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Misjudging the character of the welfare state: Hayek, generality, and the knowledge problem

Author

Listed:
  • Christopher S. Martin

    (Hillsdale College)

  • Nikolai G. Wenzel

    (University of Paris Law School (Center for Law & Economics)
    Eleutheria Institute)

Abstract

What are the limits of collective action? As James Buchanan famously worried, is it possible to empower the productive state without lapsing into the predatory state? This paper uses insights from F.A. Hayek to address problems of public goods and the role of the state. Hayek convincingly argued that no central planner has sufficient knowledge to run an economy. Yet Hayek also allowed for state provision of some goods beyond the prevention of coercion. The question, then, is whether Hayek’s safeguards offer a satisfactory response to Buchanan’s worry. This paper contends that Hayek violated his own conditions for permissible government activity. Nevertheless, he offers a serious research agenda for limiting state abuses.

Suggested Citation

  • Christopher S. Martin & Nikolai G. Wenzel, 2018. "Misjudging the character of the welfare state: Hayek, generality, and the knowledge problem," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(3), pages 301-314, September.
    • Handle: RePEc:kap:revaec:v:31:y:2018:i:3:d:10.1007_s11138-017-0376-1
    DOI: 10.1007/s11138-017-0376-1
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    References listed on IDEAS

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    1. Alain Marciano & Jean-Michel Josselin (ed.), 2007. "Democracy, Freedom and Coercion," Books, Edward Elgar Publishing, number 12644.
    2. Epstein, Richard A, 1996. "Catastrophic Responses to Catastrophic Risks," Journal of Risk and Uncertainty, Springer, vol. 12(2-3), pages 287-308, May.
    3. Hayek, F. A. & Caldwell, Bruce, 2007. "The Road to Serfdom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320540 edited by Caldwell, Bruce, Febrero.
    4. Stringham, Edward Peter, 2015. "Private Governance: Creating Order in Economic and Social Life," OUP Catalogue, Oxford University Press, number 9780199365166, Decembrie.
    5. Jean-Michel Josselin & Alain Marciano, 2007. "Democracy, freedom and coercion," Post-Print halshs-00294657, HAL.
    6. Enrico Colombatto, 2007. "Hayek and Economic Policy (The Austrian Road to the Third Way)," Chapters, in: Alain Marciano & Jean-Michel Josselin (ed.), Democracy, Freedom and Coercion, chapter 3, Edward Elgar Publishing.
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    Cited by:

    1. Christopher S. Martin & Nikolai G. Wenzel, 2020. "Generality and knowledge: Hayek's constitutional theory of the liberal state," Constitutional Political Economy, Springer, vol. 31(2), pages 145-168, June.

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    More about this item

    Keywords

    Productive state; Predatory state; Hayek; Anarcho-capitalism; Generality principle; Knowledge problem; Welfare state; Public goods;
    All these keywords.

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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