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F. A. Hayek was a throwback to the time when economics was a part of philosophy, and the questions and approaches used by scholars were ecumenical. This paper asks a specific question: Was Hayek “really” a political scientist? Political science is the older discipline, and was traditionally concerned with society and norms as well as laws. The comparative analysis is mostly qualitative, though a quantitative comparison between citation patterns for Hayek and another “political” economist and Nobelist, James Buchanan, is also presented. My conclusion is that, to the extent that Hayek considered institutions that are collective and non-market (i.e., do not work primarily through the price mechanism), Hayek might indeed be considered to have made substantial contributions in political science. The fact that political scientists seem to disagree may say more about the discipline than the man.

The concept of “neutral money” has a long history in monetary theory and macroeconomics. Like a number of other macro concepts, its meaning has been subject to a variety of interpretations over the decades. I explore the way in which Hayek used this term in his monetary writings in the 1930s and argue that “neutrality” for Hayek was best understood as the idea that monetary institutions were ideal if money, and changes in its supply, did not independently affect the process of price formation and thereby create false signals leading to economic discoordination, and especially of the intertemporal variety. This view was rooted in his work on money and the trade cycle in the late 1920s and early 1930s and also bound up with his understanding of “equilibrium theory.” The importance of his concept of neutrality was that it served as a benchmark for judging the comparative effectiveness of different monetary regimes and policies. That use is still relevant today.

As Bruce Caldwell (2007, p. 1) notes, Hayek's classic text had a “decidedly inauspicious” beginning. In spring 1933, Hayek wrote a memorandum (Nazi socialism) to Sir William Beveridge – then Director of the London School of Economics – arguing that National Socialism represented the “culmination” (Hayek, [1933] 2007, p. 245) of earlier pro-socialist trends. As Hayek puts it, National Socialism was[The] ultimate and necessary outcome of a process of development in which the other nations have been for a long time steadily following Germany…The gradual extension of the field of state activity, the increase in restrictions on international movements of both men and goods, sympathy with central economic planning and the widespread playing with dictatorship ideas, all tend in this direction. (Hayek, [1933] 2007, p. 248, italics added)

Purpose – To show that Hayek's cognitive theory sheds light on Hayek's institutional theory.

Methodology/Approach – Although F. A. Hayek contributed richly to many fields of economics – from capital theory to monetary theory, and from institutions to spontaneous order – one theme is omnipresent in his work: the knowledge problem. This paper examines Hayek's work in psychology, The Sensory Order, and argues that there exist strong parallels between Hayek's cognitive and institutional theories.

Findings – Hayek's institutional (or social) theory makes a lot more sense when understood as a necessary consequence of his cognitive theory. Furthermore, Hayek's cognitive theory allows for rational individuals making choices that are socially embedded.

Research limitations/implications – Three Hayekian themes are explored: (1) institutional implications of limited knowledge; (2) learning and knowledge generation; and (3) mental models. The paper then uses a challenge within Hayek – the tension between microlevel methodological individualism and macrolevel institutional evolution – as a starting point toward resolving the lingering individual-culture methodological puzzle in contemporary economics. These are mere starting points for further research.

Originality/value of paper – Horwitz (2000) writes that “Hayek's thought will have come to fruition when the social sciences abandon rationalist and constructivist explanations of social phenomena in favor of ones that recognize the roles of tacit and contextual knowledge, institutional evolution, and spontaneous order. Such an approach would dramatically improve our understanding of the human mind.” This paper offers a step in that direction.

Purpose – To comment on how The Sensory Order by F. A. Hayek is understood within the context of Hayek's broader research program.

Methodology/approach – Earlier and current perspectives on The Sensory Order are surveyed, quoted extensively, and commented upon. An alternative framework for understanding The Sensory Order is offered and compared to the existing perspectives. Some textual and archival evidence are combined with insights from the history of thought literature to present how Hayek himself may have viewed the role of The Sensory Order in his broader research project.

Findings – Earlier and current perspectives on The Sensory Order are found wanting. The available alternative hypothesis – that Hayek's economics is foundational to his theory of mind – is presented as a more fruitful approach to motivate modern Austrian economics as a progressive research program.

Research limitations/implications – There is limited archival and source material available on this topic and apparently competing versions circulating. Such a discussion has a relatively small and narrow field of interest among scholars intimately familiar with one another's work.

Originality/value of paper – If correct, this chapter offers a unique and original perspective on how to perceive the insights from Hayek's The Sensory Order. It also reaffirms the role of methodological pluralism in progressing contemporary political economy.

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. We emphasize 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 we explore. 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.

Purpose – To explore lines of inquiry by Hayek and C. S. Peirce on sensation and cognition and Hayek's interest in Peirce.

Methodology – To compare Hayek and Peirce's relational interpretations of sensation and cognition.

Research limitations – The theories of both Hayek and Peirce on sensation and cognition are more extensive than can be addressed here. This exploration is more suggestive than comprehensive.

Findings – Both Hayek and Peirce emphasized the relational and abstract nature of human mental processes. Hayek viewed his contribution as overlapping with psychology while Peirce viewed his theory as being logically before psychology.

Social implications – The ideas of Peirce and Hayek imply that the traditional empiricist and rationalist epistemologies of cognition and sensation are limited and incomplete and thus embrace cognitive inefficiencies.

Originality/value of paper – Hayek's brief references and interest in the ideas of C. S. Peirce have not yet been explored to date.

F.A. Hayek’s famous critique of the socialist planned economy turned on the role of information in markets. In competitive markets, decision-making is decentralized and relies on locally available market signals. Decision-makers do not have to be omniscient or predict the future; they simply have to focus on market prices. By contrast, socialist planners face a much more demanding situation where they have to acquire and process vast amounts of information in a centralized fashion. The author revisits Hayek’s early work in light of the contemporary revolution in information technology, using recent research on organizational decision-making. The author argues that a great deal of market information is produced by public and private institutions, and includes much more than market prices. The boundary between tacit knowledge and formalized knowledge changes as IT enables the spread of the latter. Furthermore, the growing “knowledge economy” underscores the importance of intellectual property, and the legal institutions that support it. Overall, some of Hayek’s early insights hold up well while others need updating.