Some Current Economic Considerations Base on Hayek's "The Use of Knowledge in Society"

Friedrich Hayek's "The Use of Knowledge in Society" is one of the most cited and read pieces of economics of all time. The piece was advanced as a defense of free markets against centralized planning and,while Hayek has been tentatively adopted by some parts of the political right, it has a depth of thinking that means he cannot be reduced to a "wooden insistence" on the free market above all else. Times have changed and the free market is here to stay. But I wish to revisit his discussion of "special knowledge" in light of income inequality and the environment. I see the key bit of the piece revolving around "special knowledge of circumstances of the fleeting moment not known to others." This is also expressed as "knowledge of the particular circumstances of time and place." Examples Hayek points to are knowing that a machine is not fully employed and can be put to better use, or that some person has skills that can be better utilized, or knowledge of tramp-steamers that are only partially filled so a few extra goods can be shipped at a good price. Hayek sees this kind of special knowledge as generally held in disrepute, and seen as slightly unfair or crass. Thus the value of markets, which do a good job of communicating this kind of information to individuals engaged in non-coordinated or decentralized planning, are also disparaged. Now for my points. Herbert Simon has noted that ever since Adam Smith (who disparaged all institutions, including Oxford), we have in fact seen a rise in the amount of economic activity that occurs within organizations. 80% of current economic activity occurs within organizations and only 20% outside in what can properly be considered markets. This means a large portion of economic activity is coordinated, organized, and standardized. I suggest that this means all special knowledge is not of the same value. A special knowledge of how a particular machine works will only be of great value if there is something special about that machine. The machine may very likely be replaced, or moved to China. A special knowledge of particular tax codes, and how to use them with your business strategy if you're head of a major corporation, however, may be very valuable. As may a special knowledge of the personalities and bottom lines of a few other CEOs. Thus the relative availability of valuable special knowledge could explain inequality. This would also suggest that it will be very hard to root out such inequality. Broad based simplifying the rules of the game might be a start which Hayek would approve of. Environmental externalities are well known to not be communicated through markets. They can be dealt with through "command and control" or economic policy instruments, but in both cases intervention of a centralized planner is generally called for to set up the policy regime. Standard setting is an engineering (command and control) task and one that the U.S. EPA has been able to do generally well. But as the costs of meeting standards has risen, interests in economic policy instruments has risen. One solution is to start pricing ecosystem services, i.e. the market value of goods people receive from nature. While I support this effort, I am skeptical that it will yield the rational policy instrument many of its backers hope for. In many cases the value of a particular environmental feature is tied up in special knowledge. The value of that stream may be partly tied to sediment and nitrogen reduction and flood control. But whether it is valued by someone because it is far away and pristine, or whether it is next to houses and a group of children particularly enjoy wading in it, is very much a case of special knowledge. One with apparently identical characteristics may be viewed as a nuisance. Thus, I would suggest that the ecosystem services work will generally be more useful for educational purposes rather than yielding any strong rational planning framework.

Neurath's Boat

Neurath's boat metaphor for how we seek and apply knowledge seems popular among pragmatists, I've seen it feature quite prominently in recent defenses of pragmatism by Richard Rorty and Bryan Norton.

The basic metaphor is pretty simple (and no doubt they like being able to bring the positivists back into their camp), so there is intuitive appeal to it. We start out with the boat we have, rotting timber and all. And we don't have the luxury of replacing all the planks (which one would think of as propositions with relative degrees of truthfulness corresponding with how "sound" they are as planks), so we have to stand on other planks to replace those that are failing. As one is forced to stand on other planks, one can never start at the beginning, i.e. adopt a position of radical doubt. To not take a pragmatic stance, fix those planks most urgently need or repair while standing on those in ok, but perhaps not ideal condition, is to go into the drink. Given that the whole point of the knowledge boat in the first place is to avoid the drink, Descartes' project, er, founders.

