The Context of Context

F. A. Hayek's contribution to economic science is broadly remembered as relating to the “use of knowledge in society” but his contribution to economics of knowledge are often summarized differently. This paper emphasizes the contextual nature of the knowledge. Hayek says the market economy is capable of eliciting and utilizing in the process of coordinating economic activities. There is, however, a double meaning of context that is explored in this article. Hayek developed his argument about the use of knowledge in the context of the socialist calculation debate, and the aspect of knowledge he came to focus on was the contextual nature of knowledge in human action in markets, politics, law, and society. This paper traces out the development of Hayek's focus on the epistemic foundations of the complex coordination in an advanced market economy and shows that his critique of classical and market socialism led to a refined, subtle approach to understanding spontaneous order. Furthermore, it is precisely Hayek's focus on the role of institutions in creating the conditions for the utilization and transference of knowledge through the price system that continues to shape the progressive research programs in economic science and public policy analysis that is his legacy.

Read the article at Emerald Insight.