Analogous models of complexity: the Austrian theory of capital and Hayek's theory of cognition as adaptive classifying systems

Abstract

By the 1950s, F. A. Hayek's contributions to a variety of disciplines seemed to be more clearly center around the concept of spontaneous order, or in more contemporary and more general language, “adaptive classifying systems.” In this chapter, I compare two such systems present in Hayek's thought: his contributions to the Austrian theory of capital and his work on the theory of cognition. This comparison reveals a number of very strong analogies between the two theories, which is not surprising as Hayek himself acknowledged that his work on capital influenced his thinking when he returned to theoretical psychology after completing The Pure Theory of Capital. Specifically, I argue that both capital and the mind are adaptive classifying systems characterized by: multiple classification/specificity, the centrality of structure, and a relational concept of order. The chapter concludes with some brief thoughts on the implications of the argument for the theory of the firm and for the place of methodological dualism in Hayek's thinking more generally.

Citation

Horwitz, S. (2008), "Analogous models of complexity: the Austrian theory of capital and Hayek's theory of cognition as adaptive classifying systems", Koppl, R. (Ed.) Explorations in Austrian Economics (Advances in Austrian Economics, Vol. 11), Emerald Group Publishing Limited, Leeds, pp. 143-166. https://doi.org/10.1016/S1529-2134(08)11008-0