Epistemic problems in Hayek’s defence of free markets

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Friedrich von Hayek’s classical liberalism argued that free markets allow individuals the greatest opportunity to achieve their ends. This paper develops an internal critique of this claim. It argues that once externalities are introduced, the forms of economic knowledge Hayek thought to undermine government action and orthodox utilitarianism also rule out relative welfarist assessments of more or less regulated markets. Given the pervasiveness of externalities in modern economies, Hayek will frequently be unable to make comparative welfarist claims, or he must relax his epistemic assumptions and allow for greater government action than his classical liberalism would wish to accept.
Original languageEnglish
JournalEconomics and Philosophy
Early online date23 Feb 2024
Publication statusE-pub ahead of print - 23 Feb 2024


  • Knowledge problems
  • classical liberalism
  • externalities
  • indirect utilitarianism
  • welfare comparisons


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