My sympathies are with the pragmatists on this one, I mostly agree with Rorty's characterization of radical skeptics as "obsessive" is often apt. But it does seem pretty clear that the selection of the metaphor preselects the pragmatic conclusion. A boat is to keep you out of the water, that's what it's for. Of course it fails as a boat and you fail as a boat operator if you let it go down. Why are you voyaging might be a better question. Is it for pure knowledge and discovery, for conquest, to escape something, for profit, or to catch a tasty fish?

Having sailed a little, I also hate to let Neurath know, that most boats are made of fiberglass or steel these days, and if your boat is in trouble, you'll bring it into dock. The decision making will mostly involve which boat you decide to get on in the first place, not which non-existent planks you repair. So boat design actually is the pressing concern. What is it designed for, what tradeoffs has the designer opted for, how does it fit your purpose, how does it compare to othe boats designed for similar purposes.

I don't think that picking boats, instead of picking planks is at all problematic to the pragmatist project. How does one pick a boat, one finds a community of practitioners who generally shares the same purpose for boating, and looks at the types of boats they use. As one learns more about that specific area of boating, one may find one particular design suits oneself best, and will take a stance on various design choices. If one gets REALLY into boating, one can design and build a boat of one's own, and build it from the ground up. This might be an exercise in skepticism of current designs, and exercise in learning and understanding them, or simply a way to try one's hand at something new. At the end of the day the design will be judged by how well it performs in accordance to what it was designed for. So skepticism, even radical skepticism is permitted, but the proof is in a very pragmatic pudding.

The Neuroscientific Case for Heidegger

I've been debating Prof. Massimo Pigliucci at Rationally Speaking over the usefulness and relevance of Heidegger's work. I am putting the below excerpt from Antonio Damasio's excellent Self Comes to Mind as an example of a situation and behavior I believe to be very difficult to explain without reference to Heidegger's work refuting the substance ontology.

Briefly stated, the substance ontology tells us objects exist because they have physical form and we observe that physical form. Intuitively, this is a pretty plausible explanation, which is why it is been more or less unquestioned since Plato. Up until Kant, this led to a problem, one could examine objects (the Empiricists) or one could examine the contents of the mind (the Rationalists) but the two could not be reconciled. Something existed because it was physically there, so it was silly to say it had any relation to the contents of the mind. And yet, the mind felt like the most real thing for the Rationalists, and so we have the axioms of Descartes and Spinoza that start with the mind and then try to make a proof of the external world without any empirical recourse to it.

Building on Kant, Husserl created phenomenology, the idea that we can have access to the objects we interact with as well as ourselves by reflecting on the situations in which we interact with the objects. But this was still something taking place in our own heads, we had free reign in our own heads under Husserl, but what relevance did this have to the cold material world outside our heads?

Heidegger tells us that phenomenology has relevance outside our heads by taking on the substance ontology. He demonstrates that (as beings that have a stance on our own being) the physical properties of objects are not the primary stuff that make up the world. (There is an important distinction between the World, which has people in it, and the Universe, the realm of science, where this does not apply.) We don't go out and find a hammer, nails, and wood, and discover they have the properties of building a place to live in a certain way. Rather, the place to live in a certain way, connected with our stance on being, preexists and coordinates the use of the hammer, nails, and wood. The hammer doesn't exist primarily as piece of wood with a blob of metal on top, rather it exists primarily as something to build with. And this something to build with is based on our stance on our own being. Without a self, the coordination of these physical objects breaks down. I'm challenging Prof. Pigliucci to come up with a better philosophical explanation for the condition described below. In this case the self is lost, but the mind is perfectly capable of acting in an intentional manner towards objects consistent with the substance ontology.

Removing the Self and Keeping the Mind

Perhaps the most convincing evidence for a dissociation between the wakefulness and mind, on the one hand, and self, on the other, comes from another neurological condition, epileptic seizures. In such situations, a patient’s behavior is suddenly interrupted for a brief period of time, during which the action freezes altogether; it is then followed by a period, generally brief as well, during which the patient returns to active behavior but gives no evidence of a normal conscious state. The silent patient may move about, but his actions, such as waving goodbye or leaving a room, reveal no overall purpose. The actions may exhibit a “minipurpose,” like picking up a glass of water and drinking from it, but no sign that the purpose is part of a larger context, The patient makes no attempt to communicate with the observer and no reply to the observer’s attempts.

