Aristotle on knowledge

The purpose of knowledge is action, not knowledge. 

~ Aristotle

 

Murray Rothbard on consumers, voters and knowledge

Consumers also take entrepreneurial risks on the market.  Many critics of the market, while willing to concede the expertise of the capitalist-entrepreneurs, bewail the prevailing ignorance of consumers, which prevents them from gaining the utility ex post that they had expected ex ante.  Typically, Wesley C. Mitchell entitled one of his famous essays: ‘The Backward Art of Spending Money.’  Professor Mises has keenly pointed out the paradox of interventionists who insist that consumers are too ignorant or incompetent to buy products intelligently, while at the same time proclaiming the virtues of democracy, where the same people vote for or against politicians whom they do not know and on policies which they scarcely understand.  

To put it another way, the partisans of intervention assume that individuals are not competent to run their own affairs or to hire experts to advise them, but they also assume that these same individuals are competent to vote for these experts at the ballot box.  They are further assuming that the mass of supposedly incompetent consumers are competent to choose not only those who will rule over themselves, but also over the competent individuals in society.  Yet such absurd and contradictory assumptions lie at the root of every program for ‘democratic’ intervention in the affairs of the people. 

In fact, the truth is precisely the reverse of this popular ideology.  Consumers are surely not omniscient, but they have direct tests by which to acquire and check their knowledge.  They buy a certain brand of breakfast food and they do not like it; and so they do not buy it again.  They buy a certain type of automobile and like its performance; they buy another one.  And in both cases, they tell their friends of this newly won knowledge.  Other consumers patronize consumers’ research organizations, which can warn or advise them in advance.  But, in all cases, the consumers have the direct test of results to guide them.  And the firm which satisfied the consumers expands and prospers and thus gains ‘good will,’ while the firm failing to satisfy them goes out of business.  

On the other hand, voting for politicians and public policies is a completely different matter.  Here there are no direct tests of success or failure whatever, neither profits and losses nor enjoyable or unsatisfying consumption.  In order to grasp consequences, especially the indirect catallactic consequences of governmental decisions, it is necessary to comprehend complex chains of praxeological reasoning.  Very few voters have the ability or the interest to follow such reasoning, particularly, as Schumpeter points out, in political situations.  For the minute influence that any one person has on the results, as well as the seeming remoteness of the actions, keeps people from gaining interest in political problems or arguments.  Lacking the direct test of success or failure, the voter tends to turn, not to those politicians whose policies have the best chance of success, but to those who can best sell their propaganda ability.  Without grasping logical chains of deduction, the average voter will never be able to discover the errors that his ruler makes.  

George J. Schuller, in attempting to refute this argument, protested that: ‘complex chains of reasoning are required for consumers to select intelligently an automobile or television set.’  But such knowledge is not necessary; for the whole point is that the consumers have always at hand a simple and pragmatic test of success: does the product work and work well?  In public economic affairs, there is no such test, for no one can know whether a particular policy has ‘worked’ or not without knowing the a priori reasoning of economics.

~ Murray Rothbard, Man, Economy, and State (1962)

(As quoted by Lew Rockwell in "The Greatness of Man, Economy, and State," LewRockwell.com, June 4, 2025.  See also here under "E. Utility Ex Post.")

Michael Lewis on knowledge

In the arenas of human ambition, in Hollywood or Silicon Valley, or Washington or Wall Street, there's a knowingness about people.  They don't want to seem like they don't know.  They think that if they don't know, they're going to seem stupid.  And that leads to greater stupidity.

~ Michael Lewis, "Michael Lewis on what he learned by studying the elites," Brief But Spectacular, November 4, 2024

Friedrich Nietzsche: "There are two different types of people in the world"

There are two different types of people in the world, those who want to know, and those who want to believe.

 ~ Friedrich Nietzsche

Miles Kington on the difference between knowledge and wisdom

Knowledge is knowing that a tomato is a fruit. Wisdom is knowing not to put it in fruit salad.

~ Miles Kington, British journalist, musician and broadcaster

Frank Herbert on the beginning of knowledge

The beginning of knowledge is the discovery of something we do not understand.

~ Frank Herbert, God Emperor of Dune, p. 150

Confucius on asking questions

The man who asks a question is a fool for a minute, the man who does not ask is a fool for life.

~ Confucius

Albert Einstein on imagination and knowledge

Imagination is more important than knowledge.  For knowledge is limited to all we know and understand, while imagination embraces the entire world and all there will ever be to know and understand.

~ Albert Einstein

George Bernard Shaw on false knowledge

Beware of false knowledge; it is more dangerous than ignorance.

~ George Bernard Shaw

Thomas Henry Huxley on knowledge

The known is finite, the unknown infinite; intellectually we stand on an islet in the midst of an illimitable ocean of inexplicability.  Our business in every generation is to reclaim a little more land.

