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For Taylor, the key lies in the quality of practice each informs. Social theories must be tested in practice in order to be able to judge their worth. Since the social practices—the objects of study of social science—are partly constituted by the self-understandings of the agents involved, social theories can influence the self-definitions and, thus, the objects of study themselves. A simple correspondence model will not suffice here. The best theory will ‘bring practices out in the clear’; it will make possible a more effective practice. It provides the constitutive understanding necessary for ‘continuing, purified, reformed practice’. Practices have a point; and social theories offer a clear account of the goods, the norms involved. If the theory is wrong, the goods involved will not be realized; the practices will be self-defeating. The more perspicuous view will allow more effective action, which overcomes ‘previously muddled, selfdefeating activity’. The proof of validity lies in a changed quality of practice, one which is ‘less stumbling’ in producing the desired goods. To be put to the test, the theory must be generally accepted by the practising community, and its impact (through a changed self-understanding) assessed. Up to that point, we have only the test of the persuasiveness of the arguments in the theory’s behalf, which must consider how the theory would affect practice.

WHAT IS A GOOD?

Hermeneutical thought suggests that economics should ask its selfdefinition. What is economics about? Its self-understanding must be as clear as possible in order for its practice to be of the highest quality. Economics is said to be about resources, or goods. But what is a resource? Is there anything in this world which could not be put to some use? If we are only interested in resources which are ‘scarce’, what does this say to the status of humans as resources? No; economics is about human action and interaction in the world. It is about human energy and motivation. Under this definition, it is clear that the success of economics depends on its depth of understanding of what it is to be human.

Taylor (Papers 1/4) is offering another view of the agent of economic theory. She is one to whom things matter, who is moved to action by matters of significance. The hermeneutical agent may have a more or less finely articulated understanding of the emotions which reflect the significance of the situations in which she is embedded. There are matters of pride, shame, moral goodness, evil, dignity, sense of worth, and love which make up a realm which clearly differentiates the human. In particular, being a moral agent means being sensitive to certain standards; it means being a self-evaluating being (Hirschman 1984). It means recognizing that we are subject to higher demands—that we can wish to achieve higher goods. These are peculiarly human concerns, matters of the deepest significance for us as humans.

For Taylor, to be human is to exist in a space defined by distinctions of worth —in which we may evaluate ourselves. Self-interpreting animals can only be understood against this linguistic background, which is formed by the

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‘continuing conversation of humanity’. These interpretations can be more or less correct; one cannot just think anything about oneself and have it be self-fulfilling. We can be deluded about ourselves, and the result is not just the absence of correspondence, an incorrect representation, but rather ‘in some form inauthenticity, bad faith, self-delusion, repression of one’s human feelings, or something of the kind’ (Papers, II, p. 26). For Taylor, the depth of selfunderstanding determines the quality of human motivation and action.

When considered from this perspective, the notion of human ends which are absolutely describable becomes quite problematic. Beyond the physiological regularities of the needs for food, shelter, etc., human ends reside in the selfinterpretive realm. Here the question is not how to achieve absolutely defined ends, but rather how to achieve the finest articulation, the most profound understanding of ourselves. It is a question of ‘practical deliberation’ on the true form of human emotions.

In ‘The diversity of goods’ (Papers II/9), Taylor (in a fashion reminiscent of Knight 1935, Ch. 1) discusses the limitations of utilitarianism. Utility theory assumes that what counts for human happiness can be clearly ascertained as fact; it ignores distinctions between qualities of action, or modes of life. There is an evaluation of action, of being a certain way, which does not depend on the consequences of action. The necessity to recognize these qualitative distinctions, which differentiate between the noble and the base, the higher and lower, cannot be eliminated by a calculus of utils. Just as Hirschman (1984, p. 91) discusses ‘striving’, Taylor notes that personal integrity, for example, can be a central goal which has an overriding influence on action. Moral demands and other standards of action are higher goods which are worthy of pursuit in a special way. We recognize the higher value of integrity, charity, and rationality; we aspire to be motivated in certain ways. Here Taylor, along with Hirschman, cites Frankfurt’s (1971) distinction between firstand second-order desires. We are considered deficient if we do not have higher goals, whereas it does not matter if we have ordinary goals or not.

