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Hayekian economic policy

Lars Feld () and Daniel Nientiedt

No 22/01, Freiburg Discussion Papers on Constitutional Economics from Walter Eucken Institut e.V.

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 rejects deliberate legislation and moves closer to the Misean 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.

Keywords: Friedrich Hayek; Rule-based economic policy; Spontaneous order; Knowledge problem; Cultural evolution (search for similar items in EconPapers)
JEL-codes: B31 D78 P16 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-cwa, nep-his, nep-hme and nep-hpe
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