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Hayek in Today's Cognitive Neuroscience
Abstract
Purpose – To show that Hayek's prescient concepts on the cerebral cortex have received substantial support from modern neuroscience.
Methodology – Update the terminology of The Sensory Order to adjust it to prevalent concepts of cognitive network, plasticity, association, connectivity, and cortical dynamics. Extend his concepts of perception to other cognitive functions, notably memory. Reveal significance of modern methods to study the formation and organization of cognitive cortical networks (cognits), applying the same basic methodologies that he applied to perception. He also applied those methodologies to knowledge transactions in economics and the social order.
Findings – As Hayek proposed or assumed in his theoretical monograph:•Cognitive networks are spontaneously formed by associations (connections) between neuronal assemblies representing simultaneous elementary sensations.•Perceiving is classifying the world into categories of objects defined by those associations, in accord with a relational code.•Networks are hierarchically organized, with smaller networks constituting, and nested within, larger ones.•After formed and organized, a network becomes memory, which will make and shape future perception.•The interactions between the organism and its environment are governed by the perception/action (PA) cycle, a concept intuited by Hayek. This is the cybernetic interplay between the mammalian organism and its environment that courses through perceptual and executive networks of the cortex.•The dialog with an interlocutor epitomizes the PA cycle of language, unique to the human.
Social Implications – The brain embodies structure and dynamics similar to those relating the individual to society. They include a complex adaptive system, the cerebral cortex, which engages the brains of others through the PA cycle. Language is the highest operation of that cycle at interpersonal level. Transactions of knowledge within the cortex are similar to those of the market place, with their attributes of spontaneity, self-organization, and incompleteness.
Originality/Value of paper – This paper is unusual in that it highlights: (a) the insight of Hayek in cognitive neuroscience, anticipating by several decades the verification of his thinking on the role of the cerebral cortex in knowledge utilization and storage; and (b) the value for brain science of the principles of organization of knowledge that Hayek successfully applied to social sciences.
... Beaman et al., 2009;Duflo et al., 2011;Gauri, 2012;Luoto et al., 2014) have mostly taken place on an ad-hoc basis, no theoretical considerations have been made so far for the use of nudging to cope with external shocks. Especially due to the recent developments in neuroscience (Fuster, 2011), which show how individuals make decisions by generating patterns based on their previous experiences, the effectiveness of nudges can be discussed from a theory-led perspective. ...
... Against this background, we sort out which kinds of nudging can potentially improve people's ability to deal with shocks. For this purpose, we make use of Hayek's (1952) cognitive theory and its empirical evidence (Fuster, 2011) as well as some recent theoretical developments from the field of evolutionary economics (Erkut, 2016a) to propose a taxonomy of strategies of nudging in the shock coping context, and the behavioral mechanism behind the knowledge generation processes of individuals based on shock coping. ...
... Rather, the effectiveness is contingent on the context of the designed nudge, on how this context is perceived by the initiators, and most importantly whether the perceptions of the initiators and those of the target audience match. This is the idea behind the matching of the perception/action cycles of the individuals (Fuster, 2011), for which the simplest example can be given as two individuals in a conversation -both having to understand what the other one says, processing it, and reacting to the statements in a proper way to keep up the conversation. The idea behind Hayek's (1952) cognitive theory states that "even the simplest form of sensation is based on prior experience" (Fuster, 2011, p. 6) i.e. when we are confronted with an event, our mind either associates it with experiences of the past that show a similar pattern to the current one, where "perception is made of relationships, history, and an everevolving cerebral cortex" (Fuster, 2011, p. 6). ...
Nudging individuals towards improved decision making that serves their interest best is in vogue, not only among governments of the rich economies. It has also received growing interest from development agencies and development economists. Different experimental studies in developing countries have tested the impact of nudging on behavior. While these studies have mostly taken place on an empirical ad-hoc basis, our contribution proposes a theory-led reflection of the limits and potentials of nudging, with the aim to empower agents coping with external shocks such as droughts, floods, and earthquakes. We make use of Hayek’s cognitive theory to point out how behavioral mechanisms may respond to nudges, and address normative concerns.
... Nevertheless, one can build upon the Hayekian theory to provide an alternative explanation and a theoretical/conceptual contribution to evolutionary economics with an emphasis on product innovation and market shaping -hence, targeting to close a gap in evolutionary economic analysis, which is also biased towards process innovations since the major contribution of Nelson and Winter (1982). Erkut (2016b) focuses on this challenge, and for this purpose, the differentiation between information and knowledge as put forward by Hayek (1948) plays an important role in this approach -together with the psychological insights of Hayek (1952), and the empirical evidence confirming these insights (Fuster, 2011). Erkut (2016b) introduces a conceptual framework of analysis to evolutionary economics, with which the notions of product innovation and market shaping can be analyzed in an integrated way. ...
