"We know, in other words, the general conditions in which what we call, somewhat misleadingly, an equilibrium will establish itself: but we never know what the particular prices or wages are which would exist if the market were to bring about such an equilibrium"
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Hayek is doing something sly here: he concedes the seduction of “equilibrium” while quietly pulling the rug out from under the way economists (and policymakers) lean on it. The phrase “somewhat misleadingly” is the tell. He’s not rejecting markets or theory; he’s attacking the pretense that we can treat the economy like a solved system where the unknowns can be neatly backed out if we just write enough equations.
The intent is epistemic, not merely technical. Hayek is arguing that we can sketch the weather patterns of capitalism but not forecast tomorrow’s gusts on your street corner. “General conditions” are the institutional and behavioral regularities: property rights, incentives, competition, entry and exit. Those can tell us how coordination tends to happen. “Particular prices or wages” are something else entirely: moment-to-moment summaries of dispersed, local knowledge - inventory quirks, shifting preferences, tacit skills, sudden shortages - that no single mind or committee possesses in full. If equilibrium is a destination, the map is drawn by information that only exists in fragments, and often only at the moment it’s needed.
Context matters: this is Hayek pushing back against the mid-century confidence of macro-management and socialist calculation. The subtext is a warning shot at technocracy. If you claim you can “set” the right price or wage from the top down, you’re not just making a policy choice; you’re claiming access to knowledge the system generates only through the very process you’re overriding. Equilibrium becomes less a target to hit than a cautionary metaphor about the limits of expertise.
The intent is epistemic, not merely technical. Hayek is arguing that we can sketch the weather patterns of capitalism but not forecast tomorrow’s gusts on your street corner. “General conditions” are the institutional and behavioral regularities: property rights, incentives, competition, entry and exit. Those can tell us how coordination tends to happen. “Particular prices or wages” are something else entirely: moment-to-moment summaries of dispersed, local knowledge - inventory quirks, shifting preferences, tacit skills, sudden shortages - that no single mind or committee possesses in full. If equilibrium is a destination, the map is drawn by information that only exists in fragments, and often only at the moment it’s needed.
Context matters: this is Hayek pushing back against the mid-century confidence of macro-management and socialist calculation. The subtext is a warning shot at technocracy. If you claim you can “set” the right price or wage from the top down, you’re not just making a policy choice; you’re claiming access to knowledge the system generates only through the very process you’re overriding. Equilibrium becomes less a target to hit than a cautionary metaphor about the limits of expertise.
Quote Details
| Topic | Knowledge |
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