----------------- HES POSTING ----------------- 
 
Lawrence, I wonder whether I was clear regarding my point about  
the perfect knowledge assumption as a counterfactual. When we  
say that the mind of the the human being is not a computer, we are  
led to identify characteristics of the mind that differ from those that  
we attribute to the computer. When we say that economic actors  
do not have perfect knowledge, we are led to identify  
characteristics of "real" economic knowledge. We are led to ask  
what economic knowledge is and how it is relevant to the way  
actors organize themselves in an effort to do better than they could  
do if they chose not to trade. These are the fundamental questions  
that using the perfect knowledge assumption as a counterfactual  
leads one to ask. I'm sorry that my reference to acquiring, using  
and communicating information led to you associate my comment  
with Hayek. That was not my intent, although I can see why you  
would interpret it in this way.   
 
It seems to me that the question of who started the assumption of  
perfect knowledge is not independent of the question of what the  
user of this assumption expected it to accomplish. I suggest that  
Knight's use was very different from that of Marshall. I agree with  
your Weberian "ideal type" interpretation of Marshall (and the  
British microeconomists who followed). But I do not think that this  
interpretation applies to Knight or the Austrians.   
 
(I realize that I am avoiding the broader philosophical implications  
that Knight often attached to the perfect knowledge assumption.  
See Ross's earlier comment. I am interested here only in the  
assumption's use as a tool of understanding economic interaction.)  
 Robin's comment about policy is a good case to differentiate these  
uses because she seems to have adopted the Marshallian  
definition. Let me explain. Insofar as one assumes perfect  
knowledge, the outcome of a policy is entirely predictable but, of  
course, not very helpful in judging the outcome of policy in the real  
world. Insofar as one has some idea of how actual knowledge  
differs from perfect knowledge (the ideal type paradigm), the  
outcome is less predictable and there is room for speculation about  
whether the policy could succeed. This opens the door to a new  
profession of speculators and model builders who base their policy  
judgments on assumptions about the kinds of knowledge that  
people actually have. The field of micro-economic policy is born.  
However, insofar as one assumes (a) radical uncertainty or (b) that  
economic actors have and are likely to acquire, use and  
communicate knowledge that the policy maker could never hope to  
acquire; there is grounds for doubting that micro-management  
types of policies have any chance of succeeding even if they were  
adopted. The whole professional enterprise of devising micro- 
management policies may appear wasteful, fruitless, delusional,  
and a garden to be plundered by political hacks. I think that there  
are many economists who make the latter assumption. And many  
of them would not regard themselves as followers of Shackle or  
Austrians.   
 
Finally, I would like to recall my earlier point that the economics  
that followed the marginal (value) productivity theory of distribution  
revolution was gaining consensus at the turn of the 19th century  
and early 20th century was multi-faceted. I call this neoclassical  
economics, although definitions are not important. I agree with you  
that the dominant micro textbooks of today are largely Marshallian.  
Nevertheless, I think we would mark ourselves as narrow-minded if  
we disregarded the influence on these textbooks that  
mathematicization of the profession has had. Nor would it be  
sufficient to simply point to an edition of Marshall's _Principles_ in  
which mathematics was de-emphasized in order to show that the  
textbooks do not fully reflect neoclassical economics. The often  
brilliant works of the Austrians, J. B. Clark, Herbert Davenport,  
Frank Fetter, Frank Knight, and others were simply ignored in the  
drive to manufacture a textbook that bureaucratic teachers would  
require their students to buy. Many of these writers were strong  
critics of Marshall.   
 
Pat Gunning 
Sultan Qaboos University, Oman 
 
------------ FOOTER TO HES POSTING ------------ 
For information, send the message "info HES" to [log in to unmask]