A passage written by Bryan Magee inspired the title and theme of the paper:
Because [Karl Popper] regards living as first and foremost a process of problem-solving he wants societies which are conducive to problem-solving. And because problem-solving calls for the bold propounding of trial solutions which are then subjected to criticism and error-elimination, he wants societies which permit the untrammeled assertion of differing proposals, followed by criticism, followed by the genuine possibility of change in the light of criticism. Regardless of any moral consideration, he believes that a society organized on such lines will be more effective at solving its problems, and therefore more successful at achieving the aims of its members, than if it were organized on other lines. (1985, 75-76) This passage clearly embodies Karl Popper's ideas of scientific discovery and problem solving through conjecture and refutation. In his major work on social theory, The Open Society and Its Enemies (1963a, 1963b), Popper (1902-94) presented his idea of an open society and outlined a method of social reform he called "piecemeal social engineering" (1963a, 158). Although he was inclined to intervention, he included market processes in his model: "Even a man who opens a new shop, or who reserves a ticket for the theatre, is carrying out a kind of social experiment on a small scale; and all our knowledge of social conditions is based on experience gained by making experiments of this kind" (1963a, 162). It is unfortunate that rather than focusing on this latter component of piecemeal social engineering and encouraging Popper to expand upon it, Friedrich A. Hayek (1899-1992) focused his energy on criticizing its more interventionist thrust (Notturno 2015, 1821). (1) This critique has led to a general failure to recognize the relevance of Popper's philosophical views by economists and philosophers who are wary of intervention. It is this failure that I wish to remedy here by criticizing Popper's interventionism in the light of his work on the evolution of knowledge and exploring the implications of that work that are supportive of markets.
I contend that the market has a tremendous advantage over interventionism as a venue for piecemeal social engineering, and it will be to Popper's lasting credit that he allowed for a great deal of market freedom in his social theory. However, there is no argument here that Popper would have agreed to the shift of emphasis and supported it. Jeremy Shearmur, a former assistant to Popper who often reasoned to more market-friendly conclusions from Popper's ideas, mused that he could have been seen by Popper as betraying him for making arguments "that Popper's work has consequences in the political realm which are suggestive of views which are different from those which Popper himself espoused, especially as a young man" (1996b, 1). To make the case for markets, I first discuss Popper's significance and the political thought that fueled his interventionism and provide a brief introduction to economic ideas that are fundamental to the argument. I then examine interventionism and markets considering the two criteria that Magee puts forward:
Does the approach permit "the untrammeled assertion of differing proposals"?
Does the approach facilitate "criticism, followed by the genuine possibility of change in the light of criticism"?
The two criteria are discussed in the sections addressing interventionism and markets.
Karl Popper's Significance
Karl Popper was possibly the most significant philosopher of science of the twentieth century (Thornton 2016). Coming of age in Red Vienna, dabbling in Marxism, and associating with many Marxists and socialists, Popper tried his hand at cabinetmaking, music, teaching, science, and eventually epistemology (Hacohen 2000). Then, with the aid of the Vienna Circle (Wiener Kreis), he finally burst forth upon the world stage with his revolutionary book Logik der Forschung (1935), later revised and translated as The Logic of Scientific Discovery (1959). The Vienna Circle was the intellectual home of logical positivism and the center of the universe in terms of the philosophy of science. Ironically, Popper issued his book as a criticism of logical positivism but has Men victim to confusion regarding his association with the same and the "legend" that he was a logical positivist (Hacohen 2000, 211).
In short order, Gottfried Haberler recommended the book to fellow Austrian and economist Friedrich Hayek (Popper 1985, 108 n. 163), but when Popper called upon Hayek in "September or October of 1935" (Popper  2008a, 408), Hayek had not yet read it. Popper gave him a copy, and Hayek read it "with great care" within a week (Popper  2008a, 408-9). Soon after, Popper presented a paper to Hayek's seminar at the London School of Economics (Popper 1985, 108). The paper, entitled "The Poverty of Historicism," was later revised and expanded and published in three articles in Economica in 1944-45 and finally as a book in 1957 (Hacohen 2000, 353).
