In keynote remarks at the 2012 Charles Street Symposium, University of Texas Professor Peter Lewin explores what it really means to know that we don't know something.
My subject tonight is uncertainty and what we know about it. Surprise, mystery, anxiety and, of course, profit, are all implications of this phenomenon that we call uncertainty. Pretty much everything we know about humans in their social lives is connected to uncertainty, the fact that we do not know what is going to happen; people plan, they relish, they fear, but they don’t really “know” for sure what is going to happen.
As George Shackle would say, we live in the fleeting present, imperfectly remembering the past, anticipating the uncertain future. In that sense the uncertain future is very much part of the present, and it shapes everything we are and everything we do. So uncertainty refers to a “lack of knowledge” to the not-knowing. And we know that we don’t know. No less an authority than Donald Rumsfeld informs us: The truth is, there are things we know, and we know we know them – the known knowns. There are things we know that we don’t know – the known unknowns. And there are unknown unknowns; the things we do not yet know that we do not know.
My topic tonight concerns this “meta-knowledge” – this knowledge of not-knowing.
What does it mean to know that we don’t know? What is the nature of this knowledge,
and what are its implications?
On this our teachers tell us different things? Permit me a brief account of my own
experience. I came of age as an economist under the tutelage of Ludwig Lachmann. For him uncertainty was of the radical variety and it was lethal for the standard neoclassical framework. Unless economics as a discipline could figure out how to incorporate this real, this radical, uncertainty, it was doomed to irrelevance at best, and to the propagation of arrogantly administered disastrous economic policy at worst. Later, as I discovered the extensive work of Friederich Hayek, this approach was reinforced – though, of course, Lachmann and Hayek differ in some important respects. Hayek’s Nobel prize lecture on the ‘Pretense of Knowledge’ is the culmination of a particular way of thinking about uncertainty.
Lewin's full keynote remarks are available here: What Do We Know For Certain About Uncertainty?.
Peter Lewin is a professor of economics at the University of Texas at Dallas. Lewin’s talk was part of the Charles Street Symposium, the Legatum Institute’s new annual forum for the world’s leading young economists. The inaugural symposium focussed on issues of economic risk and uncertainty.