How Compelling Hayek's Conclusions?

How compelling are Hayek 's epistemological arguments against central planning and in defense of market economies? Introduction This paper discusses the epistemological arguments of Austrian born economist Friedrich Hayek against central planning and in defense of market economies. Personally, I believe that Hayek’s views in this regard are logical and theoretically well grounded. Therefore, throughout the essay I will try to demonstrate the soundness of Hayek’s arguments. This essay is consists of two major parts. The first part of the essay attempts to support Hayek’s arguments against central planning using different scholars’ and academics’ opinions. The second part support Hayek’s arguments in favor of market economies and several controversial opinions. In the 1930s two schools of political economy emerged among the scholars. The first school supported socialist ideology of centralized planning by defending dominant influence of the government for the economy. This school was represented by F.M. Taylor, O. Lange, A.P.Lerner, and H.D. Dickenson. Second school was represented by well-known Austrian economists like Ludwig Mises and Friedrich Hayek who criticized the socialism its centrally planned economy. Hayek believes that socialists target and programmes are impossible to achieve or accomplish in practice (Hayek, 1988, p.7; Kley, 1994, p.3). Socialist regimes were activated after the World War I when fighting countries have created military economies based on the principles of centralized and collective planning. Nevertheless, even after the war planning was used by countries to solve the problems of economy in the peacetime. Hayek stated that the supporters of “socialist economy” promised more than they could ever supply because all the knowledge required to regulate the economy must be gathered and worked out by sole government. This assumption neglects the fact that contemporary society is set up on widely

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