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COGNITIVE ECONOMY: AN INQUIRY INTO THE ECONOMIC DIMENSION OF KNOWLEDGE.

by Nicholas Rescher Pittsburgh: University of Pittsburgh Press, 1989.

The goal of this little book is to argue that,

... only by heeding the concrete processes that engender our knowledge in a way that takes account of their economic dimension can we adequately explain the nature of its operations and properly understand the character of its products .... [A] cogent account for our standard cognitive practices is provided by seeing them as emerging from an economic pressure to cost effectiveness in the management of our epistemic affairs." (p. 150)

The ftrst part of this, the idea that an adequate epistemology must take an "economic dimension" into account does receive some support.

Consider, for an example of how epistemology can be seen as having an interesting economic dimension this metaphor of Rescher's: "A communicating community is a sort of marketplace with offerers and takers, sellers and buyers" (p. 49). This picture provides the epistemologist with a number of tools. Knowledge or information can be regarded as a more or less ordinary commodity to be produced, exchanged, and consumed. An individual's knowledge can be thought of as cognitive capital which is useful for the production of further knowledge, but also a costly investment taking resources away from immediate needs. Consumers of knowledge can be classified as risk averse, extremely risk averse (this is Rescher's clinical diagnosis of the skeptic) or as risk loving, depending on how much of their resources

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they spend on ensuring that their information is reliable. There is a potential confusion here. Are we supposed to be considering a special market for information alone or, instead, an entire economy in which information is one commodity among many? Rescher wants the former, I think, but the latter is much more realistic and useful.

An interesting extension of the basic picture comes from what Rescher might have (but didn,0 call a contractarian ethics of truth- telling in the marketplace of ideas. Political philosophers have tried to show how self interested agents might rationally agree to be constrained in their pursuit of immediate satisfaction in the expectation that this will make them better off in the long run. Rescher argues that rational communicators will want to establish themselves as reliable informants even when deception might prove profitable in the short run, because they want to be included in future beneficial exchanges of information and command a good price for the information they will be supplying to others. Rescher likens this to the building of one's own "cognitive capital" and the extending of cognitive credit to others. All of this directly parallels the contractarian idea that it is rational to behave morally because the alternative is being excluded from the contracts governing cooperative projects that result in society's cooperative surplus,

Another way the market metaphor can be developed is in connection with "... [an] otherwise puzzling aspect of scientific methodology: the predisposition of research scientists towards novel and untried theories .... Once a new theory begins to gain acceptance, it replaces the old with surprising rapidity and manages to gain approval to an extent that outstrips its evidential merits." (p. 123). I think this means that in these cases the new theories are better cognitive investments. The evidence, and the present knowledge payoffs, may still weigh more heavily in favor of the old theory, but we expect that the new theory will have a superior payoff in the future.

The market approach to epistemology is perhaps the most useful epistemological idea in the book. Whether this approach can someday provide insightful explanations will depend on the viability of the basic economic picture it is based on. The idea that pervasive aspects of human behavior are best explained by and, perhaps, even motivated by the constrained optimization of utility, preference satisfaction, or

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some such has received much strong criticism over the years. One aspect of this criticism, namely that it is empirically difficult or even impossible to characterize adequately what economic agents are supposed to be optimizing, applies to using contractarianism to understand communication. One might rationalize the fact that people tend to be reliable sources of information by producing a hypothetical contract that would, in principle, be agreeable to everyone in a community. This might serve to morally or politically justify such behavior to someone entertaining the moral skeptic's worry that only self-interested maximization (which will sometimes involve deception) is rational. Potential justificatory force, however, is not invariably connected with explanatory force and in this case, since the contract is wholly hypothetical, there is no reason to believe that economic thinking has helped explain anything. In general, it can be argued that an economic explanation of this kind is effective only when its presuppositions match up fairly closely with the way things are. In the special case of a knowledge market they obviously do not. People do not, for example, usually perform optimizing calculations to determine whether they should tell the truth.

If we abandon the project of finding realistic economic explanations of epistemic behavior and concentrate instead on the more modest project of "instrumentally" explaining it, there is still trouble. In economics itself, the trouble comes from the circumstance that the quantities to be maximized, preference satisfaction, profit, and the like, can only be inferred after the fact. We cannot, for example, look into a person's head to see what their utility function is, and asking him about it elicits unreliable responses, so the only course left open is to observe his behavior and try to reconstruct what it was he was maximizing in order to produce that behavior. This procedure results in an objectionable circularity if it is explanations instead of rationalizations that we are interested in. This general problem with economic methodology is clearly relevant to Rescher's aforementioned suggestion regarding the scientist's predilection for new theories. His proposal is that scientists take new theories to be better investments, but there is no good way to test the claim. Things would be different if we knew enough to make strong inductive inferences about the epistemological potential of new theories, but, in practice, there are no

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reliable measures of "promise"; the only criterion for one theory's being "less promising" than another is that scientists do replace the one with the other. So we can always say, no matter which theory is chosen, that the choice was economically explicable. This means, of course, that the economic account provides no explanation at all; it is again, at best, an ex post rationalization.

