Hayek on Economics and Knowledge

In 1936, Friedrich Hayek gave a lecture that was published one year later as an essay titled “Economics and Knowledge.” In this essay, Hayek explains that economics is, at its core, a science of how knowledge is communicated and acquired. Hayek outlines a system of economics that relies not only on the division of labor, as Adam Smith discussed, but on the division of knowledge as well. The ability to mobilize knowledge in a decentralized fashion is a virtue of market economies. This video also covers the concept of equilibrium, the “rational expectations” movement, and what division of knowledge means for economic data.