BUCHANAN: Yes, I think pattern prediction is a very important concept that most economists
still sort of miss. HAYEK: It's the whole question of the theory
of how far can we explain complex phenomena where we do not really have the power of precise
prediction. We don't know of any laws, but our whole knowledge is the knowledge of a
pattern, essentially. BUCHANAN: I think that's very important and
has been missed. And I think, again, to go back to what you attributed a lot to the utilitarians,
I think the utilitarian mode of thought had a lot of influence toward preventing that
sort of way of going. HAYEK: Yes, yes. In a way, you know, I am
becoming aware that the simplest conception of science, which I assumed was only invented
in the middle of the last century by Auguste Comte and those people, goes back much further.
It's a Newtonian example of how you could reduce all scientific knowledge to very simple
laws--that one thing was a function of only one or two other magnitudes. And this conception
of a single function is a prototype of a scientific explanation. It had probably a very profound
effect from the late eighteenth century on scientific thinking generally.
BUCHANAN: Of course, that does have its virtues, as has been proven, but on the other hand,
I think in places like economics, when dealing with human interaction in particular, I think
it's had major drawbacks. One thing has concerned me, and I don't know to whom you attribute
it, really- -maybe Hicks is partly responsible--and that is when once the mathematicians start
putting down utility functions, and putting a formula in for utility functions, they have
already excluded so much of the problem that, in fact, they neglect what is really going on.
HAYEK: Oh I quite agree.
BUCHANAN: I think that... I was just talking to Professor Alchian earlier that one of the things that
in a sense, I'm influenced partly by just reading Shackle recently. There's
been a tremendous neglect of the notion of sort of emergent choice: that we don't really
have before us objects among which to choose; we create them in the act of choice. Arbitrage,
really, has not become central to economics like it should be, it seems to me. That's
part of this whole subjectivist, Austrian, whatever you want to call it, type of an approach
to economics. But do you see much hope for-- There's been a little upsurge of interest
in this among young people in the United States, but the dominant graduate schools are still
predominantly the other direction. HAYEK: Certainly, but the other thing is spreading.
What I'm afraid of is that people will get disappointed because what we can know in the
field of economics is so much less than people aspire to. Much of this tradition you are
speaking about--my tradition--is really indicating barriers to further advance than
leading to further advance, and that may well lead to a disappointment again among these
young people. They are more ambitious, and of course the great bulk of econometrics and
all this claims to be able to make predictions which I believe are impossible. But people
don't like to accept an impossibility, and of course there is a certain widespread view
that nothing is impossible. Hundreds of things which science has said are impossible were
proved to be possible; why shouldn't this be possible? You can't prove that it's impossible.
BUCHANAN: This was the main thrust of your Nobel Prize lecture.
HAYEK: Yes.