~ T. H. Huxley, biologist and grandfather of Aldous Huxley, 1887

Seneca on the unfolding of knowledge

The time will come when diligent research over long periods will bring to light things which now lie hidden.  A single lifetime, even though entirely devoted to the sky, would not be enough for the investigation of so vast a subject...  And so this knowledge will be unfolded only through long successive ages.  There will come a time when our decendants will be amazed that we did not know things that are so plain to them...  Many discoveries are reserved for ages still to come, when memory of us will have been effaced.  Our universe is a sorry little affair unless it has in it something for every age to investigate...  Nature does not reveal her mysteries once and for all.

~ Seneca, Natural Questions, Book 7, 1st century

Thomas Sowell on the circle of competence

It takes considerable knowledge just to realize the extent of your own ignorance.

~ Thomas Sowell, tweet, November 13, 2020

Friedrich Hayek on the dispersion of knowledge, variety and the division of labor

The knowledge that plays probably the chief role in this differentiation [Wilhelm von Humboldt's "human development in its richest form"] - far from being the knowledge of any one human being, let alone that of a directing superbrain - arises in a process of experimental interaction of widely dispersed, different and even conflicting beliefs of millions of communicating individuals.  The increasing intelligence shown by man, accordingly, due not so much to increases in the several knowledge of individuals but to procedures for combining different and scattered information which, in turn, generate order and enhance productivity.

Thus the development of variety is an important part of cultural evolution, and a great part of an individual's value to others is due to his differences from them.  The importance and value of order will grow with the variety of the elements, while greater order in turn enhances the value of variety, and thus the order of human cooperation becomes indefinitely extensible.  If things were otherwise, if for example all men were alike and could not make themselves different from one another, there would be little point in division of labour..., little advantage from coordinating efforts, and little prospect of creating order of any power or magnitude.

~ Friedrich Hayek, The Fatal Conceit, Chapter 5: "The Fatal Conceit"

Friedrich Hayek on how knowledge is dispersed

To the naive mind that can conceive of order only as the product of deliberate arrangement, may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralising decisions, and that a division of authority will actually extend the possibility of overall order.  Yet that decentralisation actually leads to more information being taken into account.  This is the main reason for rejecting the requirements of constructivist rationalism [socialism].  For the same reason, only the alterable division of the power of disposal over particular resources among many individuals actually able to decide on their use - a division attained through individual freedom and several property - makes the fullest exploitation of dispersed knowledge possible.

~ Friedrich Hayek, The Fatal Conceit, p. 76

Jeffrey Tucker on the knowledge of the marketplace

What is brought to bear in all of this is the knowledge, experience, informed judgments, and insightful hunches of all the individual participants of the entire global system of division of labor in the worldwide marketplace of goods and ideas. If, as the saying goes, two heads are better than one, then surely 7.7 billion heads are better than all of the best minds of the relative handful of those in government who would presume to know how to “get things done” in better and more balanced ways than when all those billions of minds are set to work through the motive of profit and the avoidance of loss in attempting to improve one’s own circumstances.

~ Jeffrey Tucker, "Leaving People Alone is the Best Way to Beat the Coronavirus," AIER.org, March 23, 2020

Chris Mayer: "investors are better off focusing on knowable things"

[As investors,] I believe we’re better off focusing on “knowable things.” About 25 years ago, I read a thin book titled The Craft of Investing by John Train. There is a passage he wrote that I still remember. The pages of my copy are yellowing around the edges with age, but I found the passage that sticks in my mind and I want to share it with you here:

Investment, as distinct from speculation, is the craft of the specific. It is extraordinary how much time the public spends on the unknowable. Is the market going up or down? Is the economy recovering? What is the government going to do?

You should forget about the short term and not worry about the economy or the direction of the market. Instead, buy a share of a company the way you would buy a house: because you know all about it and want to own it for a long time at that price.

Train uses an analogy from military history. He says amateurs talk about grand strategy, but generals talk about supply lines and communication. In investing, the parallel is clear: wise investors focus on specifics – people, control, assets, how businesses are financed, priced, etc. Knowable things.

~ Chris Mayer, "Woodlock House Q4 Letter," January 7, 2020

Robert Hagstrom recalls a talk by Charlie Munger about finance "as part of a larger body of knowledge"

Rather than discussing the stock market, he intended to talk about “stock picking as a subdivision of the art of worldly wisdom.” ...[H]e challenged the students to broaden their vision of the market, of finance, and of economics in general; to see them...as part of a larger body of knowledge...that...also incorporates psychology, engineering, mathematics, physics, and the humanities... [E]ach discipline entwines with, and in the process strengthens, every other.

~ Robert Hagstrom, The Warren Buffett Way

Daniel Boorstin on the greatest obstacle to discovery

The greatest obstacle to discovery is not ignorance - it is the illusion of knowledge.

~ Daniel J. Boorstin, historian

Lao Tzu on knowledge and wisdom

To attain knowledge, add things everyday. To attain wisdom, remove things every day.

~ Lao Tzu

Albert Einstein on learning and knowledge

The more I learn, the more I realize how much I don't know.

~ Albert Einstein