If you visit a physician’s office, your behavior is part of a large context that has to do with the specific goals of the visit, your overall plan for the day, and the wider plans and intentions of your life, at varied time scales, relative to which your visit may be of some significance or not. Everything you do in the “scene” at the office is informed by these multiple contents [contexts?], even if you do not need to hold them all in mind in order to behave coherently. The same happens with the physician, relative to his role in the scene. In a state of diminished consciousness, however, all that background influence is reduced to little or nothing. The behavior is controlled by immediate cues, devoid of any insertion in the wider context. For example, picking up a glas and drinking from it makes sense if you are thirsty, and that action does not need to connect with the broader context.

I remember the very first patient I observed with this condition because the behavior was so new to me, so unexpected, and so disquieting. In the middle of our conversation, the patient stopped talking and in fact suspended moving altogether. His face lost expression, and his open eyes looked past me, at the wall behind. He remained motionless for several seconds. He did not fall out of his chair, or fall asleep, or convulse, or twitch. When I spoke his name, there was no reply. When he began to move again, ever so little, he smacked his lips. His eyes shifted about and seemed to focus momentarily on a coffee cup on the table between us. It was empty, but still he picked it up and attempted to drink from it. I spoke to him again and again, but he did not reply. I asked him what was going on , and he did not reply. His face still had no expression, and he didn not look at me. I called his name, and he did not reply. Finally he rose to his feet, turned around, and walked slowly to the door. I called him again. He stopped and looked at me, and a perplexed expression came to his face. I called him again, and he said, “What?”

The patient had suffered and absence seizure (a kind of epileptic seizure), followed by a period of automatism. He had been both there and not, awake and behaving, for sure, partly attentive, bodily present, but unaccounted for as a person. Many years later I described the patient as having been “absent without leave,” and that description remains apt.

Without questions this man was awake in the full sense of the term. His eyes were open, and his proper muscular tone enabled him to move about. He could unquestionably produce actions, but the actions did not suggest an organized plan. He had no overall purpose and made no acknowledgement of the conditions of the situation, no appropriateness, and his acts were only minimally coherent. Without question his brain was forming mental images, although we cannot vouch for their abundance or coherence. In order to reach for a cup, a pick it up, hold it to one’s lips, and put it back on the table, the brain must form images, quite a lot of them, at the very least visual, kinesthetic, and tactile; otherwise the person cannot execute the movements correctly. But while this speaks for the presence of mind, it gives no evidence of self. The man did not appear to be cognizant of who he was, where he was, who I was, or why he was in front of me.

In fact, not only was the evidence of such overt knowledge missing, but there was no indication of covert guidance of his behavior, the sort of nonconscious autopilot that allows us to walk home without consciously focusing on the route. Moreover, there was no sign of emotion in the man’s behavior, a telltale indication of seriously impaired consciousness (emphasis in original).


Such cases provide powerful evidence, perhaps the only definitive evidence yet, for a break between two functions that remain available, wakefulness and mind, and another function, self, which by any standard is not available. This man did not have a sense of his own existence and had a defective sense of his surroundings.

The Pitfalls of Objectivity in Policy Design

We strive for objectivity in our work, as well we should. The less observations or conclusions are dependent on opinions, biases, or assumptions, the more replicable and generalizable results will be by others, and thus they will be more useful, and more convincing.

A prevailing view of objectivity derives from a conception of correctly representing phenomena in the natural sciences. In this view, there is an objective natural reality of objects "out there" and we, if we wish to be good scientists, seek to create representations that are objective to the extent that they replicate the objects in that reality. We must observe the objects to do this, with our sensory perceptions and with apparati, but we are more scientific if we can take the "we" out of the observation. If one wants to objectively characterize a rock "heavy" is a very useful subjective description, but a poor objective one. "25lbs" is a better objective one, but still tied to the context of the planet Earth. "11.33980925 kilograms" is the best objective measure, even if but it loses the subjective component. "Heavy" means the same thing here and on the moon in an experiential sense. 11.33980925 kilograms does not.

