In the 1960s, Hayek argued that: “in the field of complex phenomena, the term” law “, as well as the concepts of cause and effect, are not applicable”. Regarding “The Theory of Complex Phenomena”, Hayek warned that in the case of complex phenomena, the scientist must give priority to the development of theoretical assumptions, instead of privileging empirical tests. The economist perceives the market system as a complex system in which the coordination process of decentralized individual plans takes place.
According to his approach, cognition and evolution are social phenomena intertwined in a historical process. His cognitive theory plays a relevant role in explaining how institutions, traditions and behaviours cannot be inherited, but are learned through education and experience. His interest in the study on the recurrence of behavioural patterns is crucial to understand the conceptualization of a complex system as a coherent structure, where a complex pattern of behaviour has produced the properties that maintain the structure itself.
Hayek also highlighted the erroneous role of statistics in understanding complex economic phenomena. In his view, the applicability of statistics eliminates complexity because it does not require information about how different elements with different attributes are related and ignores the structure in which the different elements are organized. On the other hand, statistical methods treat individual elements as systematically unconnected and disregard the relevance of the relative position of different elements in a structure. This is possible because the main underlying assumption is that information about the numerical frequencies of the different elements of a complex structure is sufficient to explain phenomena. In short, according to the Austrian economist, the applicability of statistics is irrelevant to the solution of complex problems, in which the economist needs to consider the relationships between individual elements with different attributes.
Hayek bleives that the goal of a theory of social phenomena is to build a theory about complex structures. In this attempt, no amount of statistical information can be used to build this theory, because statistical techniques say nothing about structure. In fact, Hayek pointed out that the emphasis on objective knowledge related to statistics in economic thinking and research has neglected an understanding of the nature od economic systems where complexity, evolution and knowledge are intertwined. His theory of evolution describes only a range of possibilities, that is, this theory does not aim to verify all the facts that will contribute to determine particular outcomes. In short, the way the theory deals with the forces of pattern-building cannot predict which new forms and the particular circumstances that will determine the selection of types that will survive. Therefore, economic theory can describe types of patterns that depend on certain general conditions, but it can rarely derive any prediction from specific phenomena.
This theoretical and methodological perspective has relevant implication for the analysis of a complex economic structure. By discovering “laws” is a characteristic of theories of simple phenomena, complex phenomena are not associated with a single “law”. Indeed, a “law” would be valid only for a particular and constant set of values of parameters. However, if the parameter values are continuously variable, an infinite number of particular “laws” can arise.
In view of this, economists should rethink the relationship between complexity and economic laws in order to rethink ideas and practices regarding the Economics curriculum.