Hayek, social science, and politics: Reply to Hill and Friedman

Hayek's case for the limits of economic agents' knowledge does not, as Greg Hill seems to suggest, imply that government should be in the business of engaging in countercyclical fiscal policy or paternalistic corrections of people's pursuit of "imaginary goods." In the latter case, markets have corrective learning mechanisms for consumer mistakes. In the former, public-choice and public-ignorance problems plague government efforts to correct the business cycle. The problem of public ignorance is, in turn, Jeffrey Friedman's topic, but he is unfair in condemning Hayek's abandonment of this problem in order to develop his thesis that a "planning mentality" was the source of the leftist ideas with which Hayek disagreed. Hayek was confronted by widely popular planning schemes that were endorsed by a great many of his colleagues, who were not ignorant of economics. © 2007 Critical Review Foundation.

Duke Scholars

Author Bruce J. Caldwell Economics