenomena fairly closely, and to draw a distinction between ‘positive’ predictions such as “the moon will be full at 5h 22′ 16″ tomorrow”, and merely negative predictions such as “the moon will not be full tomorrow.”  But this is no more than a distinction of degree.  Any statement about what we will find or not find within a stated temporal and spatial interval is a prediction and may be exceedingly useful: the information that I will find no water on a certain journey may indeed be more important than most positive statements about what I will find.  Even statements which specify no single specific property of what we will find but which merely tell us disjunctively that we will find either x or y or z must be admitted as predictions, and may be important predictions.  A statement which excludes only one of all conceivable events from the range of those which may occur is no less a prediction and as such may prove false [and, because it can be proven false, is ‘scientific’].

DBx: I have always found “Degrees of Explanation” to be Hayek’s most challenging article, yet one that repays close study handsomely.  No summary statement by me can do this article justice, but it’s one of Hayek’s attempts to explain (!) why the method of the social sciences must differ from the method of the physical sciences (especially from physics) and why social scientists must be more modest in their claims about what they can explain or predict.

Applying the insight in the passage above to economics, we rediscover the most important practical role for the economist – namely, to warn the general public that much of what they suppose government action can achieve is, in fact, not achievable (or, at least, not achievable at the zero, low, or finely targeted costs that the general public supposes).  The economist is much like someone who follows a quack doctor around to warn the quack-doctor’s gullible audiences that none of the quack’s miracle cures will work and that many, or even most, of them will actually result in greater illness and injury.  The quack, of course, denies the ‘negativity’ while his gullible audiences, eager to believe in miracle cures, dismiss the economist as an unimaginative or mercenary naysayer.  And the real world, being far more complex than either the quack or his audiences realize, easily find reasons to reject the economist’s counsel.