The book is less successful when it attempts to shed economic light on traditional epistemological puzzles. I do not think that Rescher has yet managed to provide an "adequate explanation", or even a "cogent account" of epistemically important cognitive processes. Consider, for instance, the Raven Paradox. Hempel's original formulation is as follows. Suppose this is a law of nature: 6 ) All ravens are black. (L) is logically equivalent to (L*): All non- black things are non-ravens. The paradox is that (L) is confirmed by positive instances (black ravens), but not by non-black non-ravens (yellow warblers). Non-black non-ravens, however, a re positive instances of (L*) so it seems they should confirm (L) as well. Rescher's attempted resolution of the paradox follows Hempers by allowing that a non-black non-raven confh-ms (L), but differs by adding that it confirms (L) less than a black raven does. His reason is that getting a good statistical sample of non-black things and checking them for ravenhood would cost much more money than getting a good sample of ravens and checking them for blackness because there are so many non-black things in the universe. This is true, but it does not resolve the paradox because the root of the intuition that non-black non-ravens do not confirm (L) (or, if Rescher is right, the intuition that they confirm it much less than black ravens) is not pecuniary. Suppose that a powerful extraterrestrial benefactor offered to check out positive instances of (L) and (L*) at absolutely no cost (to human scientists). Surely the intuition that the black ravens are better confirming instances would remain. Hempel's own diagnosis of the intuition as resulting from suppressed background knowledge seems more convincing. Hempel is also able to say that when the background information is in place that yellow warblers do not confirm (L) at all, but Rescher needs more assumptions to get this conclusion.

Rescher's treatment of Goodman's "new riddle of induction" is not very helpful either. The riddle, very briefly, is that it is possible to

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construct strange predicates that we do not expect to support inductive inferences, but which are syntactically indistinguishable from ordinary predicates. Goodman's example was 'grue', which applies to things observed before some future time t just in case they are green, but to other things just in case they are blue. Rescher's attempt to solve the problem relies on the claim that someone who used 'grue' after t would need to know whether an object was first observed before t or not before he could determine whether it was grne. Those who use 'green' after t c a n decide whether objects are green without additional knowledge about prior observations. He writes,

We are now not left (as Goodman was) with the brute fact of entrenchment itself - the circumstance that the orthodox taxonomy is established, accepted, and familiar in contrast to its alternatives. Rather, we are able to deploy fundamental principles to get some insight into why it should be the one that has become entrenched; namely, because it is less complex and more convenient (economical!) to operate. (p. 117)

Let us suppose that Rescher is correct about the alleged asynunetry between green and grne. This is less of a triumph for the economic perspective than it is for familiar considerations about the epistemological desirability of simplicity. It does not require a special economic point of view to appreciate that, every thing else being equal, humans prefer simple hypotheses and taxonomies to complex ones and generally take themselves to be justified in so doing. Moreover, the economic perspective is no help whatsoever with familiar problems concerning the concept of simplicity. It has nothing to contribute, for example, to discussions about the objectivity of our judgments of simplicity themselves. This is highly relevant to Goodman's problem because it might be claimed against Rescher that the "orthodox taxonomy is established, accepted, etc." because it is based on orthodox judgments of simplicity and convenience. One might also wonder, especially if one shares Rescher's anti-skeptical and anti-relativist positions, why simplicity should be thought to confer truth, or even be especially strongly correlated with truth. One might

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grant that 'green' is really simpler than 'grue' while resisting the conclusion that emeralds are really green instead of grue, especially since both hypotheses about emeralds seem to have equally strong inductive support. The economic perspective does not get us into special trouble with the Goodman Problem, but it does not illuminate either.

