Knowledge in the context of economic activity
In Articulation versus Spontaneous Order, we discussed the economizing feature of knowledge in the free-market capitalist systems. By transmitting information about scarcity, costs and preferences via a single metric viz., Price, the amount of knowledge an individual requires to acquire for his gainful conduct in society is restricted to an immediate surrounding sphere.
Just by observing the prices of certain goods of his trade, such as those of the raw materials, capital goods and consumption goods, the burden of knowledge he needs to carry is limited. Though, a sufficiently analytical mind could make extensive deductions from such simplified information, than someone who would proceed directly to acquire that general knowledge about society.
An individual could delimit his sphere of inquiry to those concerning prices related to his trade, but yet also acquire a peripheral knowledge of general matters, simply out of vocational interest. His proficiency in those peripheral areas have no bearing on his well-being and it becomes entirely academic as to whether his interpretations in those areas are correct or absurd.
Knowledge: The Wider Meaning
It is hard to define knowledge, except that it is largely embodied in collective human experience. Knowledge isn't particularly concerned with the human intellect since the intellect is firstly in pursuit of knowledge - which means, it seeks to accumulate something from an external source. From an individual perspective, that source would be the accumulated experience of civilizations manifest in forms amenable to personal acquisition.
It is also worth highlighting that human knowledge began when civilizations began - and the two, run concurrently. Knowledge is as antiquated as human civilization.
The manifestation of knowledge would not only be in written form but as well as in oral traditions, through culture, habits, conducts, beliefs etc. Some institutions carry long-dated knowledge while many expressions of knowledge happen just by reflexive conduct - as in by default behaviour.
On the other hand, there is no necessity to presume an evolution of an unbroken line of knowledge through the ages. Over time, sufficient adaptions take place within society. Several of these adaptions are so slow that plain observation and the marking of definite dates of 'eventful' turns in history are many a time impossible. A historian's account may only partly explain the metamorphosis of social rules of conduct because of the multitude of factors surrounding his object of explanation.
Some would argue that the passing of a certain law is the turning point when a new order emerges replacing an old one. This is, however, debatable. The new law is the result of an internal, conscious desire of the society to change a less-desirable practice. This means, the law follows societal changes: it doesn't create change where none was envisaged internally. These are the subtleties one easily overlooks if one goes by purely chronological accounts of history.
Several of the mores of society isn't understandable in current contexts but thrive as effective modes of societal conduct. A rational account of all such devices are seldom found in descriptive forms anywhere but merely manifests itself in daily human action.
Society's rules of conduct allow work to happen; but to subject each method of action to conscious, rational introspection and make the further course of action contingent upon passing such rational filters, will only mean that such an individual would only stay at home in meditative contemplation without performing any work. The rules exist so that contemplation of rules isn't necessary but one can achieve ends more easily.
This, however, doesn't mean that institutions are beyond any form of reasoned debates with a motive to change. Competition between value systems in society are constantly taking place and superior ones regularly destabilize inferior ones. People are not bound in cages within these systems but there exists mobility of generations between the different value systems.
A superior trait is discernible by the results it produces in the long run. But successfully signalling those traits in the short run is countered by 'noise' within society. The people stuck with inferior traits don't adequately pick up on those signals due to such 'noise'. Since the results that emerge in the long run are indisputable, the prevailing of those traits are successful in that aspect.
It also emerges from this that man isn't leading his way purely by deliberate rational choice but goes about clinging to the 'ropes' as far as it takes him. As successive 'ropes' are tied to its ends and lengthened, he isn't fully aware that the institutional 'rope' has prolonged his longevity. He simply goes about his business, even as opposing institutions collide and reconcile positions to the best advantage of humankind.
An individual's comprehension of these phenomena is limited by his lifespan and by the invisibility of these changes due to its glacial momentum. Reverting to the previous description of knowledge, we refer to these slow-changing institutional matters as areas of general knowledge outside the immediate sphere of an individual's primary activity. The knowledge or ignorance of the epistemological reasons behind these societal phenomena isn't particularly going to enrich him with material prospects. Neither holding steadfast views on such general matters is sufficiently potent enough to affect those phenomena.
It must be reiterated that acquiring those matters of general knowledge presupposes that the body of knowledge is codified in the form of books, that is readable in one's lifetime. One can see the futility of such arguments - neither do books codify all such vast expanse of knowledge, nor one's lifetime is sufficient enough to comprehend even the recorded knowledge that is available at a certain point in time.
An individual's acquired knowledge, therefore, falls short of the knowledge necessary to understand the reasons behind all the mechanics of the day-to-day working of society. An easy mathematical hazard would be to say that, one individual could barely possess not even one-thousandth of the total knowledge available out there.
Yet, society functions through distributed knowledge. With each person carrying with him, a minutia of knowledge embedded in culture, habits, emotions brought forward from successive generations along with the necessary conflict resolutions, interactions with other members with similar characteristics and history of the society takes place. Together, the contemporaries of society collectively carry the vast burden of knowledge necessary for effective survival.
Knowledge expressed by an individual through deep reasoning and employing persuasive language merely reflects an inconsequential volume compared to the collective knowledge of civilization. Solitary investigation of a hundred books resulting in a 'masterpiece' essay would pale in comparison to the knowledge encoded in the orders of society evidenced by chaotic but durable conduct.
Also, the capital stock of knowledge isn't patented or available only to select few or made inaccessible to many. Instead, it is freely accessible in the form of customs, culture, habits, traditions etc. Acceptance of those freely available knowledge is the individual's choice when it's sought deliberately. Despite the efforts by some in avoiding such knowledge, subconscious adaptations are nevertheless inevitable.
Any social order in vogue is far from being the optimal solution for its desired end. They are not immune to change but changes don't happen for its own sake. The incremental costs of a new order bear more importance than the inconvenience, imperfections and the inevitable defects of the current order. The caution (and the accompanying inertia) with which old mores are deliberated upon signify the wisdom of that society. Effecting change through the stroke-of-the-pen is least desirable.
The society is distinguished by the forbearance with which it goes about only slowly making amends around its rough edges. Yet, imperfections that lead to criminal injustice is fought with revolutionary spirit. The men in the society are not pitiless beings turning a blind eye and going about their businesses like sheep. The very same men reason that certain old orders ought to change much to the disdain of others who profit from its continuance. The following sample of instances support the desire for change from inside.
Adam Smith - the supposed apologist for capitalists - urged the liberation of slaves from British colonies and demanded Britain to yield its colonies to the locals and shed its imperial behaviour.
Similarly, Frederic Bastiat, the French economist urged America to change its secondary treatment of a class of citizens despite the existence of a world-class Constitution.
Edmund Burke, the Irish philosopher-politician, led the prosecution and impeachment of Warren Hastings - the first Governor-general of India - for his misdemeanours, in the British Parliament. The trial was marked by the ignorance - more than callousness - of the British public about the happenings in a "far away" continent, and Burke had the arduous task upon him of constructing a sentimental description of actual events to evoke condescension towards the criminal conduct of the Governor.
Similar chronicles narrate the reprisal by the founding fathers of the US Constitution such as Alexander Hamilton, James Madison and others.
These stories recapitulate the internal source of change that happened at crucial junctures in history led by individuals who were not 'intellectuals' or full-time politicians, but largely ordinary folks who understood the gravity of the institutional change that was necessary.
These folks simply restated the correct order of things as it ought to be - or had been a very long time ago but changed in due course by imperfect human action. Constitutions and laws codify those original orders of society.