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Competition as an Ambiguous Discovery Procedure: A Reappraisal of Hayek's Epistemic Market Liberalism

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  • Ulrich Witt

Abstract

Epistemic arguments play a significant role in Hayek's defense of market liberalism. His claim that market competition is a discovery procedure that serves the common good is a case in point. The hypothesis of the markets' efficient use of existing knowledge is supplemented by the idea that markets are also most effectively creating new knowledge. However, in his assessment Hayek neglects the role of new technological knowledge. He ignores that the discovery procedure induces not only price and cost competition but also competition by innovations. Thence he overlooks the ambiguity that follows from the unpredictability of the consequences of innovations. This fact is shown to challenge the epistemic foundations and the stringency of Hayek's version of market liberalism.

Suggested Citation

  • Ulrich Witt, 2011. "Competition as an Ambiguous Discovery Procedure: A Reappraisal of Hayek's Epistemic Market Liberalism," Papers on Economics and Evolution 2011-06, Philipps University Marburg, Department of Geography.
  • Handle: RePEc:esi:evopap:2011-06
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    Cited by:

    1. Naomi Beck, 2015. "The garden of orderly polity: F. A. Hayek and T. H. Huxley’s views on social evolution," Journal of Bioeconomics, Springer, vol. 17(1), pages 83-96, April.

    More about this item

    Keywords

    competition; innovation; liberalism; knowledge; self-organization; Hayek Length 15 pages;
    All these keywords.

    JEL classification:

    • B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian; Stockholm School
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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