Ratio Working Papers
No 133:
Unfolding the Allegory behind Market Communication and Social Error and Correction
Daniel Klein ()
Abstract: One aspect of the present paper is to draw out the Adam
Smith in Friedrich Hayek. I suggest that common economic talk of market
communication, market error and correction, and policy error and correction
invokes a spectatorial being and appeals to our sympathy with such being.
Behind such common economic talk, I suggest, are implicit allegories
wherein an allegorical figure runs a system of superior knowledge,
communication, and voluntary cooperation. Theoretical discussions of social
error invoke the notion of agent error applied to the allegorical being.
Similarly, theoretical talk of social correction invokes the notion of
agent correction applied to the allegorical being. The allegory behind such
talk is vital and necessary because without it the talk of social or market
communication, error, and correction cannot be sustained. Unfolding the
allegory clarifies the meaning, limitations, and value of such talk. Making
what had been implicit explicit helps economists to avoid overstating their
generalizations or making those generalizations sound more precise and
accurate than they are. Meanwhile, scholars have pointed out that
spectating impartially involves something of a paradox – distant-closeness,
or cool-warmth. Concurring, I explore the connections between the features
of the allegorical being and the doings of the economic agents. I suggest
that the cogency of such theorizing depends on such correspondences, and
that they are matters of culture, of both the context within which the
theorizing is done and of the context theorized about.
Keywords: Market communication; price system; error; correction; coordination; Adam Smith; Friedrich Hayek; impartial spectator; invisible hand; (follow links to similar papers)
JEL-Codes: A10; B10; B40; (follow links to similar papers)
34 pages, March 26, 2009, Revised February 17, 2010
Forthcoming in The Adam Smith Review
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