Metaphor consists in giving a thing a name that belongs to something else. — Aristotle, Poetics
Language is metaphorical through and through. — Thomas Szasz, Insanity: The Idea and Its Consequences
In a lecture delivered at the London School of Economics in March 1933, F.A. Hayek, a 33-year-old economist recently appointed to the faculty, lamented that the “oldest and most general result of the theory of social phenomena has never been given a title which would secure it an adequate and permanent place in our thinking.”
Which part of the theory of social phenomena did Hayek have in mind? He explained in “The Trend in Economic Thinking” (PDF), later published in the journal Economica:
From the time of Hume and Adam Smith, the effect of every attempt to understand economic phenomena — that is to say, of every theoretical analysis — has been to show that, in large part, the coordination of individual efforts in society is not the product of deliberate planning, but has been brought about, and in many cases could only have been brought about, by means which nobody wanted or understood, and which in isolation might be regarded as some of the most objectionable features of the system. It showed that changes implied, and made necessary, by changes in our wishes, or in the available means, were brought about without anybody realising their necessity. In short, it showed that an immensely complicated mechanism existed, worked and solved problems, frequently by means which proved to be the only possible means by which the result could be accomplished, but which could not possibly be the result of deliberate regulation because nobody understood them. Even now, when we begin to understand their working, we discover again and again that necessary functions are discharged by spontaneous institutions. If we tried to run the system by deliberate regulation, we should have to invent such institutions, and yet at first we did not even understand them when we saw them. [Emphasis added.]
Today, thanks to Hayek, we call this phenomenon that had no title in 1933 “spontaneous order.” For me, what’s so fascinating about this lecture (for my awareness of which a hat tip is due to Daniel B. Klein and his book Knowledge and Coordination: A Liberal Interpretation) is what Hayek went on to say:
The limitations of language make it almost impossible to state it without using misleading metaphorical words. The only intelligible form of explanation for what I am trying to state would be to say—as we say in German—that there is sense [Sinn] in the phenomena; that they perform a necessary function. But as soon as we take such phrases in a literal sense, they become untrue. It is an animistic, anthropomorphic interpretation of phenomena, the main characteristic of which is that they are not willed by any mind. And as soon as we recognise this, we tend to fall into an opposite error, which is, however, very similar in kind: we deny the existence of what these terms are intended to describe.
Talk about navigating between Scylla and Charybdis! On the one hand we have little choice but to talk about the complex yet undesigned order of society as if it were a purposeful and problem-solving agent. But if we take the required metaphors literally, the phenomena won’t really be understood. Indeed, if people believe that social order was designed, they might think it can be improved through a redesign — and we know where that leads. On the other hand, if we avoid metaphorical language, we will have a harder time explaining the coordination that only market makes possible.
Hayek continued,
It is, of course, supremely easy to ridicule Adam Smith’s famous “invisible hand” — which leads man “to promote an end which was no part of his intention”. But it is an error not very different from this anthropomorphism to assume that the existing economic system serves a definite function only in so far as its institutions have been deliberately willed by individuals. This is probably the last remnant of that primitive attitude which made us invest with a human mind everything that moved and changed in a way adapted to perpetuate itself or its kind. In the natural sciences, we have gradually ceased to do so and have learned that the interaction of different tendencies may produce what we call an order, without any mind of our own kind regulating it. But we still refuse to recognise that the spontaneous interplay of the actions of individuals may produce something which is not the deliberate object of their actions but an organism in which every part performs a necessary function for the continuance of the whole, without any human mind having devised it. In the words of an eminent Austrian economist [Ludwig von Mises], we refuse to recognise that society is an organism and not an organisation and that, in a sense, we are part of a ‘higher’ organised system which, without our knowledge, and long before we tried to understand it, solved problems the existence of which we did not even recognise, but which we should have had to solve in much the same way if we had tried to run it deliberately. [Emphasis added.]
Economic discussion is full of metaphors, some helpful, and some, in my view, detrimental to understanding. Hayek used two in these passages: mechanism and organism. The market is not literally a mechanism, and society is not literally an organism, but those terms can help us understand what goes on in markets and societies. We need metaphors to understand and to teach, but we must not treat them as if they were literal truths.
My least favorite metaphor in economics (catallactics) concerns rationing and allocation. Defenders of the market will say, “The market rations (allocates) by price, which is superior to rationing (or allocation) by government.” Many people — including some economists — may not fully realize this is a metaphor. The word “ration” implies a rational plan to distribute goods. But the market is the antithesis of this. It’s where millions of people exchange goods (property) and services with one another in countless discrete transactions. As a result, resources and goods change hands, but no distribution or rationing takes place. (Thus, government cannot redistribute wealth.) I would banish the word “ration” from the economic conversation. It’s a wild elephant of a metaphor and may take you where you don’t want to go.
Markets don’t ration goods or solve problems, because markets don’t do anything. Hayek stressed this in The Fatal Conceit (1988):
The extended order [society] … is formed into a concordant structure by its members’ observance of similar rules of conduct in the pursuit of different individual purposes. The result of such diverse efforts under similar rules will indeed show a few characteristics resembling those of an individual organism possessing a brain or mind, or what such an organism deliberately arranges, but it is misleading to treat such a “society” animistically, or to personify it by ascribing to it a will, an intention, or a design.
James M. Buchanan made the same point in “What Should Economists Do?” (1963):
The market or market organization is not a means toward the accomplishment of anything. It is, instead, the institutional embodiment of the voluntary exchange processes that are entered into by individuals in their several capacities.… The network of relationships that emerges or evolves out of this trading process, the institutional framework, is called “the market.” It is a setting, an arena, in which we, as economists, as theorists (as onlookers), observe men attempting to accomplish their own purposes, whatever those may be.
In my experience, the thinker who wrote most eloquently about metaphor was Thomas Szasz, the psychiatrist who challenged the deepest premises (and practices) of psychiatry by showing they were built on a metaphor that was later literalized. Szasz spent his professional life trying to teach people — including medical students — the difference between literal illness (cancer, for example) and metaphorical illness (homesickness, for example). He acknowledged that he didn’t have much success. “Medical students are educated persons,” he wrote in Insanity: The Idea and Its Consequences (1987). “But most of them do not know what a metaphor is.”
The same year as Hayek’s lecture, C. S. Lewis published The Pilgrim’s Regress, in which he wrote, “We must use metaphors. The feelings and the imagination need that support. The great thing … is to keep the intellect free from them: to remember that they are metaphors.”
To which Szasz replied: “Obviously, doing so cannot be easy, or else wise men would not have felt it necessary — in every age and every language — to keep reminding us of the duty of this remembrance.”