My Hayek exposure was mostly The Use of Knowledge in Society style stuff. I am  just now reading The Road to Serfdom for the first time.

While his analysis of why markets work has always been wonderful, from what I can tell his political economy seems to echo that of a distinctly left-of-center economist by modern standards.

Probably nothing has done so much harm to the [libertarian] cause as the wooden insistence of some [libertarians] on certain rough rules of thumb, above all the principle of laissez-faire.

We must save capitalism from the unconstrained free-market. Is this Hayek or Robert Reich? Hayek makes repeated reference to the fact that it is only competition as a rough principle that is to be supported. Indeed, he goes on to say

The [proper] attitude of the [libertarian] towards society is like that of the gardener who tends a plant and in order to create the conditions most favourable to its growth must know as much as possible about its structure and the way it functions. No sensible person should have doubted that the crude rules in which the principles of economic policy of the nineteenth century were expressed were only a beginning, that we had yet much to learn, and that there were still immense possibilities of advancement on the lines on which we had moved.

Tell that to Peter Thiel. Additionally

Nor can certain harmful effects of deforestation, or of some methods of farming, or of the smoke and noise of factories, be confined to the owner of the property in question or to those who are willing to submit to the damage for an agreed compensation. In such instances we must find some substitute for the regulation by the price mechanism. But the fact that we have to resort to the substitution of direct regulation by authority where the conditions for the proper working of competition cannot be created, does not prove that we should suppress competition where it can be made to function.

Now of course this is pre Coase Theorem, but Hayek isn’t even pushing Pigou’s The Economics of Welfare. When markets fail he suggests, command-and-control is appropriate.

Note, that I replaced liberal with libertarian to accord with modern American usage.

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