... Approaches such as that of Teubal and Zuscovitch (1997) do not neglect the role of individual perceptions during the emergence of new markets, but they also do not explain how new technological knowledge emerges. Even though Hayek is primarily known as an economist, his contribution in theoretical psychology (Hayek, 1952) was validated by empirical neuroscience (Fuster, 2011) and since this validation, recent contributions such as Arena and Larrouy (2015), Olivia (2015), Erkut (2016b), Erkut (2018) and Lehmann-Waffenschmidt and Erkut (2018) aim to incorporate Hayek's psychological work (1952) with his economic theories and to address the issue of subjectivism. In general, one can see a recent trend of incorporating Hayek's theories of different areas into one, as recently mentioned by Metin and Özkan (2018). ...
Innovation is very often described as the introduction a novelty that has a commercial value, and it remained in the agenda of economics since Schumpeter’s ground-breaking observations. Current literature categorizes innovations by means of product and process innovations; nevertheless, the economics literature in general and evolutionary economic literature in particular focus mainly on process
innovations. In this literature review, the author aims to answer the question of why product innovation and the corresponding pioneer market shaping phase remain to be a black box in economics, and how the concerns underlying this observation can be addressed by using Hayekian insights.
... . SeeHalpern (2022),Pasquinelli (2021),Birner (1996),Fuster (2011) andSalter (2020b) for the connections between Hayek and neural networks. ...
“Performing AI” raises new questions about creative labor. Might the mathematical entities called neural networks that constitute much contemporary AI research be expressive and “perform,” thus leveling the playing field between human beings and nonhuman machines? What human societal models do neural networks enact? What bodily, mental, and affective work is required to integrate neural networks into the profoundly anthropocentric domain of the performing arts?
... The empowering criteria state that people's subjective judgments are built on the fly in a dynamic classification process and feedback with the natural and social environment. Following theoretical psychology, there are two different orders: (1) a physical order, which is manifested through the natural sciences, and (2) a sensory order, which people experience through the senses [115,116]. The sensory order involves a chain of events in an organism, which is somehow related to the physical order in the external and internal environment that the actor experiences. ...
Behavioral development economics promotes the nudge theory as a mechanism to incorporate people’s cognitive biases, steering their behavior in the desired direction through coercive state intervention. Cognitive biases become a reason to doubt the efficiency of decision-making psychology in the free market process. A fundamental assumption of this approach is that political decision-makers know the people’s means and ends in ways that protect them from cognitive biases. This article reviews and discusses the nudge theory, based on the boost theory developed by the Austrian School of Economics. The boost theory consists of a comparative institutional perspective to provide the empowerment people need to realize their errors and correct them “on the fly” to cultivate economic development. It is argued that the nudge theory overlooks the cognitive biases of political decision-makers, neglects the comparative perspective of the institutional environment in the face of such biases, and does not consider how construction of on-the-fly judgments works. After reviewing the principles of the nudge theory, its main criticisms from the boost theory are discussed, forming novel conclusions about and research avenues on behavioral development economics, according to the steering or empowering quality of the institutional environment.
... Hayek problematizes not only the notion of society as a unitary agent capable of pursuing a general will but also the notion that individual human beings themselves possess a core "agent" that can observe the external world at given moments, process relevant knowledge, and thus decide an appropriate course of action (Dold and Lewis, 2021). What is more, anticipating advances in neuroscience (Fuster, 2011), Hayek (1952 argues that our everyday perception and cognition is the result of pattern recognition, honed through receiving positive and negative feedback from successful and failed predictions of observable reality. Hayek (1981) employs a useful distinction between concrete orders, the irreducibly complex objects and events that stimulate our raw sensory experience, and abstract orders, the categories of thought (or models) that we develop to make sense of what we perceive. ...
... Butos and McQuade 2015). This is surprising because Hayek's book is today recognized by neuroscientists as prescient of many important developments in the discipline, and together with Donald Hebb's (1949) work can be counted as seminally establishing connectionism as an analytical paradigm in the brain sciences (Steele 2002;Fuster 2011;McDowell 2019). Connectionism is the major alternative to modular and syntax-based computational models of the brain (for an overview, see Buckner and Garson 2019) and underlies modern theories of neural networks, which emphasize endogenous and decentralized learning via evolving neural connections. ...
