Friedrich von Hayek’s classical liberalism argued that free markets allow individuals the greatest opportunity to achieve their ends. This paper develops an internal critique of this claim. It argues that once externalities are introduced, the forms of economic knowledge Hayek thought to undermine government action and orthodox utilitarianism also rule out relative welfarist assessments of more or less regulated markets. Given the pervasiveness of externalities in modern economies, Hayek will frequently be unable to make comparative welfarist claims, or he must (...) relax his epistemic assumptions and allow for greater government action than his classical liberalism would wish to accept. (shrink)

Building on Friedrich A. Hayek’s work in social philosophy, the paper gives an account of the central role of ignorance in institutional epistemology. The first part of the paper argues that if individuals involved in the search for knowledge are constitutionally ignorant and guided by norms, as Hayek saw them, they are more likely to attain knowledge if they follow different norms, including those that are redundant. The second part of the paper argues that the market as an institutional arrangement, (...) preferred by Hayek for its epistemic features, may lead to an epistemically detrimental reduction of agents following redundant norms. (shrink)

For several decades, economists have been preoccupied with an attempt to place their entire subject on the ‘sound microfoundations’ of general equilibrium theory, with its individualistic premises. However, this project has run into seemingly intractable problems. This essay examines underlying questions such as the appropriate building block of analysis and the structure of explanation in economics. The examination of biology is found to be instructive, due to debates concerning the limitations of reductionism within that discipline. The final part of the (...) paper argues for the autonomy of a non‐reductionist macroeconomics, based on the institution as the unit of analysis. (shrink)

This article discusses the challenges raised by the inclusion of evolutionary elements in the theories of Carl Menger, Joseph Schumpeter, and Friedrich Hayek. Each adopted an idiosyncratic position in terms of method of inquiry, focus, and general message. The breadth of the topics and phenomena they cover testifies to the great variety of interpretations and potential uses of evolutionary concepts in economics. Menger, who made no reference to Darwin’s theory, advanced an “organic” view of the emergence of social institutions. Schumpeter (...) elaborated an original theory of industrial development based on the recurrent emergence and dissemination of innovations. Hayek adopted the biological notion of group selection and made it the central element in his theory of cultural evolution and the rise of the free market. The chapter concludes with a preliminary evaluation of the possible role that evolutionary theorizing might play in the future development of Austrian economics. (shrink)