by Von Hayek
[Publication Metadata and JSTOR Terms]: Bibliographic information for the article 'Economics and Knowledge' by F. A. von Hayek, including publication details in Economica and JSTOR access terms. [Section I: The Role of Knowledge and Foresight in Economic Theory]: Hayek introduces his central thesis: that formal equilibrium analysis consists of tautologies that only become empirical propositions when they include statements about how knowledge is acquired. He discusses the historical introduction of foresight into economics through the work of Knight and others, arguing that the 'Pure Logic of Choice' must be isolated from the study of causal processes in society. [Section II: Equilibrium in the Context of an Individual Plan]: Hayek defines equilibrium for a single individual as a relationship between different actions that are part of a single plan. He emphasizes that the 'data' in this context are subjective beliefs rather than objective facts, and argues that the passage of time is essential for the concept of equilibrium to have any meaning. [Section III: Social Equilibrium and the Compatibility of Plans]: The author examines the transition from individual to social equilibrium, noting that social equilibrium requires the independent plans of different individuals to be mutually compatible. He critiques the equivocation of the term 'datum,' distinguishing between the subjective data known to the actor and the objective data observed by the economist. [Section IV: Subjective vs. Objective Data and Endogenous Disturbances]: Hayek elaborates on the distinction between objective real facts and subjective knowledge. He defines a state of equilibrium as one where individual plans are mutually compatible, and distinguishes between endogenous disturbances (caused by incompatible plans) and exogenous disturbances (caused by unforeseen changes in objective facts). [Section V: Equilibrium as Correct Foresight]: Hayek argues that equilibrium is essentially defined by correct foresight regarding the relevant actions of others and external facts. He decouples the concept of equilibrium from the 'stationary state,' suggesting it is applicable to progressive societies and inter-temporal relationships as long as expectations are borne out. [Section VI: The Tendency Towards Equilibrium as an Empirical Proposition]: Hayek asserts that the claim of a 'tendency towards equilibrium' is the point where economics becomes an empirical science. This tendency implies that people's knowledge and intentions increasingly come into agreement, which requires an explanation of how knowledge is acquired and changed through experience. [Section VII: The Perfect Market and the Acquisition of Knowledge]: The author critiques the assumption of a 'perfect market' as a circular argument that assumes equilibrium rather than explaining it. He argues that the empirical content of economics lies in hypotheses about how people learn from experience, which are distinct from the universal axioms of the Pure Logic of Choice and often involve 'ideal types.' [Section VIII: Constancy of Data and Regularity]: Hayek examines the condition of 'constancy of data,' arguing it is neither necessary nor sufficient for equilibrium. Instead, there must be a discernible regularity that allows for correct prediction, though even absolute constancy does not guarantee that individuals will learn to correspond their subjective data with objective facts. [Section IX: The Division of Knowledge]: Hayek introduces the 'Division of Knowledge' as the central problem of social science, analogous to the division of labour. He explores how the spontaneous interaction of individuals with fragmented knowledge can lead to an efficient distribution of resources, and critiques the neglect of institutions like the press and advertising in pure analysis. [Section X: Conclusion and the Future of Economic Research]: In his concluding remarks, Hayek clarifies that while he emphasizes empirical propositions, he does not necessarily call for immediate empirical research but rather for clarity on where economic arguments become subject to verification. He advocates for returning to the common-sense meaning of economic analysis to avoid losing sight of its purpose.
Bibliographic information for the article 'Economics and Knowledge' by F. A. von Hayek, including publication details in Economica and JSTOR access terms.
Read full textHayek introduces his central thesis: that formal equilibrium analysis consists of tautologies that only become empirical propositions when they include statements about how knowledge is acquired. He discusses the historical introduction of foresight into economics through the work of Knight and others, arguing that the 'Pure Logic of Choice' must be isolated from the study of causal processes in society.
Read full textHayek defines equilibrium for a single individual as a relationship between different actions that are part of a single plan. He emphasizes that the 'data' in this context are subjective beliefs rather than objective facts, and argues that the passage of time is essential for the concept of equilibrium to have any meaning.
Read full textThe author examines the transition from individual to social equilibrium, noting that social equilibrium requires the independent plans of different individuals to be mutually compatible. He critiques the equivocation of the term 'datum,' distinguishing between the subjective data known to the actor and the objective data observed by the economist.
Read full textHayek elaborates on the distinction between objective real facts and subjective knowledge. He defines a state of equilibrium as one where individual plans are mutually compatible, and distinguishes between endogenous disturbances (caused by incompatible plans) and exogenous disturbances (caused by unforeseen changes in objective facts).
Read full textHayek argues that equilibrium is essentially defined by correct foresight regarding the relevant actions of others and external facts. He decouples the concept of equilibrium from the 'stationary state,' suggesting it is applicable to progressive societies and inter-temporal relationships as long as expectations are borne out.
Read full textHayek asserts that the claim of a 'tendency towards equilibrium' is the point where economics becomes an empirical science. This tendency implies that people's knowledge and intentions increasingly come into agreement, which requires an explanation of how knowledge is acquired and changed through experience.
Read full textThe author critiques the assumption of a 'perfect market' as a circular argument that assumes equilibrium rather than explaining it. He argues that the empirical content of economics lies in hypotheses about how people learn from experience, which are distinct from the universal axioms of the Pure Logic of Choice and often involve 'ideal types.'
Read full textHayek examines the condition of 'constancy of data,' arguing it is neither necessary nor sufficient for equilibrium. Instead, there must be a discernible regularity that allows for correct prediction, though even absolute constancy does not guarantee that individuals will learn to correspond their subjective data with objective facts.
Read full textHayek introduces the 'Division of Knowledge' as the central problem of social science, analogous to the division of labour. He explores how the spontaneous interaction of individuals with fragmented knowledge can lead to an efficient distribution of resources, and critiques the neglect of institutions like the press and advertising in pure analysis.
Read full textIn his concluding remarks, Hayek clarifies that while he emphasizes empirical propositions, he does not necessarily call for immediate empirical research but rather for clarity on where economic arguments become subject to verification. He advocates for returning to the common-sense meaning of economic analysis to avoid losing sight of its purpose.
Read full text