Hayek’s seminal contribution to theoretical neurosciences, The Sensory Order (1952) remains neglected in current efforts at integrating the neurosciences, psychology and economics. I defend the view that Hayek presents the case for an evolutionary alternative to leading paradigms in the field and look at two in more detail: the good-based model in neuroeconomics and the dual systems approach in behavioural economics. In both cases, essential Hayekian insights remain valid in the context of modern neuroscience, allow for taking account of recent research, and sketch a dynamic and selectionist model of choice.
Hayek has influenced (neoliberal) economic discourses over decades. This chapter shows that Hayek the economist, who promotes a disembodied approach to the market order because of its abstraction, contradicts Hayek the psychologist, who developed a radically embodied view of the brain whereby abstraction as a cognitive process must be embodied. Consequently, the market as a medium of abstraction must be grounded in, and bounded by, embodiment. The argument put forth is that Hayek’s disembodied view of the market is motivated by his ideological rejection of social justice. The Hayek paradox is compared with the psychologist and economist Herbert Simon who consistently employs a disembodied approach to cognition throughout his work. Despite the strengths of some of their developments, this book follows in the footsteps of Hayek the psychologist to develop a more systematic approach to embodied economics in which, contra Hayek the economist, social justice ultimately becomes the beacon for policy and economic practice.
Study of how we come to know—the nature of modeling and anticipation of our unpredictable, often dangerous environment—is the province of evolutionary epistemology. Constructivism depends upon knowledge being static or non-evolutionary and therefore cannot address the unforeseen and unknown in either our behavior or acquisition of knowledge. It has no anticipatory or feedforward mechanisms for the unanticipated. Likewise, constructivism has no mechanism for addressing error—either its detection or correction. Social or market orders (e.g., science) are sources of information used by agents to generate knowledge and to detect error. Trying to control science or the market by top-down intervention falsifies knowledge claims, fails to detect error, and reduces productivity in society. Socialism is not scientific, it kills inquiry by controlling its output.KeywordsAnticipatory systemsError eliminationCreativityControl
There is emergent literature that converges from neuroscience and entrepreneurship research, but the definitions and interlinkages are still inconsistent. We conduct a systematic literature review of 167 papers on the interface between neuroscience and entrepreneurship to address this. We observe the literature trends examining the interlinkages between neuroscience and entrepreneurial intention through six antecedents, namely - molecular neuroscience, systems neuroscience, behavioral neuroscience, cognitive neuroscience, social neuroscience, and computational neuroscience. Our findings suggest that entrepreneurial intention impacts entrepreneurial activity through five factors, including (1) opportunity recognition, (2) evaluation and risk-taking, (3) entrepreneurial cognition, (4) entrepreneurial behavior, and (5) entrepreneurial decision-making. From our discussions, the links among the neural factors affecting entrepreneurship are identified, and a research agenda highlighting a pathway for future studies is proposed.
There is emergent literature that converges from neuroscience and entre-preneurship research, but the definitions and interlinkages are still inconsistent. We conduct a systematic literature review of 167 papers on the interface between neuroscience and entrepreneurship to address this. We observe the literature trends examining the interlinkages between neu-roscience and entrepreneurial intention through six antecedents, namely-molecular neuroscience, systems neuroscience, behavioral neuroscience, cognitive neuroscience, social neuroscience, and computational neu-roscience. Our findings suggest that entrepreneurial intention impacts entrepreneurial activity through five factors, including (1) opportunity recognition, (2) evaluation and risk-taking, (3) entrepreneurial cognition, (4) entrepreneurial behavior, and (5) entrepreneurial decision-making. From our discussions, the links among the neural factors affecting entre-preneurship are identified, and a research agenda highlighting a pathway for future studies is proposed. ARTICLE HISTORY
Converging evidence from humans and nonhuman primates is obliging us to abandon conventional models in favor of a radically different, distributed-network paradigm of cortical memory. Central to the new paradigm is the concept of memory network or cognit—that is, a memory or an item of knowledge defined by a pattern of connections between neuron populations associated by experience. Cognits are hierarchically organized in terms of semantic abstraction and complexity. Complex cognits link neurons in noncontiguous cortical areas of prefrontal and posterior association cortex. Cognits overlap and interconnect profusely, even across hierarchical levels (heterarchically), whereby a neuron can be part of many memory networks and thus many memories or items of knowledge.
What would you do if faced with the choice of a smaller reward that you could have today versus a larger reward that you would
receive after several weeks' delay? Such questions are explored by
Ainslie and Monterosso
in their Perspective, which discusses a recent study that uses functional magnetic resonance imaging to measure the brain
activity of student volunteers as they are faced with immediate versus delayed monetary rewards (
McClure
et al.).
Economics and knowledge