The reason we don't like "heavy" as a measurement, is it is very closely tied to the observer. A weightlifter and a four year old will have very different observations of what is heavy. The advantage of "heavy" as an observation, is if I do know the observer, I can abstract a lot of subjective information, and infer a lot of objective information from it. If I know you described the rock as heavy, I know that when you describe another item as heavy, you mean something in approximately the same range of mass. I can also know, when you have described a mass (that I also have made a subjective judgement about) as heavy, whether I think you are a weakling or not.

Let's call "heavy" and aspect of the rock, and "11.33980925 kilograms" a property of the rock. Both aspects and properties, have their uses. If you tell me someone was hit by a car on the freeway, you've conveyed a lot of information. I don't need the mass or velocity of the vehicle, or a detailed representation of the human body and the effects of force exerted on it, to know this is "bad" news for said individual. My intuitive understanding of human physiology, that cars are "heavy" and move "fast," especially on the freeway, is enough, and is in fact superior for rapidly and fully conveying what occurred, than a formally observed and modeled (attempts at repeated observations might run into some ethical issues) explanation of what happened.

That said, maybe there was construction on the freeway (or it just happened to be somewhere in the DC Metro area, or both) so the car was traveling two mph. The car was made up of balsa wood and rice paper and piloted by a midget and the person hit was a 400lb goliath in a suit of armor. Well, the formal representation route would have avoided this mistake, by refusing to take any information from the aspects of the situation and only using the properties, but once again would have been more costly than simply amending the initial statement with the above qualitative description and ensuing subjective judgments. On the other hand, if we wish to talk about general matters of car velocities and the ensuing dangers (though dangerous is an aspect, not a property) we may wish to take more formal routes.

Why do we throw out so much perfectly good information when conducting scientific inquiry? In fact we don't, interpretations of what situations are relevant to a theory or other human concern a situation are relevant and should be investigated, and interpretations of the aspects of those situations and the data they produce, are necessary for science to be an intelligible endeavor. This is why science is conducted by scientists, not computers. While computers can represent and analyze all kinds of data, we need a human being to interpret the data for it to be intelligible and intelligent. Even AI, just isn't that intelligent.

Indeed, all statistics must be interpreted. 90% of Pasteur's data on contagion theory is reported to have been ignored by him. We maintain the ideal of astronomy because it attractively avoids the slippery slope where the differences between interpretation, confirmation bias, and pure fabrication, are distinguished by the subjective intent of the individual researcher, and thus the research result, difficult to replicate under any circumstances, is very rarely objectively verifiable. Trusting the researcher and his or her reviewing peers is essential and necessary for much of the scientific endeavor.

Just trusting someone, a subjective stance (and as we know an often troubling one), is intuitively anathema to how we conceptualize science. Isn't the whole point of science that we can replicate results that are intuitively implausible of people that we don't trust? Isn't that what objectivity really is?

Can anyone beat Galileo's work as the style of investigation all scientific work should seek to imitate? Here we have someone take a theory, that is intuitively implausible based on our sense experiences, and confirm it with empirical observations. The theory and linked observations, are so strong, that it stands, despite all the organized political and spiritual powers that be, and despite that the man himself recanted it, as True, and replicable by anyone who wishes to verify it.

But there is a danger in idealizing this style of science, particularly when we get into the social sciences. The social sciences are often thought of as soft sciences, perhaps not really sciences at all. Their subjects of study are often so maddeningly hard to pin down, and likely to adapt to circumstances, that the development of formal representational models, that will have any empirical validity, predictive value, and societal relevance, is maddeningly elusive. This is the subject of much gnashing of teeth among social scientists. Who doesn't what to be a real scientist dealing with real hard Galilean Truths?

