Elgar original reference
Edited by Richard Arena, Agnès Festré and Nathalie Lazaric
Chapter 4: Carl Menger and Friedrich von Wieser on the Role of Knowledge and Beliefs in the Emergence and Evolution of Institutions
* Agnès Festré 4.1 INTRODUCTION The revival of interest in the issue of knowledge in recent years1 has rarely given way to systematic studies of the nature of knowledge within mainstream economics. Within this tradition, an entire generation of economists, following the seminal work of Arrow (1955, 1962), has confined scientific and technical knowledge to information, and argued that the knowledge generated by research activities possessed certain generic properties of public goods that implied that such activities could not be produced or distributed through the workings of competitive markets. By contrast, within the Austrian tradition,2 but also in Polanyi (1967) and in the case of evolutionary economics, we find explicit recognition of the influential aspect of knowledge in human action. The contribution of the Austrian tradition to this topic, culminating in the works of Hayek, is indeed indisputable.3 Several reasons may explain this special focus on knowledge. First and most importantly, it should be recalled that the Austrian economic tradition assumes that human action takes place in time and in a context of uncertainty.4 Such an assertion implies, first, that in contrast to neo-classical economics, data such as individual preferences or production techniques are not given, but gradually take shape through individual action, experience and learning as well as under the influence of institutions and collective norms or beliefs. Second, from a methodological perspective, the Austrian tradition is associated with the subjectivist viewpoint that it develops. This implies that, though often on a rather diverging basis according to the...
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