The Pretense Of Knowledge

Frederich A Hayek, economist
Frederich A Hayek, economist

Friedrich Hayek was the founder of the Mont Pelerin Society. (The pseudonym used by this author derives from that group.) Hayek was a remarkable intellectual, doing path-breaking work in several areas, primarily economics and political science. He was awarded the Nobel Prize in economics in 1974.  “The Pretense of Knowledge” was the title of his Nobel address. These four words capture the problems that remain with us today. Government believes and acts as if it possesses knowledge which no single entity can possibly possess. It is the pretense of all central planners.

Richard Ebeling is an Austrian economist who provided this article about Friedrich Hayek at The Daily Bell. Read it to appreciate the man and his contributions. If possible, email it to Paul Krugman and his ilk so that they may become more informed about economics. As an aside, Hayek’s final book (published posthumously from Hayek’s notes) was entitled The Fatal Conceit, a title meant to describe those who believed society could be “improved” by social engineers and central planners.


December 02, 2014

Editorial By Richard Ebeling ~ Forty years ago, on December 11, 1974, Austrian economist Friedrich A. Hayek formally received that year’s Nobel Prize in Economics at the official ceremonies in Stockholm, Sweden. He delivered a lecture called, “The Pretense of Knowledge,” which forcefully challenged all those who believe that government has the wisdom or ability to successfully plan the economic affairs of society.

His primary targets were the Keynesian economists at that time who were confident that they could micro-manage the “macro-economy” to assure full employment, economic growth and market stability. His more general antagonists were all those social engineers who wished to redesign and regulate society through the coercive agency of government.

Hayek’s Role in Fighting Keynesianism and Socialism

Hayek was awarded the Nobel Prize that year for his contributions over many decades to the understanding of inflations and depressions, and his writings on the nature and workings of society as a “spontaneous order” of evolution and development independent of political control and manipulation.

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More Jobs Predicted for Machines, Not People

By Steve Lohr | The New York Times
October 24 2011

Erik BrynjolfssonA faltering economy explains much of the job shortage in America, but advancing technology has sharply magnified the effect, more so than is generally understood, according to two researchers at the Massachusetts Institute of Technology.

The automation of more and more work once done by humans is the central theme of “Race Against the Machine,” an e-book to be published on Monday.

“Many workers, in short, are losing the race against the machine,” the authors write.

Erik Brynjolfsson, an economist and director of the M.I.T. Center for Digital Business, and Andrew P. McAfee, associate director and principal research scientist at the center, are two of the nation’s leading experts on technology and productivity. The tone of alarm in their book is a departure for the pair, whose previous research has focused mainly on the benefits of advancing technology.

Indeed, they were originally going to write a book titled, “The Digital Frontier,” about the “cornucopia of innovation that is going on,” Mr. McAfee said. Yet as the employment picture failed to brighten in the last two years, the two changed course to examine technology’s role in the jobless recovery.

The authors are not the only ones recently to point to the job fallout from technology. In the current issue of the McKinsey Quarterly, W. Brian Arthur, an external professor at the Santa Fe Institute, warns that technology is quickly taking over service jobs, following the waves of automation of farm and factory work. “This last repository of jobs is shrinking — fewer of us in the future may have white-collar business process jobs — and we have a problem,” Mr. Arthur writes.

The M.I.T. authors’ claim that automation is accelerating is not shared by some economists. Prominent among them are Robert J. Gordon of Northwestern and Tyler Cowen of George Mason University, who contend that productivity improvement owing to technological innovation rose from 1995 to 2004, but has trailed off since. Mr. Cowen emphasized that point in an e-book, “The Great Stagnation,” published this year.

Technology has always displaced some work and jobs. Over the years, many experts have warned — mistakenly — that machines were gaining the upper hand. In 1930, the economist John Maynard Keynes warned of a “new disease” that he termed “technological unemployment,” the inability of the economy to create new jobs faster than jobs were lost to automation.

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