Hayek & Wittgenstein — The Parallel Rejection of Formal Modeling as a Proxy for Capturing the Significance of Language or the Causal Mechanism of the Economic Process

Academics attempting to make sense of the significance of words & logical implication had a framework for doing so exactly parallel to that of economists attempting to make sense of the significance of prices & the implication of prices for distribution.

In fact, both modern programs in their mature form came out the the same city — Vienna. In the word & logic domain the key figures were Wittgenstein and Carnap. And you can connect a direct line from Wittgenstein & Carnap to Abraham Wald’s formal existence proof of equilibrium.

BOTH of these programs sought to limn words & logic (language) and prices & distribution (the economy) by mapping these into formal models.

In the first case, by stipulating a mapping of semantics to particular meaning entities & then mapping the formal relation of these in propositional logic, a system of axioms.

In the second case, by stipulating a mapping of values to particular price entities & then mapping the formal value relations of these into an axiomatic system.

These are the “God’s eye view” constructs pretending to limn language and the economy that Wittgenstein & Hayek rejected — rejected because they actually deceive us into misapprehending where the significance we ascribe (as the top-down “God”) to the elements of our constructs actually derive their purchase and significance — i.e. from the social phenomena in which we move and are embedded.  We are embodied within language and within a social pricing system and we never have a synoptic God’s eye or bird’s eye purchase on semantic or price “entities” connected in formal relations — THE WORLD DOES _NOT_ COME THAT WAY.

Prices are signals, imperfectly perceived and imperfect as instruments for orienting ourselves in coordination with others.

Language, ditto, although much more tightly bound in shared practices and successful common ways of going on together (read some Wittgenstein).

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A system of market determined prices is .. indispensable [as a mechanism which makes] us adapt our activities to events and circumstances of which we cannot know. — F. A. Hayek

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