Subjective Interpretation and Coordination in Two Austrian Perspectives: Schutz’s Phenomenology and Hayek’s Cognitive Psychology

Abstract

The coordination of human actions in the social world remains a central issue in Austrian economics. This paper explains the actor’s subjective interpretation and coordination in two subjectivist traditions: namely, Schutz’s phenomenology and Hayek’s cognitive psychology. This paper starts with a formulation of Schutz’s notion of mental projection. It then argues that intersubjectivity allows actors’ subjective interpretations to be coordinated in the social world. When the agent’s interpretative framework is disrupted by a novel stimulus, the agent will project action in the future perfect tense and form knowledge surrogate. Through a process of typification, a new stock of knowledge is established which enables the actor to solve new problems in everyday life. The society’s stock of knowledge (or human institutions) which actors share serves as a social coordinator. In terms of Hayek’s cognitive psychology, during the perception process, the human mind can identify and classify events coming from the outside world. If the event and sequent stimulus are repeated, a pattern will begin to register in the mind and become a rule of thumb which facilitates decision-making in complex situations. Given a cognitive pattern, a novel event from outside will create new impulses to the perception process. When the established linkages of the mental map fail to give an adequate account of the current environment, the agent is then in a state of conflicting experience. The result is a gradual reclassification of the linkages and new rules are re-established. In Hayek’s view, institutions or ‘rules of doing things’ are common schemes of behaviour, which simplify the complexity of the world and enable us to operate with a certain degree of predictability. They help to solve coordination problems during social interaction. This paper concludes that Schutzian and Hayekian perspectives on actors’ subjective interpretation and coordination are strikingly compatible and consistent. The two subjectivist contributions can be synthesised into fruitful tools to understand social phenomena.