The Fallacy of the Mixed Economy

  • S. C. Littlechild


In 1974, Professor Friedrich Hayek was (jointly) awarded the Nobel Prize in Economics.1 Hayek is nowadays accepted as the leader of the so-called ‘Austrian School of Economics’. Over the last three years there has been an increasing number of references, in the press and the economics literature, to this school of thought. The influential American magazine Business Week, for example, has run two feature articles on the implications of Austrian ideas for macroeconomic policy. There have been several sessions on leading Austrians at professional economics meetings in the USA and, more recently, in Britain. A series of introductory weekend seminars in London and major American cities has attracted over a thousand participants. Exponents of the Austrian approach have themselves been on lecture tours to many universities, and a series of reprints and original papers in Austrian economics is now under way, sponsored by the Institute for Humane Studies.


Austrian Economic Austrian School Market Process Aircraft Noise Methodological Individualism 
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    For example, such IEA publications as L. M. Lachmann, Macro-economic Thinking and the Market Economy, Hobart Paper 56, 1973;Google Scholar
  2. 3a.
    F. A. Hayek, A Tiger by the Tail Hobart Paperback 4, 1972 (2nd edn, 1978); Full Employment at Any Price?, op. cit.; Choice in Currency, Occasional Paper 48, 1976; Denationalisation of Money, Hobart Paper 70, 1976 (2nd edn, 1978).Google Scholar
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    J. R. Hicks, Capital and Time: A Neo-Austrian Theory, Clarendon Press, Oxford, 1973. It may be noted, however, that Kirzner has taken issue with Robbin’s emphasis on ‘economising’ to the exclusion of ‘alertness’, and that even Hicks’s ‘neo-Austrian’ approach is associated rather narrowly with the Böhm-Bawerkian theory of capital.Google Scholar
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    F. A. Hayek, ‘The Theory of Complex Phenomena’, in Studies in Philosophy, Politics and Economics, Routledge & Kegan Paul and the University of Chicago Press, 1967. Cf. also Aristotle: ‘For it is the mark of an educated mind to expect that amount of exactness in each kind which the nature of the particular subject admits’ (Nichomachean Ethics, Book 1, Ch. 3).Google Scholar
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    [Early IEA studies of advertising reached broadly similar conclusions: Ralph Harris and Arthur Seldon, Advertising in a Free Society, 1959, and Advertising and the Public, 1962. — ed.].Google Scholar
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    Discussed at more length in G. H. Peters, Cost-Benefit Analysis and Public Expenditure, Eaton Paper 8, IEA, 1965 (3rd edn, 1974).Google Scholar
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    An incisive critique of Britain’s first national plan is in John Brunner, The National Plan, Eaton Paper 4, IEA, 1965 (3rd edn, 1969).Google Scholar

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© The Institute of Economic Affairs 1993

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  • S. C. Littlechild

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