Taylor claims that much of human behaviour is only explicable in terms of qualitative contrast. There are goods which are of ultimate importance, which make the most important demands. There is a plurality, a diversity of such goods. Decisions here cannot be made on the basis of a single consideration procedure, for this cannot do justice to the diversity of goods. Counting utils is a ‘bogus exactness’, which leaves out all that cannot be calculated.

What sort of ‘goods’ are the concern of economic theory? Where is the line drawn? Are shared goods and the associated questions of unity and strength of community in its domain? Taylor is calling for a transformation of much of economic theory at its very roots. The test of such a theory would come in the quality of life in a world whose self-definition was informed by the theory. But what would such a theory look like? What is the link between economics and hermeneutics?

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ATTENTION AND LANGUAGE

I would like to suggest that attention is the link. Attention is a most commonly used word…just the stuff of which economic theories are made. In the terms of modern cognitive psychology, attention is a limited capacity resource for mental operations. The extent to which attentional capacity is exhausted is a function of intensity of effort and/or the demands of the task at hand. Attention is also considered to be a selection mechanism, and the object of attention consists of those stimuli selected out of all possible perceptions impinging on the senses.

Attention and language are intimately related. Attention is a selection mechanism, and interpretation is a process of selective attention to those aspects of a matter which are more salient than others. Clarity results as attention is brought to bear on our worldly engagements. As these affairs come to light, what was previously unclear becomes more finely articulated. More clarity with respect to the import of these situations means that the associated practices are more effective in producing the desired goods. The movement of attention in articulation and interpretation shapes our language and the social environment in which we find ourselves situated.

The intimate relationship between attention and language is evident in Taylor’s Theories of meaning’ (Papers 1/10). In contrast to the designative view of language, Taylor cites Humboldt’s notion of the primacy of the activity of speaking, in which language is constantly being made and modified. Language formulates what was only implicit, and allows a proper focus on the matter in question. Articulation brings matters into focus, as a feature is identified; and an articulated view grasps how the different features or aspects of a matter are related. Language draws boundaries in which certain features become salient. Through language we ‘delimit what we are attending to in the matter at hand’ (Papers, I, p. 258).

Language places matters out in the open between interlocutors, in ‘public space’. This is the realm of common meanings and shared goods. Public space is a ‘common vantage point from which we survey the world together’. It is not a coincidence of individual states, but a ‘common act of focusing’. Taylor claims that it is not possible to understand how society works without some notion of public space. Public space is where we jointly attend to the matters which lie at the heart of human action, matters which have been selected for concern (Douglas and Wildavsky 1982).

The relations between language and human emotion and social practices are most important in Taylor’s work. Language ‘provides the medium through which…the characteristically human concerns, can impinge on us at all’ (Papers, I, p. 260). It provides the background upon which distinctions of worth are made. A language of qualitative contrasts is necessary in order for us to focus on the standards by which we judge our actions and self-worth. A discussion of the relation between attention and economics will now argue that attention plays a role similar to that of language in hermeneutics.

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ATTENTION AND ECONOMICS

Economics is about human effort; and the essence of effort is attention (Kahneman 1973; Eysenck 1982). McCloskey (1985, p. 79) has defined labour as ‘conscientious attentiveness’. Attention is how we apply ourselves in the course of daily life. My assertion is that attention is a central element in knowledge, communication, and therefore in all economic phenomena. The manner in which attention is paid influences both what comes to be known and the extent of communication which takes place in any situation. A study which would aspire to explain human activity must take cognizance of the attentional deployment of the agents under investigation.

In his 1967 study of the behaviour of sub-human primates, M.R.A. Chance of the University of Birmingham came to a most important conception: the structure of attention, which he defined as the joint movement of attention of the members of a social unit. Chance and Larsen (1976) viewed attention structure as central to the co-ordination of all behaviour. The structure of attention forms the network of communication between individuals, and lies at the heart of the system of resource deployment. Our world is constituted by encounters with others through resources which are animated by practical attentiveness. Resources in the system of deployment are far from lifeless; they reflect the marks left by those individuals standing behind them. The quality of life is directly dependent on the quality of practical attentiveness in day-to-day activities.

