Hayek and Economic Policy (The Austrian Road to the Third Way)
AbstractBy examining Hayek’s approach to economic policy, this paper tries to show that his understanding of a free-market society was ambiguous, if not contradictory. Hayek was indeed following the Austrian tradition by rejecting technocratic views of policy-making. Nevertheless, he advocated a constitutional approach ultimately based on the rule of law created behind a veil of ignorance. Regulation and a fairly extensive welfare state are not ruled out either, and are subject to evaluation through a mix of rule of law (what that means), public opinion, common sense. After close inspection of the Road to Serfdom, the Constitution of Liberty, Law, Legislation and Liberty this contribution concludes that not only does Hayek fail to provide clear answers to the fundamental questions of economic policy. He also advocates a Third Way characterised by enlightened social engineering. In particular, the state has the duty to provide a suitable framework for the individual to develop his action, and to meet those social needs that the market fails to satisfy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 18-2004.
Length: 27 pages
Date of creation: Sep 2004
Date of revision:
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philippe Fontaine, 1996. "The French Economists and Politics, 1750-1850: The Science and Art of Political Economy," Canadian Journal of Economics, Canadian Economics Association, vol. 29(2), pages 379-93, May.
- Denzau, Arthur T & North, Douglass C, 1994.
"Shared Mental Models: Ideologies and Institutions,"
Wiley Blackwell, vol. 47(1), pages 3-31.
- de Jasay, Anthony, 1996. " Hayek: Some Missing Pieces," The Review of Austrian Economics, Springer, vol. 9(1), pages 107-18.
- Nelson, Robert H, 1987. "The Economics Profession and the Making of Public Policy," Journal of Economic Literature, American Economic Association, vol. 25(1), pages 49-91, March.
- William D. Grampp, 2000. "What Did Smith Mean by the Invisible Hand?," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 441-465, June.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alessandra Calosso).
If references are entirely missing, you can add them using this form.