Hayek’s new ideas and present-day ones

Abstract

This paper reexamines key themes in Friedrich Hayek’s work, including his early macroeconomics and work on overinvestment, as well as his critiques of socialism and corporatism. The paper argues that Hayek’s concern was over economic efficiency rather than innovation. Hayek viewed innovation as exogenous to the business sector, as did Schumpeter. A likely reason for his resistance to innovation as indigenous to the business world was his unease about a theory of the capitalist economy in which the future is indeterminate. Viewing innovation as rare and exogenous helped to minimize the problem of indeterminacy in his economic model. While Hayek’s great ideas will continue to be revered, economic scholarship must now build an economics that gives central place to indigenous innovation in determining a modern economy.

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Correspondence to Edmund S. Phelps.

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Phelps, E.S. Hayek’s new ideas and present-day ones. Rev Austrian Econ 28, 253–256 (2015). https://doi.org/10.1007/s11138-015-0308-x

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Keywords

  • Adaptation
  • Indeterminacy
  • Overinvestment
  • Socialism
  • Corporatism
  • Exogenous innovation
  • JEL Code
  • B2
  • B3