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We begin with a process-oriented model of science according to which signals concerning scientific reputation serve both to coordinate the plans of individuals in the scientific domain and to ensure that the knowledge that emerges from interactions between scientists and the environment is reliable. Under normal circumstances, scientific order emerges from the publication–citation–reputation (PCR) process of science. We adopt and extend F. A. Hayek's epistemology according to which knowledge affords successful plan-based action and we employ this in the development of an epistemic theory of social order. We propose that external interferences with the PCR process have distorting effects on scientific knowledge and, thus, on scientific and social order more broadly. We support this claim by describing the history of the US federal government's development of standardized dietary guidelines for American consumers and its concomitant interference in the PCR process of nutritional science. We conclude that this interference contributed to social disorder in dietary science and beyond.

In the social science literature spawned by Friedrich Hayek’s “The Sensory Order,” the questions asked were: (1) In what ways does Hayek’s cognitive theory fit with his social theory and with Austrian economics in general? (2) Do we need “The Sensory Order” at all to do our social science, and how does it make a difference in providing insight toward understanding the social realm? This chapter surveys this literature and, by drawing out the ramifications from both Hayek’s work on epistemology and psychology and the ongoing experimental investigations of individual economic behavior, it points to the possibility of a coherent new view of economic and other social systems in which individuals have realistic capabilities, where emergent effects are recognized as macro-phenomena that supervene on micro-activity rather than being simply reducible to it and where systemic characteristics such as adaptation and knowledge generation are given their due.

Synopsis: Hayek’s cognitive theory, which seeks to describe the operation of a particular order, in fact provides a paradigmatic account of knowledge-generating orders in general. We claim that this paradigm provides a fertile conceptual framework for exploring a variety of problems in economics and social theory. In particular, we shall show that Hayek’s conception of the ‘map’ and the ‘model’, which he uses to explain the operation of the complex adaptive classifying system called ‘mind’, are promising analytical devices with applications extending to social structures of various kinds and complexity. We use Hayek’s notion of the map and model to analyze how different social structures – regarded as classifying systems – work in terms of their input, processing, and output capabilities. The adaptive characteristics of such systems, via communicative routines, multi-level classification, and feedback, form central motifs for our discussion of markets, science, and other social structures. We show that by analyzing the knowledge-generating characteristics of such structures we are also able to gain insights about the circumstances affecting their adaptive properties.

Carabelli & De Vecchi dispute competing interpretations of Keynes and Hayek, including ours. They mistakenly impute to us the view that Keynes was inconsistent. They deny that Keynes had a subjectivist theory of expectations by noting his rationalist philosophy. We agree that Keynes had a rationalist philosophy, but deny that this implies an objectivist theory of economic expectations. We persist in viewing Keynes as a subjectivist regarding expectations. This short paper reviews these issues and a few other contentious matters regarding Keynes and Hayek.

This paper discusses the “knowledge problem” in terms of both the use and generation of knowledge. This is analyzed in the context of Hayek's failure to respond to the “Keynes Challenge”—the claim that markets fail to produce relevant knowledge—by suggesting that in the aftermath of The General Theory he was not well-positioned to address that problem. Ironically, his post-World War II work in cognitive psychology, The Sensory Order, offers a theory of the generation of knowledge which can provide a useful analogy for understanding the generation of market-level knowledge.

Economists approaching the study of science typically assume the applicability of a market analogy, but then base their analysis on the presumption that science constitutes an area of pervasive market failure. Given the interactions that are actually observed to occur between scientists, we suspect that the failure is in the analogy, not in the putative market. In considering how one might better apply the economic way of thinking to the understanding of science as an activity, we suggest that it is necessary to specify exactly how scientific interaction differs from market interaction, and to be clear about how the behavior of interacting scientists might be modeled in terms of the general pursuit of self-interest in a noncatallactic context. Our model of science portrays an institutionalized mode of interaction between scientists involving the publication, use, and citation of scientific papers, and it is in the exploration of the individual incentives thrown up by this arrangement that the interesting empirical implications arise. We give a short exposition of the possible lines of investigation that could be followed based on this approach.

Time and Money provides a highly effective platform from which to consider macroeconomic theory, and its capacity to service the needs of comparative macroeconomic analysis is an important contribution in its own right. The book will be important for the development of Austrian economics because it identifies important questions and provides sensible answers to the questions it analyzes. Although not discussed at length in these remarks, the framework contained inTime and Money is receptive to the extension of Austrian economics, especially with respect to monetary disequilibrium theory and to comparative institutional analysis. The impetus Garrison’s book provides for the wider acceptance and extension of capital-based macroeconomics will be carried out both at the level of theory and, one hopes, at the empirical level as well.

We agree with Burczak's identification of the crucial issues. We disagree with his interpretation of them. We expand our defense of the claim that Keynes was a rationalist. We introduce the "horizon principle" to critize Keynes' dichotomy between short-term and long-term expectations. We question the statistical simile guiding some Post Keynesian dsiscussions of uncertainty. We point to the role of evolution in shaping conventions that fit the economic environment in a world with novel events. We think the evidence favors our view over Burczak's. Finally, we put in a plea for framing the issues in a way that facilitates empirical testing.

