Edited by Roger W. Garrison and Norman Barry
Chapter 9: Hayek: from economics as equilibrium analysis to economics as social theory
Friedrich Hayek, a scholar of enormous range and scope, made major contributions both to pure economic theory and also to a wide variety of fields in social theory and philosophy. Historians of thought usually attempt to impose some order on Hayek’s work by distinguishing between the early (pre-1937) Hayek, whose attention was largely confined to matters of pure economic theory, and the later (post-1937) Hayek, whose interests extended well beyond the conventional boundaries of economics to embrace fields as diverse as political philosophy, jurisprudence, theoretical psychology, the philosophy of science and the history of ideas. The impetus for Hayek’s transformation from narrow economic theorist to wide-ranging social theorist and philosopher, a transformation whose origins are usually traced to Hayek’s 1937 paper on ‘Economics and knowledge’ (Hayek,  1948), derived from his increasing dissatisfaction with the principal methodological tool to which he had been committed in his pre-1937 writings on price theory, capital theory and business cycles, namely equilibrium analysis. By 1937 Hayek’s participation in the socialist calculation debate had led him to realize that the epistemological presuppositions of equilibrium theory – that is, the assumptions it makes about people’s knowledge – preclude a satisfactory answer to what Hayek had come to see as the central question of economics: namely how (if at all) people learn enough about each other’s actions to be able to form mutually compatible plans.
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