The social scientists that have best positioned themselves as being "real" scientists are economists. We have a lot of formal models based on assumptions that are more or less intuitively plausible, and more or less based on empirical observation. They do a lot of math, come up with a lot of counterintuitive conclusions. What economists have, are prices, employment figures, interest rates, and other such measurements, which mean they can get farther away from the world of subjective interpretation, (what does it mean that 54% of the population voted for this candidate, depends on why the population, who the candidate is, who the population thinks the candidate is, etc., etc.).

These numbers are more or less objective, one car argue about methodologies for measuring GDP, whether a black market exists, but at the end of the day, if an apple sold for $1, the apple sold for $1. The perception that economics deals with objective truths has given economists a great deal of power in the policy arena. Predicting the outcomes of various policies is undeniably complicated work so methodologies such as cost benefit analysis can help policymakers and the public get a rough idea of the policy's financial implications and thus whether it is "worth it."

The tricky thing, is that the apple's valuation at time of sale of $1 is a subjective valuation. I may not actually want the apple later when I initially planned to purchase it, and thus I may have wasted my money. This isn't a terrible problem, one buyer does not a market make (exception monopsony) provided that we trust the market is efficient and most buyers are rational. Similarly an unemployment rate doesn't just reflect the number of people out of work but looking for employment, but also the unemployed's subjective perceptions of whether it is worthwhile to keep looking, and employers' subjective judgements regarding where the economy will go. A full picture of unemployment must reference who the unemployed are, and why they're doing what they're doing, and who the employers are, and why there doing what they're doing. Suddenly we're stuck with subjective judgements in this most scientific of social sciences, no wonder macroeconomic arguments are often so heated. While we can formally represent the unemployment rate in a satisfactory manner, any formal representation of the employers or unemployed is going to be strongly contested.

Fortunately as a nation, we do not need to come up with agreed upon formal technical arguments for all political issues. While the American People employ technical experts to advise elected and appointed political representatives, ultimately the sovereign power of this nation resides in The People.

Just because the technical experts are let off the hook from finding technical and objective solutions to all of America’s problems does not mean that everything is hunky dory. The power Congress delegates to Executive Branch agencies may enshrine or foster over time a class of experts whose values differ markedly from that of The People. (We will leave who The People are aside for a moment, but needless to say, who they are, and what they want is naturally a contested political issue.) Thus we have practices such as cost benefit analysis that put a “weight” on an agency action that is readily understood by all.

How fully this weight describes the action can be complicated. Just as a rock can be described by its weight it will also have chemical and physical properties, texture and a geographical and perhaps even a cultural history. Its weight, just like the measure of economic efficiency that is cost benefit analysis, will capture some of these properties better than others. The numbers of a cost benefit analysis are a worse measure than the weight of the rock, because we aren’t able to weigh the economic efficiency of the action directly, rather we must derive it from technical assumptions that may only be understood by experts. Thus cost benefit analysis, may serve an anti-democratic and anti-transparent function by moving the realm of decision making to technical conflicts between experts inside and outside of government. The situation may be further worsened because decision makers and the public may have very little idea what a cost benefit analysis says and does not say. Just as the weight of a rock might not be its most interesting feature, so the economic efficiency of an agency action may not be what we care most about.

The solution is not to throw out cost benefit analysis, or even give up on “objectivity” as an important guidepost for decisionmaking. The key is too make sure that no one thinks they know everything about a rock because of its weight. Introducing more criteria to the analysis such as employment, distributional, indirect, and environmental justice impacts are all moves in this direction. Note that these more or less objective criteria do not bring us closer to an objective decision. A rule that would assign weights to them would be necessary to do that, and even if one were to come up with such an objective rule, it would be the equivalent to describing the rock by its weight again. These additional criteria allow and force the public and decision makers to think more critically about the issue at hand. Thus the veneer of objective decision making is lost, but more critical, engaged, informed, and transparent decision making is fostered.

In a future post (teaser!) I will discuss a different conceptions of objectivity and how analyses based on it incorporate many of the advantages (but also some pitfalls) of the intuitive understanding of the aspects of objects under investigation.

