Hayek and economic ignorance
Reply to Friedman
Bibliographic Data
| ID | 7276352 |
|---|---|
| Authors | Israel M Kirzner (New York University, corresponding author) |
| Year | 2006 |
| Volume | 18 |
| Issue | 4 |
| Pages | 411-415 |
| Publication date | 2006-09-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Critical Review (JOURNAL) |
| Journal identifiers | ISSN: 0891-3811 • E-ISSN: 1933-8007 |
| Publisher | Taylor & Francis (PUBLISHER • GB) |
| DOI | 10.1080/08913810608443669 |
| OpenAlex | W2059114999 |
| Language | EN |
| Citations received | 3 |
| References cited | 2 |
Markets can be said to overcome ignorance in two senses. First, in an imaginary world of economic equilibrium, market prices can signal to consumers how they may alter their behavior so as to conform to supply and demand conditions of which they are ignorant. This is a point that was underscored by F.A. Hayek and, now, by Jeffrey Friedman. But the more important manner in which markets overcome ignorance was identified by Hayek's mentor, Ludwig von Mises, and is not mentioned by Friedman: when market prices are not perfectly aligned to supply and demand conditions (and they never are), they present profit opportunities to entrepreneurs who are alert to make such discoveries. Their profit‐motivated actions then reallocate resources in a pattern more efficiently reflecting the true supply and demand conditions. It is this way of overcoming ignorance that most clearly separates the market arena from the political arena, because no corresponding corrective discovery process exists in politics
Economics · Ignorance · Market economy · Microeconomics · Neoclassical economics · Point (geometry · Political science · Politics · Positive economics · Profit (economics · Supply and demand · Economic Theory and Institutions · Economic Theory and Policy · Law · Political Economy and Marxism
| Unique citing works | 3 |
|---|---|
| Citations per year | 0,15 |
| Citation span | 2006 - 2018 (13) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 3 |