This paper by Hayek is of the utmost importance for understanding the key difference between pure Misesian economic theory and the positivism of Popper/Friedman. Indeed, they do not contradict each other. One way of seeing it, and this is precisely what is illuminated by Hayek, is: Misesian economic theory would say that there are supply and demand curves, and why they are of such and such shape and so on. But Misesian theory could never assure that an equilibrium is going to be achieved. That is not pure logic of choice (theory, in Mises terminology) but history (or empiricism or behavior, according to neoclassic parlance).
Given that some individuals have in their minds at a specific instant a certain maximum price to pay and/or a minimum price to be paid, the actual process of groping is achieved by specific individuals in specific situations in time and space: they are empirical!
What Hayek says is akin to: "hey guys, economics is not only what Mises calls theory (pure logic of choice) but is also history (and then empiricism, positivism, etc.).
Saturday, July 26, 2014
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