The importance of attention as an economic resource has already been noted by the theorists of bounded rationality. In a section entitled ‘Attention as the scarce resource’, Herbert Simon (1978, p. 13) writes: ‘I am not aware that there has been any systematic development of a theory of information and communication that treats attention rather than information as the scarce resource’. James March (1982, p. 30) declares: ‘The key scarce resource is attention; and theories of limited rationality are, for the most part, theories of the allocation of attention’. Communication takes place when there is a common object of attention—the centre of attention— which is the focal point that allows co-ordinated action. In rationalexpectations models it is implicitly assumed that the random variables comprising the ‘underlying situation’ are the centre of attention—the common focus for all agents allowing the convergence of understanding. The attentional deployment of economic agents is the great unspoken assumption of economic theory.

Attention should not be thought of as an ordinary resource. It is not something that one can ‘economize’; it is rather a dynamic of the ‘one’, of the economic agent, itself. As March (1988, pp. 3–4) has remarked: ‘the organization of attention [is] a central process out of which decisions arise …choice [is] driven by attention allocation’. The study of attentional deployment means to get at our ‘being in the world’, the fact that we are always situated, always ‘already engaged in coping with our world, dealing with the things in it, at grips with

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them’ (Taylor 1987, p. 476). This is the prior process which economics must fathom instead of positing priors over states of the world. It is the partly pretheoretical orientation which determines our stance in the world and resultant deployment of resources.

A hermeneutic approach to economics would make attention a centrepiece. Current economic theory assumes detached, rational agents who perceive their situations from a transcendent position. They calculate optimal actions on the basis of disinterested observations which have no effect on the objects making up the economic environment. The hermeneutic agent, on the other hand, is historically situated. She is interested, concerned, and embedded in her situations prior to any calculations of trade-offs. The attention of the hermeneutic agent is deployed in worldly engagements which shape the very environment in which she is situated. Thus the hermeneutic environment is profoundly historical in nature.

The historical movement of attention is not to be explained by recourse to calculations of trade-offs with respect to given objects in the economic environment. Consider, for example, the following familiar situation. A scholar submits the fruits of her labour to a respected journal, and receives a review focused on certain aspects of the paper. After she invests considerable effort in responding to the criticisms, a second review (by the same reader) finds difficulties with other aspects which were virtually unchanged and unaffected by the other revisions. How is this inefficient disposition of human resources to be explained? Perhaps the referee had nagging doubts which he was unable to articulate during the first review. Or perhaps the revision facilitated a clearer focus on the paper as a whole. In any case, the simple fact is that circumstances led him to attend more seriously to those aspects which were neglected during the first evaluation.

Did the referee initially take a calculated risk by overlooking some items of crucial importance? The problem would be viewed in standard theory as a tradeoff between the disutility of attending and the embarrassment of a poor report. The resulting stochastic process would assume objectively perceived disutilities and an optimal expenditure of effort. But what led to the particular choice of focus during the first review? Is this again to be explained by a utility calculus over all possible aspects of the paper?

In order to address the question, it is necessary to inquire into the actual process of attending to the text. The reader begins with a set of initial interests which orient him toward certain aspects of the manuscript. These initial interests can be more or less influenced by activities in which he has recently been engaged. As the reading progresses, these ‘pre-understandings’ (Gadamer 1975) change as the text is encountered. The particular aspects selected for concern shift as the engagement with the text develops. One does not know in advance what one will discover. Since the situation is changing over time, the decision with respect to the optimal amount of effort to expend on each possible aspect must be continually re-evaluated. But in order to focus on the text, one must set such calculations aside and immerse oneself in the historical situation. One must

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be embedded in the act of reading itself. Thus the act of attending cannot be explained by assuming that the reader calculates trade-offs, for the reading cannot proceed if attention must continually be diverted to the utility calculus.

