This is an interesting interview of George Mason University’s Russ Roberts — the co-creator of the great Fight of the Century video — by Nick Gillespie of Reason TV.
During the interview Roberts mentions Friedrich Hayek’s Nobel Prize lecture on December 11, 1974, called The Pretense of Knowledge. I went back and read the lecture. It is amazing. Here is a crucial point made by Hayek during his speech:
Unlike the position that exists in the physical sciences, in economics and other disciplines that deal with essentially complex phenomena, the aspects of the events to be accounted for about which we can get quantitative data are necessarily limited and may not include the important ones. While in the physical sciences it is generally assumed, probably with good reason, that any important factor which determines the observed events will itself be directly observable and measurable, in the study of such complex phenomena as the market, which depend on the actions of many individuals, all the circumstances which will determine the outcome of a process, for reasons which I shall explain later, will hardly ever be fully known or measurable. And while in the physical sciences the investigator will be able to measure what, on the basis of a prima facie theory, he thinks important, in the social sciences often that is treated as important which happens to be accessible to measurement. This is sometimes carried to the point where it is demanded that our theories must be formulated in such terms that they refer only to measurable magnitudes.
Basically, economists often look only at what they think they can measure, and then simply assume that what they can measure is all there is.
During the fight in the video, Hayek knocks Keynes out on these four words: the pretense of knowledge (around 6 min.40). Brilliant.