Alfred Schutz, Austrian Economists and the Knowledge Problem

The Austrian School of Economics has always taken a deep interest in methodological issues, and has used its methodological reflections to build substantive theories towards explaining the role of knowledge in economic life. This ‘double’ interest for knowledge within the Austrian School can be traced back at least to Alfred Schutz’s 1932 thesis The Phenomenology of the Social World, which was written within the context of the Ludwig von Mises’ seminar group. A central idea in this thesis is that conceptualizations in the social sciences are of a second-order nature, since they build on the conceptualizations already formed by social actors in their everyday lives about other social actors. In this article I try to trace how Alfred Schutz’s writings on scientific and everyday knowledge were influenced by and in turn influenced Austrian economists, including Ludwig von Mises, Friedrich Hayek, Oskar Morgenstern, and Fritz Machlup. Furthermore, I raise the question of why Alfred Schutz himself as well as Fritz Machlup took an apologetic stance towards neoclassical economics, while Friedrich Hayek and Oskar Morgenstern were much more critical of the orthodoxy. In answering this question I argue that while Schutz and Machlup both defended equilibrium economics based on a conventionalist–instrumentalist view, Hayek and to some degree Morgenstern proposed to build more process-oriented models relying on a realist view of scientific explanations.