Hayek rejected utility maximization in favor of knowledge dispersion as the market’s justification

Evidence

Interestingly, here is where Hayek rejected the maximization of utility as the standard equilibrium concept in neoclassical economic theory. Markets don’t maximize happiness, rather, “the use of the market mechanism brings more of the dispersed knowledge of society into play than by any other [method]” (Studies in Philosophy, Politics and Economics, p. 174). — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 1926

Categorization

• DEFINE: Clarifies the core Hayekian claim that distinguishes his thought from neoclassical welfare economics.
• XREF: This is the knowledge-problem argument that later became the epistemic foundation of the ‘thought collective’ — connects to Hayek’s ‘use of knowledge in society’ strand paid off in later chapters. — connects to: Hayek grounded free-market economics in a theory of human ignorance — Angus Burgin, The Great Persuasion: Reinventing Free…, 278; Hayek grounded negative rights in utilitarian market efficiency, not natural law. — Quinn Slobodian, Globalists: The End of Empire and the…, 411; Hayek treated belief in market superiority as an article of faith, not rational demonstration. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 1887 (+9 more)

Broader Connections

• Hayek justified markets by dispersed knowledge, not happiness maximization #corroborates (0.97) — Philip Mirowski & Dieter Plehwe (eds.), The Road from Mont Pèlerin, 2195
• Hayek’s market argument rests on an epistemology of dispersed tacit knowledge #expands (0.90) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 72
• Hayek argued contextual individual knowledge cannot be statistically aggregated #expands (0.85) — Jessica Whyte, The Morals of the Market, 211
• Hayek saw the market as an unrepresentable knowledge network, not a contained machine #expands (0.85) — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 171
• Hayek located rationality in impersonal market processes, not individuals #expands (0.82) — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 223