An Economic Critique of Pragmatism

I've been doing a little reading in America's great philosophical tradition, pragmatism, and in general I like what I see. Get to the point people, tell me why it matters. "Monism" or "pluralism," why does it matter? Pretty soon you get to such abstract notions that no one but two old men care one iota. Coincidentally, one of those men suspects that the other intentionally spilled water on his tweed coat during a seminar 30 years ago, and the other that vociferiously denies the allegation, and is quite bitter about it. Angels on dancing on the head of a pin.

As an economist, however, I must advance a criticism of the following statement from William James:

The great English way of investigating a conception is to ask yourself right off, "What is it known as? In what facts does it result? What is the cash-value, in terms of particular experience? "And what special difference would come into the world according as it were true or false?" (Emphasis in original.)

What if I were to take a suitcase of $100 bills with me to visit one of those Amazonian tribes just coming in contact with the outside world? What would be the cash value of such a suitcase? It might be worth $1,000,000 when I get on the boat to go up the river, but what it is worth when I get there, is going to depend on whether I can convince the tribe that this paper will be accepted almost anywhere else in the world in exchange for goods and services, that its value will be maintained (hopefully these days!) because it is backed by a economic and military superpower, and that people everywhere basically trust this superpower to pay its obligations and thus maintain the currency. They may trust me, and thus take the cash and create their own dollarized economy, ensuring that I am very well taken care of with my now substantial wealth. They may read the newspaper I brought with me talking about the current debt ceiling negotiations, and put me on the next boat out of town.

The point is, cash value doesn't exist unless a standard by which values are measured is established. (One does not explicitly need cash to do this as in a barter economy, but one of the functions of currency is to act as a numeraire.) Biological value is not a bad place to start, I will immediately be concerned about how many dollars I can exchange for a tasty grilled sloth. But, as the massacres over seeminly petty doctrinal issues during the Reformation and Counter-Reformation indicate, our concerns in life are not merely biological. In fact, the current nastiness over the teaching of evolution is, at its core, a fight over whether the biological is primary or the spiritual is primary. Perhaps, if I had a religous restriction on eating grilled sloth, I would be truer to my values by starving instead of eating its devilishly tasty flesh?

Does this throw out pragmatism? No, not at all. Pragmatism is a very useful solvent to dissolve issues that are inherently silly because fighting over them obscures implicit agreement on a host of values that are far more consequential. It can help us move past the abstract to issues of significant political, social, and spiritual consequences, which may underlie the abstract debates. A small abstract detail can radically change the standard by which the world and objects and actions in it are valued. We should count ourselves lucky that those abstract details are carried out in irrelevant debates, rather than with tanks and jets.

A Brief Exercise in Subjectivity for Philosophy

After my prior post on what I took to be John Searle's misreading of Antonio Damasio's new theory that the roots of consciouness are in the primordial mind, I went out and bought Damasio's book. It is, (in my subjective opinion), quite excellent. It lucidly ties together neuroscience, evolutionary biology, and philosophy for an intuitively very plausible (to me) framework for how consciousness arose and how it operates.

What makes Damasio's account powerful is that it is rooted in the scientific and objective. But how I ended up reading his account, is an exercise in the power of the subjective. And whether I reduced my search costs for this book enormously with clever shortcuts, or whether I simply found a way to confirm my own biases, is up to the reader to decide.

I found Searle's review of Damasio through a posting by blogger/philospher John Wilkins. I recognized Searle's name and found it interesting because Hubert Dreyfus had noted repeated squabbles with him. As I find Dreyfus to be very engaging and insightful, I have an interest in seeing what Searle has to say because Dreyfus is interested in what Searle has to say. (I also have a bit of a bias against Searle because of Dreyfus but you can judge how much that influences me based on my previous post.)

The little flag raised by Dreyfus' interest in Searle got me to go back to look for the post after I wasn't able to read it immediately. Three times. Twice on my workstation, where for some reason Twitter malfunctioned, and the post didn't show, and then a third time on my smartphone where I found it. That amount of effort says something, I'm not exactly hard up for information to consume. The little flag had a powerful effect.