In inquiring into the particular path taken during the review of the manuscript, it is also necessary to consider all concomitant demands on the attention of the reader. Was he pressed with other matters? Upset with affairs at home or on the job? The details of one’s entire life situation at the time will influence how one attends to the task at hand. The lapse of attention during the first review can hardly be explained as the outcome of a random process, with objective mean and variance which depends on the calculation of an isolated ego. The very actualization of such a calculation would itself be contingent on a particular attentional deployment in that it must be embedded in an historical situation. Rather than positing detached observers viewing affairs from afar, the total shifting complex of demands on attention (which themselves depend on previous deployments) must be considered in understanding human activity.2

It has been argued that attentional deployment cannot be explained by recourse to calculations with respect to underlying objects constituting the economic environment. In addition, these objects are themselves shaped by the worldly engagements of economic agents. In current theory, utility and cost functions are considered to be the given objects forming the economic environment. Rational, disinterested agents observe these objects and make their choices. Hermeneutic theory, on the other hand, recognizes that utility and technology are constituted by knowledge, and as such are subject to change as attention is paid to them by interested individuals. Thus attention shapes the very environment in which the agents find themselves situated.

The supporting argument with respect to utility has already been made. Utility is a proxy for human emotionality. Economists talk about maximizing happiness, about ‘pleasure machines’. Utility functions should be called emotion functions; and, when considered from this perspective, the specification of such functions becomes quite problematic. For emotion does not exist by itself, completely irrational as it were. There is always an accompanying cognition (Clarke and Fiske 1982; Izard 1977), an articulation of oneself. One’s feelings change as they are articulated; thus, attending to one’s utility function can change it.

Attention also shapes technology, or more generally the historical situation/ institutional environment in which we find ourselves embedded. I will consider cost functions, human skills, household production functions, organizational decision processes, and financial markets as part of the historical situation.

Radner and Rothschild (1975) studied the allocation of effort in the firm. Managers have many possible activities to which they may attend. They can learn about operations, communicate with suppliers, customers, and employees, etc. Radner and Rothschild hypothesized that attended activities will tend to improve, while unattended activities will tend to deteriorate. The firm’s cost function is determined by which rule of thumb is used in the selection process. This determines how economy is practised in the organization.

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The key idea is that attending to the cost function changes it. Cost functions are not objects, like mountains, waiting to be climbed; they are not separate from the learning process. Of course, humans are very important components of ‘cost functions’. Simon (1965) claimed that the bulk of the productive wealth in an economy resides in our minds, and pointed to the rapid post-war reconstruction of Europe as evidence in behalf of the assertion. Attention is central to the development of human skills; psychology recognizes how cognitive structures develop as the result of the investment of attentional energy (see, for example, Eysenck 1982).

The general law noted by Radner and Rothschild with respect to attended and unattended activities also applies to household-production functions. For example, how long will a given pair of shoes last? If one is heedful of the process of consumption of the resource (that is, if one pays careful attention while walking) one may practise economy. Another example is whether an individual will decide to eat one more unnecessary serving. This depends on whether attention is captured by the thought of food, or if the individual directly attends to the physical reality of the overextended stomach. (The notion of not wasting, or needlessly using, things is noticeably absent from explicit consideration in economic theory.)

March and Olsen (1976) have highlighted attention as a scarce resource in their study of organizational decision-making. Who is attending to what and when is a critical determinant of organizational dynamics. Rather than an abstract maximization subject to constraints, March and Olsen find decisionmaking to be highly contextual, in concert with hermeneutical thought (see, for example, Rommetveit 1987). At any given point in time, there is a complex mix of choices, problems, solutions looking for problems, and outside claims on the attention of decision makers. Thus the attention given to a particular decision will depend on the total nexus of situations which demand attention. Short spans of volatile attention underlying decisions and communication in general make for the turbulent environment presented by March and Olsen. This is the antithesis of the simple ‘underlying situation’ facilitating common understanding in the rational-expectations models.

The chaotic picture of organizational life provided by March and Olsen may be extended to the system as a whole. Attention brings affairs to light. A change in the deployment of attention brings new affairs to light, resulting in a change in system performance. Scarcity of attention means that a great many situations go unattended, resulting in systemic instability. This phenomenon is particularly apparent in financial markets. Participants focus on good news in bull markets, for instance, as euphoria captures the bulk of attention. Scarcity of attention is evident in the short memories exhibited by market participants (Minsky 1975; Guttentag and Herring 1984). As the peak is reached, the focus shifts to previously overlooked negative factors—resulting in a dramatic change in system performance. The perspective of the aggregate is determined by the micro-level deployment of attention.