In the aftermath of the financial crisis the Fed pursued a “near zero” overnight interest floor and initiatives to manipulate the size and composition of central bank assets. Bernanke referred to this policy as “credit easing.” I overview the succession of unconventional Fed measures that have yielded more than a five-fold increase in its balance sheet since September 2008 but with growth below trend. Three areas of concern are highlighted: the distortion of asset prices and interest rates, the Fed as a debt-enabler, and the $2.6 trillion overhang of bank reserves.

Scientific disciplines, like economies, can and do experience booms and busts. We document a boom in climate science which is sustained by massive levels of funding by government entities and whose scientific direction is set by an extra-scientific organization, the IPCC. Although the popular perception is that the IPCC’s function is the dispassionate collection and summarization of research in climate science, it has emerged as a “big player” in the scientific arena, championing of the hypothesis of anthropogenic global warming and emphasizing some of the more extreme implications of that hypothesis. We note the difficulties in obtaining definitive empirical clarity due to the complex nature of climate, the feedback between the effects of the IPCC’s advocacy and the government’s willingness to fund the science, the ideological and political agendas at play, the dangers to the integrity of scientific procedure in the context of ideological bias, and the poor performance of the “crony capitalist” enterprises that have grown on the back of politicized science.

J.M. Keynes and F.A. Hayek had different economic ideas even though both were subjectivists seriously engaged with issues of time and uncertainty in economics. The source of the difference between their economic ideas was the difference between their philosophical ideas. Keynes was a Cartesian rationalist and justificationist; Hayek a critical rationalist and non-justificationist. We draw on Keynes's "A Treatise on Probability," Hayek's "The Sensory Order," and other works to defend our argument. Although Keynes and Hayek might both be called "subjectivists," there are varieties of subjectivism. Their subjectivist ideas are not fully compatible with one another and conduce to different theories of the market process. Hayek's theory, not Keynes's, allows us to say when markets will behave in the way Keynes described and when they will instead behave in more coordinated ways. In this sense, a Hayekian theory is needed to understand a Keynesian world.

We treat science as a Hayekian social order whose distinctive emergent characteristic is the generation of knowledge. We model modern science as an institutional form that principally relies on publication with citation and its effects on individual reputation in order to study the possible effects of funding on science. We develop a taxonomy of three broad categories of effect: those having to do with the direction followed by scientific activity, those involving the operational and financial stability of both the physical institutions integral to scientific work and the scientists themselves, and those due to distortions of the basic knowledge-generating procedures of science. It is argued that, while directional effects of funding are ubiquitous, destabilizing and distorting effects are much more likely to emerge when funding sources are concentrated than when they are decentralized. Further, when funding is accompanied by regulatory oversight, the possibilities for distortion are significantly increased. Examples of such effects actually occurring under the current U.S. funding regime are discussed.

We show that the orderliness of market processes and outcomes, and hence the realization and coordination of individuals' plans, are dependent on the social environment in which individuals function. In specific, when atomicity and stable (social) rules are compromised in the case of Big Players, markets are less orderly despite the fact that individuals are behaving rationally.—The paper provides an account of individual rationality by generating a theory of expectations based on Hayek's cognitive theory. Hayekian expectations are coherent, competitive, and endogenous. This suggests that expectational analysis must take account of the context of constraint—the “environment” or what we call “filtering conditions”—within which individuals function and to which they must adapt. The paper provides a theoretical analysis of expectations at the individual level and shows that the particular behaviors stemming from those expectations require a specification of the rules governing social and market activities.

How well is Austrian business cycle theory corroborated by empirical evidence? This question is addressed by examining the contraction of 1990–1991 and the expansion leading up to it. An overview of the Austrian theory of the business cycle permits the identification of several empirical propositions implied by the theory. Empirical data for several economic variables are examined for consistency with the patterns suggested by the theory. The evidence suggests a muted Austrian cyclical process at work in conjunction with other factors during the time period studied.

Purpose – Overview of Hayek's cognitive theory and the contributions of chapters. Methodology/approach – Perspective on significance of Hayek's cognitive theory for the social sciences. Findings – Hayek's cognitive theory provides insight into his oeuvre; more importantly, it is relevant for social theory in its own right. Research limitations/implications – Hayek's cognitive theory warrants further attention by economists and social theorists interested in evolutionary social processes. Originality/value of paper – To counter a widespread view that the contribution to economics and social science of Hayek's cognitive theory is largely confined to methodology. Hayek's cognitive theory also provides a useful framework for furthering the understanding of evolution within the social realm.

