The Sensory Order, Neuroeconomics, and Austrian Economics

Abstract

In the social science literature spawned by Friedrich Hayek’s “The Sensory Order,” the questions asked were: (1) In what ways does Hayek’s cognitive theory fit with his social theory and with Austrian economics in general? (2) Do we need “The Sensory Order” at all to do our social science, and how does it make a difference in providing insight toward understanding the social realm? This chapter surveys this literature and, by drawing out the ramifications from both Hayek’s work on epistemology and psychology and the ongoing experimental investigations of individual economic behavior, it points to the possibility of a coherent new view of economic and other social systems in which individuals have realistic capabilities, where emergent effects are recognized as macro-phenomena that supervene on micro-activity rather than being simply reducible to it and where systemic characteristics such as adaptation and knowledge generation are given their due.