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The Hayekian Theory of Market as a Self-organised System (The 'Invisible Hand')

Philippe Nemo ()

Cahiers d’économie politique / Papers in Political Economy, 2002, issue 43, 47-67

Abstract: Hayek has stated a remarkable theory of the "invisible hand", which he conveys with the concepts and words of the modern systemic theory. The market is a self-organizing system which uses a twofold communicating device, with two "media", law and prices. Both media do embody useful information and thus can guide the individual agent's behaviour in such a way as he may insert himself into the global economic system, even though he has not, and cannot have, a global view of this system, due to economic complexity. The same communicating system results in the free decisions of the individual agents beeing transmitted to the whole system, so that economy adjusts itself to the new conditions in due time. Hayek's theory thus gives an "explanation of the principle" of this odd paradox: instead of disorder and anarchy, economic freedom may, under certain structural conditions, cause a sophisticated kind of order which could be produced by no other way: the world-scale division oflabour.

JEL-codes: B20 (search for similar items in EconPapers)
Date: 2002
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Handle: RePEc:cpo:journl:y:2002:i:43:p:47-67