Entrepreneurship, Money, and Coordination begins with a single page introduction by the editor, Jurgen Backhaus, a well known economist now at the University of Erfurt, in which we learn that the contribution by Horst Feldmann (Hayek's theory of cultural evolution: A critique of the critiques) provided the impetus for the book's remaining six chapters, a melange of papers by Brian J. Loasby,1 Jurgen G. Backhaus, Christian Schubert, Alexander Ebner, Martin T. Bohl and Jens Holscher, and Walter W. Heering. Unfortunately, the papers assembled here do not cohere well and in some instances are not altogether “reader-friendly.” The papers by Bohl and Holscher (a six-page overview and econometric analysis of Hayek's theory of competing currencies) and Heering (on monetary theory) seem rather disconnected from the main theme of the book. Surprisingly, Backhaus’ “Introduction” does not provide a useful integrating overview of the book's subject matter and papers, something readers surely would have appreciated from so eminent a scholar.

Cognition and psychology have become central issues in economics. While this interest represents a radical change in economic theory, it does have a useful history that we believe is only partially recognized by contemporary economists. Although it is customary to cite Herbert Simon's important work in this regard,1 we suggest Hayek's earlier work The Sensory Order (1952) should enjoy similar billing.

The received Austrian theory of entrepreneurship is considered in light of the generation of knowledge. It is suggested that learning involving more than the discovery of profit opportunities provides a way to endogenize knowledge and to expand the scope of entrepreneurial activity. The theoretical and applied aspects for entrepreneurial studies of this approach are discussed.

The paper distinguishes two types of entrepreneurial activity in terms of their institutionally relevant contexts. Type 1 (Kirznerian) entrepreneurship refers to catallactic activity in which coordinating mechanisms, operating via the exchange of property rights, generates market prices. We identify Type 2 entrepreneurship with noncatallactic processes.The paper argues that scientific activity, despite exhibiting characteristics congenial to the economic way of thinking, cannot be generally studied as a catallactic process under prevailing institutional arrangements. Recent changes in the institutional context of science, however, suggest a widening scope for treating science as a market activity.Cet article fait la distinction entre deux types dactivite entrepreneuriale suivant les contextes institutionnels ou ils apparaissent. Le premier type (kirznerien) dactivite entrepreneuriale sinscrit dans un cadre catallactique ou les mecanismes de coordination operant a travers lechange des droits de propriete generent les prix marchands. Le second type dactivite entrepreneuriale que nous identifions releve de processus non catallactiques. Larticle soutient que, meme si elle presente des caracteristiques qui pourraient relever de la pensee economique, lactivite scientifique telle quelle est pratiquee dans les conditions institutionnelles actuelles, ne peut en general pas etre etudiee comme un processus catallactique.Cependant, les changements recents dans le contexte institutionnel de la science suggerent la possibilite grandissante denvisager la science comme une activite marchande.

J.M. Keynes and F.A. Hayek had different economic ideas even though both were subjectivists seriously engaged with issues of time and uncertainty in economics. The source of the difference between their economic ideas was the difference between their philosophical ideas. Keynes was a Cartesian rationalist and justificationist; Hayek a critical rationalist and non-justificationist. We draw on Keynes's "A Treatise on Probability," Hayek's "The Sensory Order," and other works to defend our argument. Although Keynes and Hayek might both be called "subjectivists," there are varieties of subjectivism. Their subjectivist ideas are not fully compatible with one another and conduce to different theories of the market process. Hayek's theory, not Keynes's, allows us to say when markets will behave in the way Keynes described and when they will instead behave in more coordinated ways. In this sense, a Hayekian theory is needed to understand a Keynesian world.

The Elgar Companion to Austrian Economics is a major new reference work which highlights the common ground between all the branches of the school while demonstrating the breadth and diversity within it. The Companion reflects the many areas where Austrian economists have made contributions, including technical economics, methodology of the social sciences, political theory and political science. This book includes contributions from an international group of scholars whose work demonstrates a basic similarity and interest in questions which have historically been associated with the Austrian approach to economics, although many of the contributors would not consider themselves to be strictly of this school.

An unanticipated outcome of the renewed interest in Austrian economics is the claim that it shares important similarities with new-classical macroeconomics. This claim has been mounted in two related ways. First, Lucas [27] and Laidler [25] argue that the business cycle work of Hayek and Mises during the 1920s and 1930s is a precursor to contemporary equilibrium business cycle theory. Second, Colander and Guthrie [5] and Kantor [23] suggest that the rational expectations hypothesis resembles an Austrian theory of expectations. Together, these interpretations suggest a degree of correspondence between Austrian and new-classical macroeconomics not heretofore generally acknowledged by contemporary Austrian economists. Indeed, Austrians are usually at pains to emphasize a distinct Austrian point of view. Given the increased frequency of claims to the contrary, the rationale for a well-defined Austrian research program is called into question. The aim of this paper is to assess the correspondence between Hayek's business cycle studies and the equilibrium approach to business cycles favored by Lucas, Sargent, Wallace and others. Since the claim advanced by Lucas and Laidler refers only to Hayek's work in the 1920s and 1930s, I shall investigate their claim by restricting references to Hayek from the same period. In section II, I overview the equilibrium business cycle theory of newclassical macroeconomics, provide exegetical evidence pertaining to Hayek's early cycle studies, and discuss Hayek's notion of equilibrium. Section III probes the status of equilibrium theory in Hayek's early work and new-classical macroeconomics. In section IV, I summarize the main conclusions of the paper.