But how did I even see the post in the first place? I didn't even know who John Wilkins was two weeks ago, and now I'm following him on Twitter, seeing stuff he writes a few times a day. Well, a few weeks ago, Andrew Sullivan, who I find takes novel and well thought out positions on politics and provides a nice mix of philosophy and religion thrown in, posted a link to Massimo Pigliucci's blog. The post was interesting, so I started following it and his Twitter account as I figured one post of interest might lead to more posts of interest. A few days later Massimo posted a link to Sean Carroll's article requiring a physically testable hypothesis for the soul. I think this is a silly position, and had some back and forth with Massimo who doesn't believe this is a silly position. At some point, John Wilkins, started following me in Twitter. So I looked his back and forth with Massimo, and his blog post on the subject which I found covered the limits of science in this case, to be technically well done (and I agreed with his conclusions). So I started following John Wilkins on Twitter, and later saw his post on Searle's article.

So how many degrees of subjectivity do we have here? I bought a book because Searle disagrees with the author and Hubert Dreyfus disagrees with Searle. I found out about the book because Sullivan found Massimo's post interesting, then I disagreed with Massimo on a subsequent point and John agreed with me. It ended in an objective act, a $25 purchase on Amazon. And I've got a book I'm happy with, that I wouldn't have found otherwise. Perhaps I'm confirming my biases, but without my biases, how would I have found the book?

John Searle's Illuminating Confusions

John Searle concisely summarizes what appears to be a very complicated but interesting book, Self Comes to Mind: Constructing the Conscious Brain by Antonio Damasio, in the New York Review of Books. The first part of the review itself is worth reading for the significant progress Damasio appears to have made on the problem of where consciousness comes from, notably, by looking at lower level functions of the brain. But Searle brokers confusion and advances a subsequent critique which says more about the baggage that he, and many of the rest of us brought up in the analytic tradition, bring to such problems.

First, let us look at Demasio's conception of consciousness and Searle's problem with it.

Demasio:

The decisive step in the making of consciousness is not the making of images and creating the basics of the mind. The decisive step is making the images ours, making them belong to their rightful owners…. [Italics in original.]

Searle:

Consciousness. In actual practice I think his idea of consciousness is essentially the one stated above. Its essence is qualitative subjectivity. But when Damasio defines it explicitly it comes out a bit differently: it is “a state of mind in which there is knowledge of one’s own existence and of the existence of surroundings” (italics in original). I do not believe this definition is correct. My dog, Gilbert, is plainly conscious, but in what sense does he have knowledge of his own existence? He is certainly aware of his surroundings when he perceives anything. But it is hard to say that when he is dreaming he has knowledge of the existence of his surroundings. It is Damasio’s right to define a word any way he likes, but I think in practice he uses “consciousness,” as I do, to refer to ontologically subjective states such as pains, and does not use it just to describe epistemic states, such as my knowing that I am in Berkeley.

Searle's, problem and confusion, arises from a quirk in the English language. In English we ask, "Where am I?" and the answer, might be, "Here, in Berkeley." But a Japanese speaker, would see this question as nonsensical. You are always here, indeed, "Wherever you go, that's where you are." The question for a Japanese speaker, is "Where is here?" This conception mirrors Heidegger's Daseins, each of which is its own "here." This formulation of here one Gilbert, Searle's dog (who is "plainly conscious?"), could deal with. Gilbert knows where "he" is. "He" always where "he" is. "He" doesn't have a concept of a "he" that can be placed anywhere else. "He" may be interested in the properties of what currently surrounds him, however, and proceed to sniff about, see if "here" has other dogs about, and foul smelling but delicious items to consume. Where Searle gets himself in trouble is by assuming the statement "I am in Berkeley" is somehow a more objective statement than "My leg hurts." We can see a man in a location called Berkeley on a map, or we can see a bleeding leg, but both these are objective observations of the above statements are predicated on the existence of a John Searle, which is a subjective experience of said John Searle. If John Searle had recently returned to Berkeley from Venice, he could wistfully say "I'm still in Venice," and the statement would make sense. We would understand that John Searle was subjectively still in Venice even though objectively his physical form was in Berkeley. Gilbert the dog, as he has no knowledge of himself, would not be able to make such a statement.

