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Hayekian equilibrium and change

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  • Peter Lewin

Abstract

What do we mean when we say action is possible in disequilibrium? If we adopt Hayek's approach to equilibrium, we must mean that we can act in a world where the plans that motivate and define those actions are not mutually compatible. This is hardly controversial. After all, the market process features rivalrous actions, that is, actions that are part of mutually inconsistent plans. Successful plans tend to displace unsuccessful ones. But, can we say, therefore, that, overall, plans tend to become more consistent so that there is a 'tendency' toward equilibrium? Is this important? I answer both in the negative and that the Hayekian definition requires too much. Plans are complex, multi-layered con-structs. Overall 'plan consistency' is, therefore, either impossible or hopelessly imprecise. At some levels plans are and must be highly compatible, while at other levels (as part of the market process for example) they are and, if we are to have economic progress, they must be, incompatible.

Suggested Citation

  • Peter Lewin, 1997. "Hayekian equilibrium and change," Journal of Economic Methodology, Taylor & Francis Journals, vol. 4(2), pages 245-266.
    • Handle: RePEc:taf:jecmet:v:4:y:1997:i:2:p:245-266
    DOI: 10.1080/13501789700000017
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    References listed on IDEAS

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    1. Peter J. Boettke & David L. Prychitko (ed.), 1994. "The Market Process," Books, Edward Elgar Publishing, number 54.
    2. Peter J. Boettke (ed.), 1994. "The Elgar Companion to Austrian Economics," Books, Edward Elgar Publishing, number 53.
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    Cited by:

    1. Alexander W. Salter & William J. Luther, 2016. "The Optimal Austrian Business Cycle Theory," Advances in Austrian Economics, in: Studies in Austrian Macroeconomics, volume 20, pages 45-60, Emerald Group Publishing Limited.
    2. Nicolai J. Foss & Giampaolo Garzarelli, 2007. "Institutions as knowledge capital: Ludwig M. Lachmann's interpretative institutionalism," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 31(5), pages 789-804, September.
    3. Robert L. Formaini, 1999. "Evolution of the Regulatory State : The Mixed Economy Viewed Through a Complexity Lens," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 15(Fall 1999), pages 67-97.
    4. Peter Lewin, 2016. "Policy Design and Execution in a Complex World: Can We Learn from the Financial Crisis?," Advances in Austrian Economics, in: Studies in Austrian Macroeconomics, volume 20, pages 265-283, Emerald Group Publishing Limited.
    5. Randall Holcombe, 2008. "Advancing economic analysis beyond the equilibrium framework," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 21(4), pages 225-249, December.
    6. Hoffmann, Andreas & Urbansky, Björn, 2012. "Order, displacements and recurring financial crises," Working Papers 108, University of Leipzig, Faculty of Economics and Management Science.
    7. Steven Horwitz & Peter Lewin, 2008. "Heterogeneous human capital, uncertainty, and the structure of plans: A market process approach to marriage and divorce," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 21(1), pages 1-21, March.
    8. Marek Hudik, 2020. "Equilibrium as compatibility of plans," Theory and Decision, Springer, vol. 89(3), pages 349-368, October.
    9. Andreas Hoffmann & Björn Urbansky, 2015. "Policy Shifts and Financial Instability in Emerging Markets," Review of Development Economics, Wiley Blackwell, vol. 19(3), pages 455-469, August.
    10. Harper, David A., 2013. "Property rights, entrepreneurship and coordination," Journal of Economic Behavior & Organization, Elsevier, vol. 88(C), pages 62-77.
    11. Fernando Antonio Monteiro Christoph D’Andrea, 2020. "Strategic marketing & Austrian economics: The foundations of resource-advantage theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 33(4), pages 481-501, December.
    12. G. R. Steele, 2005. "Psychology, social evolution and liberalism: a Hayekian trinity," Review of Political Economy, Taylor & Francis Journals, vol. 17(4), pages 571-586.
    13. Marek Hudik, 0. "Equilibrium as compatibility of plans," Theory and Decision, Springer, vol. 0, pages 1-20.
    14. Peter Lewin & Nicolas Cachanosky, 2020. "Entrepreneurship in a theory of capital and finance—Illustrating the use of subjective quantification," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(5), pages 735-743, July.
    15. Peter Lewin, 2016. "Plan-coordination: Who needs it?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 29(3), pages 299-313, September.
    16. Randall G. Holcombe, 2021. "Entrepreneurial Economies," Economies, MDPI, vol. 9(3), pages 1-12, September.
    17. Peter Lewin, 2014. "Hayek and Lachmann," Chapters, in: Roger W. Garrison & Norman Barry (ed.), Elgar Companion to Hayekian Economics, chapter 8, pages 165-194, Edward Elgar Publishing.

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