As the feared German occupation of Austria approached, Popper began a search for a position outside the reach of Nazi Germany. His ancestry was Jewish, and his parents' conversion to Lutheranism would have been of no account to the Nazis. Hayek was involved in the initial stages of the search that led Popper to New Zealand, but it was others who carried the greater part of the burden and deserve recognition for its success (Hacohen 2000, 318-24). While Popper was in New Zealand, he wrote The Open Society and Its Enemies as part of what he called his "war effort" (Popper 1985, 115).
As Hayek continued to help Popper, the two became close friends, and Hayek said of Popper: "To a very large extent I have agreed with him, although not always immediately. Popper has had his own interesting developments, but on the whole I agree with him more than with anybody else on philosophical matters" (Hayek 1994, 51).
Popper's lifetime drift toward classical liberalism made him Hayek's ally, although one that was considerably more interventionist. Hayek invited Popper to join him at the first meeting of what came to be known as the Mont Pelerin Society. Popper, hoping to create an alliance between liberals and socialists concerned with freedom, recommended that some of these democratic socialists be invited to join the meeting--advice that Hayek failed to follow (Shearmur 1996b, 30).
Popper's intellectual exchanges with Hayek, one of the twentieth century's leading liberals, make it incumbent on modern liberals and libertarians to engage with his social thought. However, it is his work in epistemology and philosophy of science that can be applied to develop new arguments that strengthen the liberal/libertarian project.
Popper's Political Thought
As a young man, Karl Popper embraced socialism under the tutelage of his lifelong friend Arthur Arndt (Popper 1985, 12). Popper's attraction to socialism was due to his belief that "nothing ... could be more important than to end poverty" (Popper 1985, 12) and that socialism was the program by which that end could be achieved. He read Edward Bellamy's Utopian novel Looking Backward (1887) at the impressionable age of twelve, so it is no wonder that he never lost his fondness for the world it portrayed (Popper 1985, 13, 36). In the waning years of World War I, in which students became increasingly politicized, he joined a Marxist youth group (Hacohen 2000, 77). (2) After a shocking experience in 1919 during an attempted Communist coup in Vienna, Popper lost confidence in communism and eventually rejected Marxism (Hacohen 2000, 82-85). However, even after rejecting Marxism, he remained a socialist (Popper 1985, 36), and socialists made up his core friendships into the mid-1920s (Hacohen 2000, 79).
Around 1922, Popper became skeptical of bureaucracy and began his drift toward liberalism (Shearmur 1996b, 21). By June 4, 1944, soon after he had submitted his manuscript for The Open Society and Its Enemies, he had read Hayek's The Road to Serfdom (Shearmur 1996b, 27 n. 43). Struck by the similarities of its conclusions to his own, he asked Ernst Gombrich, who had undertaken to find a publisher for The Open Society, to insert a note that made clear that he had not read Hayek's work prior to writing his book (Shearmur 1996b, 27). In a later letter to Rudolf Carnap, he wrote that he had not read The Road to Serfdom prior to writing The Open Society but had since read it and "learned a great deal from it" (Popper [1940-50] 2008b, 100). In the preface to the second edition of The Open Society, Popper wrote, "I see now more clearly than ever before that even our greatest troubles spring from something that is as admirable and sound as it is dangerous--from our impatience to better the lot of our fellows" (1963a, ix), echoing Hayek's similar sentiments in The Road to Serfdom: "Because of the growing impatience with the slow advance of liberal policy, the just irritation with those who used liberal phraseology in defense of antisocial privileges, and the boundless ambition seemingly justified by the material improvements already achieved, it came to pass that toward the turn of the century the belief in the basic tenets of liberalism was more and more relinquished" (Hayek 2007, 72).
In The Open Society, Popper strongly criticized "unrestrained capitalism" (1963b, 122), (3) accepting Marx's view that it is unjust and inhumane (1963b, 124). (4) However, he also accepted that the absence of trade barriers was "something highly desirable" and that there was "tremendous benefit to be derived from the mechanism of free markets" (1963b, 327, 124).
Popper suggested piecemeal social engineering as an antidote for collectivist utopianism, (5) and it was effective for that purpose:
Before proceeding to criticize Utopian engineering in detail, I wish to outline another approach to social...