The second issue that Searle has is the apparent "circularity" of Damasio's account of consciousness:

The problem can be stated succinctly by presenting his account with the following dilemma: Is the self, as he describes it, unconscious or conscious? If it is unconscious then he has nothing to say about how its encounter with a mind results in consciousness. But if you look at the text closely it seems pretty clear that there is no way to understand the sort of self that he describes without supposing that it is already conscious. He frequently uses words like “primordial feeling” and “emotion” to describe the self. It is hard to understand these in a way that does not imply consciousness. This account is therefore circular because we are assuming a conscious self in order to explain the conscious mind, but this uses consciousness to explain consciousness.

Searle's problem arises from two assumptions 1) he treats consciousness as an objective property and 2) he is trying to encompass completely that objective preexisting property in the individual. The former assumes that just because we are able to label a set of subjective experiences as "consciousness" that this label is sufficiently descriptive of these subjective experiences that it is a valid cognitive concept. The latter assumes, that this property can be fully attributed to the individual.

To address Searle's first assumption, let's look at a couple of examples of consciousness. When Jesus says: "Forgive them Father, they know not what they do," what is he saying? Clearly the Romans, the crowd, and Jesus have a fairly good understanding of the objective attributes of the situation. But Jesus and his followers have a very different understanding of the subjective aspects of the situation. Executing the Son of God versus executing a criminal and rabble rouser are subjectively very different things. Each of these things implies a very different concept of self. A self God died for to atone the sins of, a self that relates to the Roman Pantheon and keeps law and order, and a self as part of a people that has a Covenant with God and acts as part of that people by keeping that Covenant. Given that the self is part of Damasio's formulation of consciousness, we can expect these different formulations of self to be the explanation for different experiences of the same event. Thus, "They know not what they do," is fully consistent with Damasio's formulation of consciousness, Jesus is speaking of radically different subjective experiences.

Another example of an appeal to consciousness is Shylock's famous monologue:

He hath disgraced me, and hindered me half a million, laughed at my losses, mocked at my gains, scorned my nation, thwarted my bargains, cooled my friends, heated mine enemies; and what's his reason? I am a Jew. Hath not a Jew eyes? Hath not a Jew hands, organs, dimensions, senses, affections, passions? Fed with the same food, hurt with the same weapons, subject to the same means, warmed and cooled by the same winter and summer, as a Christian is? If you prick us, do we not bleed? If you tickle us, do we not laugh? If you poison us, do we not die? And if you wrong us, shall we not revenge?

If we are like you in the rest, we will resemble you in that. If a Jew wrong a Christian, what is his humility? Revenge. If a Christian wrong a Jew, what should his sufferance be by Christian example? Why, revenge. The villainy you teach me I will execute, and it shall go hard but I will better the instruction.

Here we see an appeal to a common human consciousness based on common experiences, across lines drawn by religion. It is a strong appeal for a new, humanistic consciousness. By my count, we have four different ways a self can be conceived above that each indicate radically different subjective experiences of the world. So while the term consciousness may encompass each of these, it tells us very little about them. By dealing with consciousness as a purely abstract concept, Searle has created a problem for himself.

Both of these examples also get to the second of Searle's assumptions, where how an individual becomes conscious. In a religious or other cultural tradition, consciousness is something that is received or cultivated. One's personal story becomes intertwined with that of the religion or tradition through ritual and simply because one's autobiography or self is immersed in the religion and tradition and thus picks up on narratives and habits of mind. It's no coincidence that we see language such as "awakening" and "enlightenment" in descriptions of religious experience. In a our society, our concepts of self are more likely to be tied to who we are as professionals, political actors, or consumers, but our concept of self is still tied to how we define ourselves and are ourselves defined culturally. A baby doesn't have a concept of self anymore than Searle's dog does.