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Hayekian economic policy

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  • Feld, Lars P.
  • Nientiedt, Daniel

Abstract

What is the appropriate role of the state in economic policy-making? This paper shows that Friedrich Hayek, who is often considered a proponent of laissez-faire liberalism, offers three different answers to this problem. First, Hayek argues that the state should provide a legal framework for competitive markets. Second, he proposes to employ the rule of law criteria – generality, equality, and certainty – to distinguish permissible from non-permissible state interventions. Third, he downplays the importance of deliberate legislation and moves closer to the Misesian idea of a minimal state. The paper considers these answers in light of Hayek's analysis of the knowledge problem. We suggest that a Hayekian approach to economic policy-making should focus on improving the framework of general rules that guide individual behavior, thereby enabling spontaneous ordering processes and reducing the epistemological burden placed on policy-makers.

Suggested Citation

  • Feld, Lars P. & Nientiedt, Daniel, 2022. "Hayekian economic policy," Journal of Economic Behavior & Organization, Elsevier, vol. 204(C), pages 457-465.
    • Handle: RePEc:eee:jeborg:v:204:y:2022:i:c:p:457-465
    DOI: 10.1016/j.jebo.2022.10.019
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    Cited by:

    1. Feld, Lars P. & Nientiedt, Daniel, 2023. "Examining the ordoliberal tradition in classical liberal thought," Freiburg Discussion Papers on Constitutional Economics 23/5, Walter Eucken Institut e.V..

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    More about this item

    Keywords

    Friedrich Hayek; Rule-based economic policy; Spontaneous order; Knowledge problem; Cultural evolution;
    All these keywords.

    JEL classification:

    • B31 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - Individuals
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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