Frank H. Knight played a significant role in Weber’s American reception. Due to his contribution the University of Chicago grew one of the American centres of Weberianism (Scaff, 2011, p. 199). Even though the birth of his interest in Weber is shrouded in mystery, by the time he arrived at Chicago (1928) he had certainly nurtured an in-depth knowledge of Weber’s social scientific methodology and comparative historical sociology (Emmett, 2006, p. 107). Knight’s attraction to Weber remained intense even up to the 1940s. In these years he applied Weber’s tenets as a fundament upon which he could build his complex social scientific approach. Even though his explicit references to Weber were rather scarce (Noppeney, 1997, p. 328), and they were so especially from the 1930s, for Knight Weber remained the most influential intellectual authority throughout his career. Knight was reliant upon Weber in understanding the formation of capitalism, in rethinking economic methodology and in the economic interpretation of history (Emmett, 1999, pp. xiii-xv).
Knight’s most interesting methodological tenets regard the relationship between neoclassical economics and the broadly interpreted social scientific disciplines. He exerted his methodological considerations in a series of publications one of the recurrent thoughts of which is that physics-based neoclassical orthodoxy has only highly limited relevance―however, on its carefully circumscribed territory it meets the standards of modern science (Noppeney, 1997, p. 334). It is interesting to realize that Knight in these texts, while arguing for the irrelevance of neoclassical economics outside its territory, identifies its genuine scope. Here, he regards orthodoxy as a useful and relevant system.
The possibility of extending physical concepts to economics is qualified. Thus, the most acute methodological problem of the development of economics for Knight was to carefully demarcate the scope of neoclassical economics. Even though Knight stinted this territory, he was ready to admit neoclassical theory conveying true knowledge of reality (Knight, 1935, p. 286). Because of abstraction we can have partial truths only. Neoclassical tendency laws have universal validity without providing comprehensive causal descriptions of the phenomena on their territory. The circumstances under which formally deduced economic laws can perfectly emerge in reality are unlikely to set in―which would be undesirable in social-political terms (Knight, 1956, p. 270). Knight, however, regarded the fundamental laws of neoclassical economics and the assumptions underlying the ideal type of homo oeconomicus (Knight, 1944, pp. 293-305) as the obviously existing characteristics of reality (Knight, 1924/1999). As something that as behavioural tendencies are hidden behind the complex and chaotic socio-economic reality (Knight, 1921, pp. 4-5).
In order to understand economic and life he was determined to set up a framework that is sensitive to the fact that social reality is never like the abstract ideal types of neoclassical orthodoxy. Thus, Knight drew attention to a complex causal analysis in which the nature of the processes under scrutiny is a concern. From the content and the form of economic actions he considered economic laws to be able to describe the static form only. Instrumentally rational individual behaviour accessible to mathematical description (Knight, 1972, p. 7) emerges in a framework the elements of which (views, beliefs, attitudes and institutions) are subjected to continuous development. The very nature of the process itself makes the physicalist approach unable to describe this comprehensive evolution. For him, the extensive usage of the ceteris paribus clause was justified only when the abstracted changes were negligible (Knight, 1935/1999). In his view, there exists only a limited possibility to resolve the tension between statics and dynamics within the theory (Knight, 1922/1935, p. 20). Even though we can identify the static laws and the key variables of the economic sphere of life, however, analysing the evolution of the dynamic framework is well beyond the territory of neoclassical economics. To this end, neoclassical theory needs historical analysis in understanding real social processes (Noppeney, 1997, pp. 322-323; Knight, 1972, p. 6) for this is the only way to scrutinize the differences between the theoretical outcomes and reality (Knight, 1944, pp. 308-310).
Knight took the stance of methodological pluralism, in which the interpretation of economic actions exhorts us to utilize all the social scientific disciplines. In this context neoclassical economics is only one of the suggested approaches (Knight, 1972, p. 10). His ultimate purpose was to establish an interpretative complex social science in which theoretical economics is complemented by other approaches including both the humanities and the entire field of social disciplines. In such a framework we can analyse human actions in the broader context of social reality (Fu-Lai Yu, 2002, p. 4). Knight expected the involvement of these approaches to enhance both the complexity of causal understanding and the predictive success beyond the possibilities of neoclassical theory (Knight, 1940/1999).
Emmett, R. B. (1999). Introduction. In F. H. Knight, & R. B. Emmett (Ed.), Selected essays (Vol. 1, pp. vii-xxiv). Chicago: The University of Chicago Press.
Emmett, R. B. (2006). Frank Knight, Max Weber, Chicago economics and institutionalism. Max Weber Studies, 7(1), 101-119.
Fu-Lai Yu, T. (2002). The economics of Frank H. Knight. An Austrian interpretation. Forum for Social Economics, 31(2), 1-23.
Knight, F. H. (1921). Risk, uncertainty and profit. Boston: Houghton Mifflin Company.
Knight, F. H. (1922/1935). Ethics and the economic interpretation. In F. H. Knight, M. Friedman, H. Jones, G. Stigler, & A. Wallis (Eds.), The ethics of competition and other essays (pp. 19-40). Freeport: Books for Libraries Press.
Knight, F. H. (1924/1999). The limitations of scientific method in economics. In F. H. Knight, & R. B. Emmett (Ed.), Selected essays (Vol. 1, pp. 1-39). Chicago: The University of Chicago Press.
Knight, F. H. (1935). Economic theory and nationalism. In F. H. Knight, M. Friedman, H. Jones, G. Stigler, & A. Wallis (Eds.), The ethics of competition and other essays (pp. 277-359). Freeport: Books for Libraries Press.
Knight, F. H. (1935/1999). Statics and dynamics. In F. H. Knight, & R. B. Emmett (Ed.), Selected essays (Vol. 1, pp. 149-171). Chicago: The University of Chicago Press.
Knight, F. H. (1940/1999). “What is truth” in economics? In F. H. Knight, & R. B. Emmett (Ed.), Selected essays (Vol. 1, pp. 372-399). Chicago: The University of Chicago Press.
Knight, F. H. (1944). Realism and relevance in the theory of demand. Journal of Political Economy, 52(4), 289-318.
Knight, F. H. (1956). The role of principles in economics and politics. In F. H. Knight, W. L. Letwin, & A. J. Morin (Eds.), On the history and method of economics. Selected essays (pp. 251-281). Chicago: The University of Chicago Press.
Knight, F. H. (1972). Social science. Ethics, 83(1), 1-12.
Noppeney, C. (1997). Frank Knight and the historical school. In P. Koslowski (Ed.), Methodology of the social sciences, ethics , and economics in the newer historical school (pp. 319-339). Heidelberg: Springer.
Scaff, L. A. (2011). Max Weber in America. Princeton: Princeton University Press.