The Role of the Economist in a Free Society: The Art of Political Economy

"When Hayek was awarded the Nobel Prize in Economic Science, he did not fail to highlight this point to the chagrin of his host and his peers. In his Nobel banquet toast, he said simply that if he had been consulted, he never would have advocated awarding Nobel Prizes to economists for the simple reason that no economic thinker should ever be provided with such public recognition, as it falsely provides a sense of authority that can be safely trusted to no economist. But Hayek wasn’t done there. In his Nobel Lecture entitled “The Pretense of Knowledge,” he made the following claims: First, we economists have indeed made a mess of things with our efforts at macroeconomic management of the western economies. Second, economists are led to make a mess of things because they have falsely adopted a methodology appropriate for the natural sciences but inappropriate for the sciences of man. He dubbed this intellectual mistake scientism. Third, a scientific discipline expected to be able to deliver useful, practical knowledge, which in fact it is incapable of producing, is a quick path toward charlatanism. Furthermore, this charlatanism is protected by vested interests within the economics profession and its relationship with agents of the state. There is an alliance, in essence, between scientism and statism, and there are self-reinforcing incentives that make this alliance difficult to break once it is forged. Fourth, unless this intellectual situation is resisted, not only will economic science be rendered worthless in terms of social understanding, but economists will become potential tyrants and destroyers of civilization.

Hayek’s essay received a revise and resubmit from the very journal he helped edit during his time at the London School of Economics—Economica. That is a very strange fate for a Nobel Lecture, but Hayek’s message was very much outside the general tenor of the times. The idea of the economist as social engineer and economics as the science that guides the engineering was then, and is now the dominant mindset across the political spectrum. This perspective shapes the advanced study of economics methodologically and analytically. But this wasn’t always the case"