Bruce Caldwell

F. A. Hayek and the economic calculus Article (Accepted version) (Refereed)

Original citation: Caldwell, Bruce (2015) F. A. Hayek and the economic calculus. History of Political Economy. © 2015 Duke University Press This version available at: http://eprints.lse.ac.uk/63266/ Available in LSE Research Online: August 2015 LSE has developed LSE Research Online so that users may access research output of the School. Copyright © and Moral Rights for the papers on this site are retained by the individual authors and/or other copyright owners. Users may download and/or print one copy of any article(s) in LSE Research Online to facilitate their private study or for non-commercial research. You may not engage in further distribution of the material or use it for any profit-making activities or any commercial gain. You may freely distribute the URL (http://eprints.lse.ac.uk) of the LSE Research Online website. This document is the author’s final accepted version of the journal article. There may be differences between this version and the published version. You are advised to consult the publisher’s version if you wish to cite from it.

Electronic copy available at: http://ssrn.com/abstract=2642884

F. A. Hayek and the Economic Calculus

Bruce Caldwell

Duke University

Abstract: The paper offers a revisionist account of certain episodes in the development of F. A. Hayek's thought. It offers a new reading of his 1937 paper, "Economics and Knowledge," that draws on unpublished lecture notes in which he articulated more fully the distinctions he made in the paper between a "pure logic of choice," or the economic calculus, and an "empirical element," which he would later call the competitive market order. Next, the paper shows that Hayek continued to try to develop his ideas about the role of the economic calculus through the 1950s and early 1960s, an effort that has been missed because it never led to any published work. Finally, the paper examines Hayek's attempt to articulate a theory of the market process, one that would be at the same level of generality as the economic calculus, in lectures he gave at the University of Virginia. He never developed a full-fledged formal theory, but his failed efforts still bore fruit in leading him to his contributions on spontaneous orders and the (verbal) theory of complex phenomena. This work anticipated contributions by others who were more technically trained. Keywords: F. A. Hayek, the economic calculus, market process, the pure logic of choice, the structure of economic theory, spontaneous orders

JEL Codes: B25, B31, B53