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

Ulrich Witt

Papers on Economics and Evolution from Philipps University Marburg, Department of Geography

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.

Keywords: competition; innovation; liberalism; knowledge; self-organization; Hayek Length 15 pages (search for similar items in EconPapers)
JEL-codes: B25 D80 O33 P16 Q55 (search for similar items in EconPapers)
Date: 2011-05
New Economics Papers: this item is included in nep-com, nep-hpe and nep-pke
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: COMPETITION AS AN AMBIGUOUS DISCOVERY PROCEDURE: A REAPPRAISAL OF F. A. HAYEK'S EPISTEMIC MARKET LIBERALISM (2013)
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