In spending time in the LSE archives recently, I came across a letter Frank Knight sent to Lionel Robbins on February 17, 1934. In the letter, Knight wishes to amend his review of Robbins’s “Essay on the Nature and Significance of Economic Science” published in the International Journal of Ethics (1934).

Before noting his revision, it is perhaps of interest that Knight views Robbins’s project as one of “a transplanting onto English soil of the Austrian or ‘neo-Austrian’ economics” (pg 359), where he is referring to the fact that “the postulates of rational economics essentially stake out a claim to adequacy for a complete analysis of human behaviour in terms of choice between uses of means in realizing ends” (pg 358).

For those familiar with LSE in the 1930s this would not be altogether surprising, as the ideas of Hayek and Mises were first making their way into the English language debate via LSE at the time. But for Knight, Robbins’s work has far too much emphasis “on ‘precision’ and ‘being scientific'”, a theme that Hayek would go on to develop in distinguishing the methods appropriate for the social sciences from those of the physical sciences.

Knight states his amended position, as follows, in his letter to Robbins:

“…the more I think about it the more I am inclined to say that the fundamental principle stressed so much in your book, of an absolute contrast between judgements of facts and judgements of value, is actually the basic error in the theory of nineteenth century liberalism. Stating it another way, I am inclined squarely to reverse the maxim, De gustibus non disputandum, in this regard, and hold that only judgements of value can be discussed, facts as such not at all. That is, when we disagree about a fact it seems to me we disagree about the validity of observation or evidence, and that every disagreement is essentially a difference in evaluation.” (Archive box, Robbins 3/2/8)

Rather than an esoteric comment on a lost debate, Knight’s issue is a perennial concern in economics and political economy (see for instance Dani Rodrik’s new book, Economics Rules). How much we agree on the evidence is dependent on how valid we believe that evidence to be. Validity in the social sciences is then tied to how we evaluate the methods for attaining knowledge and the criteria or values we use in making those judgements. For Knight, truth judgements can never be absolute, but rather only gain significance with the consensus of practitioners within a community. In this sense, the best we can gain in the social sciences are “relatively absolute, absolutes”.

Knight is a fascinating figure in relation to connections between the Austrian school and the work of his student, James Buchanan. For both, subjectivity plays an important role both in how agents perceive the economic world but also in the limits it places on political economy.