Emerald Group Publishing Limited
Copyright © 2004, Emerald Group Publishing Limited
F.A Hayek is known best as an economist theorist, espousing a neoliberal free‐market approach, and as a libertarian political philosopher with strongly anti‐Marxist views. For those interested in documentation and the communication of information and knowledge, he is also one of the originators of the concept of “tacit” knowledge, and hence a founder, albeit unconscious, of the much‐hyped discipline of knowledge management.
This book focuses on Hayek's thought and intellectual evolution, providing a complement to the author's earlier account of Hayek's life (Ebenstein, 2001). It is, in the author's words “Impressionistic and philosophical”, where the earlier book was “expressionistic and historical”. It describes Hayek's conceptions and ideas, and their development, and the way in which his work was influenced by, and influenced, other scholars. Regrettably, from the viewpoint of information‐oriented reader, it does not bring the story up to date, showing how Hayek's ideas have – to an extent, but perhaps not so much as they should – influenced the development of knowledge management.
Ebenstein leaves us in no doubt as to his view that Hayek contributions are, first and foremost, knowledge‐related, telling us on the first page of his introduction that “Hayek had his greatest impact in the area of the division of knowledge”. The crucial first step in this, to which Ebenstein devotes a good deal discussion throughout the book, is Hayek's presidential address to the London Economic Club, on 10 November 1936. In a lecture entitled “Economics and Knowledge”, he argued that knowledge is divided – decentralised – through the minds of all humanity, and that such decentralised knowledge requires decentralised decision making. Economic systems which attempt to centralise decision‐making, on an assumption that perfect, or at least sufficient, knowledge is found in some central nexus, are bound to fail. Systems which build on the reality of decentralised knowledge are more likely to succeed.
Hayek later expanded this concept to build a broader picture of the importance of knowledge which is tacit, non‐verbal and unarticulated, and hence necessarily unrecorded. Legal, social and even institutions can store, embed and convey this form of knowledge. Much knowledge is not explicitly known to the individual. For Hayek, this underlies and dictates much of his economic thought; particularly the concept that prices and profits are essentially communicators of tacit information and knowledge. As Milton Friedman expressed it in his 1976 Nobel address, “A fundamental function of a price system, as Hayek emphasised so brilliantly, is to transmit, compactly, efficiently, and at low cost the information that economic agents need in order to decide what to produce and how to produce it”. It also underlies the idea that the entrepreneur, a role to which Hayek attached considerable importance, is, in essence, someone who can consistently make a profit, but who cannot say how they do it.
His political views, also, were greatly influenced by this view of knowledge. Ebenstein interprets his statement that his philosophical studies should precede his political studies as meaning that in order to explain the political system which he favoured, it was necessary for him to explain his understanding of the transmission and communication of information and knowledge, particularly the kind of non‐verbal knowledge transmitted by institutions. He proposed to express all of this in a two‐part treatise, to be entitled “the Abuse and Decline of Knowledge”‘, but this was never completed.
Ebenstein describes all of this – together with much more – in detail, combining scholarly precision with a readable style. He sets Hayek's work into context, particularly his place as a member of the “Austrian School of Economics”, showing how that School – and particular Karl Menger, who had a strong influence on Hayek – emphasised the importance of understanding the place of knowledge and communication in economic life. Indeed, he goes further, setting Hayek's thought into a longer perspective of “Germanic” philosophy, encompassing Kant and Goethe among others.
Much of the book – indeed it may be said its main purpose – is in showing the links of intellectual influence between Hayek and other scholars of his time. An intriguing link is with Ludwig Wittgenstein: not merely a fellow member of the “Vienna Circle”, but Hayek's distant cousin. Though Ebenstein suggests that neither had much influence on the other, he suggests that their views on tacit knowledge were almost diametrically opposite. Wittgenstein, in his reading, argues that whatever cannot be said clearly must be passed over, literally, in silence; it has no meaning. Hayek, by contrast, believed that much knowledge cannot be expressed in words, but is, nonetheless, very real, valuable, and – in a sense – communicable.
A complex intellectual relationship, to which Ebenstein devotes a chapter, is that between Hayek and Karl Popper. Both men clearly respected each‐other, Eberstein quoting Hayek as saying that he was “a Popperian”, and Popper as writing to Hayek that “I do not consider myself intellectually your equal”, and that he had learnt more from Hayek than virtually any other living thinker. [The latter is particularly striking, in view of Popper's high opinion of his own capabilities.] Ebenstein shows, however, that the views of the two were often at some varaiance in many respects. However, he also suggests that much of Popper's later philosophy was strongly influenced by Hayek's ideas of distributed knowledge, and that Popper's concept of a “World 3” of objective knowledge – regarded by some as a significant philosophical basis for the information sciences – owes much to Hayek's ideas.
This detailed and scholarly view of the development of Hayek's thought will be valuable to anyone interested in understanding the intellectual underpinnings of some current trends in information and documentation, particularly knowledge management. In this respect, Hayek is not as well known as he might be: the titles and abstracts of the Library and Information Science Abstracts database contain only one lone mention of his name (Shearmur, 2000).
In the wider intellectual world, particularly where a business and economic view underlies thoughts of the management of information and knowledge, Hayek's contribution is better known. Along with Polanyi, he is respected as the originator of the concept of tacit knowledge, and several dozen papers co‐cite these two founders of the field (for example, Nonaka, 1994; Becker, 2001). Polanyi is not mentioned in Ebenstein's book, no doubt because there was no significant interaction or influence between them. A study of this aspect would be a useful contribution to the literature.
Becker, M.C. (2001), “Managing dispersed knowledge: organizational problems: managerial strategies, and their effectiveness”, Journal of Management Studies, Vol. 38 No. 7, pp. 1037‐51.
Ebenstein, A. (2001), Friedrich Hayek: A Biography, Palgrave MacMillan, Basingstoke.
Nonaka, I. (1994), “A dynamic theory of organizational knowledge creation”, Organization Science, Vol. 5 No. 1, pp. 14‐37.
Shearmur, J. (2000), “The use of knowledge in organizations: a preliminary exploration”, Knowledge, Technology and Policy, Vol. 13 No. 3, pp. 30‐48.