Money and Markets: Essays in Honor of Leland B. Yeager

A zeal for truth 5and attributes to George some understanding of the Austrian idea of imputation.He notes that George and the Austrians both had invisible-hand explanations ofmoney’s evolution and both compared money and language. The “major points ofagreement” concern political philosophy, methodology, “knowledge, coordination,and unplanned order” (p. 11), and their criticisms of socialism. I willcomment on the last two points.Chapter 6 of George’s (1898) The Science of Political Economy, “Of Knowledge andthe Growth of Knowledge,” contains many striking similarities to Austrian treatmentsof the same theme. Much as Menger had done in his Principles of Economics(1871), George attributes the progress of civilization to the growth of knowledge.His discussion includes a relatively long treatment of “skill” and how skill emergesfrom practice informed by explicit knowledge. He uses as his leading example theskill of riding a bicycle, which is the standard example in discussions of tacit knowledge.In much the way Michael Polanyi discussed the subsidiary and focalawareness, George notes that the person learning the skill of riding a bicycle “canlook neither to right nor to left, nor notice what he passes” (p. 35). But once the“knowledge required” has passed into “subconscious memory,” the learner “mayride easily, indulging in other trains of thought and noticing persons and scenery”(p. 35). Skill “cannot be communicated from one to another, or so communicatedonly in very small degree” (p. 36). George’s “skill” is tacit knowledge in all butname. Yeager remarks that George “and the Austrians agree that a central taskof economics is to explain how specialized human activities may be coordinatedwithout deliberate direction” (p. 12). George deploys “insights later also achievedby F. A. Hayek,” Yeager says, when discussing “the mobilization of knowledge thatis inevitably dispersed and that simply could not be centralized and put to use by asingle mind or a single organization” (p. 13).George’s critique of socialism bears close similarity to Austrian arguments on thetopic. Building on his distinction between “directed or conscious co-operation” and“spontaneous or unconscious co-operation,” George argues for the “Impossibilityof socialism” (p. 301). George invites us to ignore the “inevitable tendency totyranny and oppression” created by power. Imagine economic control is handedover to “the very wisest and best of men.” Considerthe task that would be put upon them in the ordering of the when, where, howand by whom that would be involved in the intelligent direction and supervisionof the almost infinitely complex and constantly changing relations and adjustmentsinvolved in such division of labour as goes on in a civilized community.The task transcends the power of human intelligence at its very highest.(George 1898: 311–12)Some parts of George’s critique of socialism, Yeager says, “remind us of theemphasis of present-day Austrians on the creative role of entrepreneurship” (p. 15).Yeager thinks George’s critique of socialism is better in The Science of Political Economy(1898) than the “earlier and less insightful” (p. 22) comments in Protection or FreeTrade? (1886).