Cognitive Economy is at its most interesting in the final chapter's discussion of the economics of the scientific enterprise. Rescher clearly explains why scientific investigation has become so expensive and why we should expect these expenses continue their disturbing rate of increase,

The discoveries of today cannot be made with yesterday's equipment and techniques. To conduct new experiments, to secure new observations, and to detect new phenomena, an ever more powerful investigative technology is needed. Scientific progress depends crucially and unavoidably on our technical capability to penetrate into the increasingly distant - and increasingly difficult - reaches of the spectrum of physical parameters . . . . We are embarked on a literally limitless endeavor to improve the range of effective experimental intervention, because only by operating under new and heretofore inaccessible conditions of observational or experimental systematization - attaining extreme temperature, pressure, particle velocity, field strength, and so on - can we realize those circumstances that enable us to put our hypotheses to the test. (pp. 134- 135)

He concludes that in order to sustain "smooth progress" in the growth of scientific knowledge economic costs will increase "exponentially" (p.138). One might question this particular way of quantifying matters, but it does seem true that we have reached a time when the principal constraint on significant scientific progress is not the lack of a sufficient number of ingenious researchers, it is instead the lack of resources to buy them what they need to conduct their research. It is

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easy to think of research programs that virtually guarantee tremendous payoffs in knowledge whose future funding is uncertain at best: the human genome project, exploration of the solar system, and experimental particle physics are prominent examples. Some argue that the paucity of funding for less spectacular basic research is an even more pressing problem for the growth of scientific knowledge.

In short then, economic pressures will force us to make difficult decisions about resource allocation. Decisions will have to be made among scientific programs demanding resources, and there will also be higher level choices to determine what proportion of society's resources will be spent on science instead of other human needs. Everyone is familiar with the position that large expenditures on space exploration are inappropriate when people are miserable on Earth, and some would emphasize that scientific knowledge is of limited value if it cannot be enjoyed without an expensive military force to protect it from foreign invaders. These issues point up one of the important gaps in economic analysis. Economics is strong on how to manage resources to get what one values, but silent on how to determine what is fundamentally valuable.

Who is qualified to make these decisions and on what basis? We might hope for a kind of economic answer here: hire managers with special training and abilities. Who has the special competence - elected government officials? There does not seem to be any way, even in theory, of avoiding subjectivity and the misuse of political power as society makes these extremely important decisions. These considerations about what is to count as valuable and important somewhat undermine Rescher's stand against "fashionable relativism". In a chapter section entitled, "Is Importance Objective?" Rescher writes,

Things do not become important merely because people attach importance to them. Matters that bear on the preservation of human life - medicine or nutrition, for example - possess an importance quite apart from any particular individual's view of the matter. (p. 78) ... [I]mportance is objective because of its inherently normative nature: it pivots not (jus0 on what matters for

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what we do care about, but on what matters for what we should care about - on what our aims ought to be as the sort of beings we are, rather than merely on what our aims actually happen to be. (p. 79)

It does not help to say that objectivity comes from normativity; it is generally normative matters that have seemed the most plausible candidates for some kind of relativistic treatment. What would one be a relativist about if not norms? Rescher's real argument is that norms that are somehow attuned to human nature are objectively important. But is it possible to determine objectively what human nature is? As examples, Rescher suggests that preservation of human life and the desire for knowledge (feeling "cognitively at home in the world", p. 8) are objectively important.

Although these are very plausible examples, they are not likely to satisfy a committed relativist. For one thing, the examples are potentially in conflict with each other. Resources taken from the pursuit of knowledge through space exploration might be used to directly preserve human lives or be spent on research to further that end. A relativist could also point out that there are circumstances in which some things could be more important than human life preservation - short lives of high quality might be worth more than well preserved lives of lower quality. Importance is a matter of degree and it is hard to understand how, in general, judgments of comparative importance can be fully objective. It is worth noting that evolutionary arguments do little to buttress a strongly objectivistic stance here. It is not at all clear, for instance, what the general effect of preserving the lives of the individuals of some species (including humans) will have on the gene pool of that species. It is not even clear that the likelihood of attaining the goal of preserving the species as a whole will be increased by this procedure. And in what sense is it objectively of overriding importance to preserve species, even homo sapiens? [Consider the lively debate that has grown over issues concerning the ethics of future generations and of population management in general. See Derek Parfit's Reasons and Persons, Oxford: Oxford University Press, 1984, especially Part Four.] I am not suggesting that fashionable relativism has got the upper hand here, but the economic

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perspective does not seem to provide any independent support for anti- relativism. Many economists have marked this point by trying first to distinguish sharply between "normative" and "positive" argumentation and then to engage only in the latter. It is significant that they use the distinction to avoid exactly the sort of claim that Rescher is making here.

Cognitive Economy provokes one to think about the kinds of economic choices that are involved in directing the path in which knowledge, especially scientific knowledge, will grow. It will also give the reader a clear impression of how some familiar epistemological problems can be recast in economic terms that maybe less familiar, but one is not likely to be convinced that the solution of these problems is to be found in the economic dimension.

ALAN NELSON

UNIVERSITY OF CALIFORNIA, IRVINE IRVINE, CALIFORNIA 92717 USA

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