Keys to Prosperity: A Hayekian View

In How Innovation Works, Matt Ridley argues that “Innovation is the child of freedom and the parent of prosperity.” This is actually quite a profound proposition to contemplate. It joins, I think, a group of core claims by economic thinkers from Adam Smith’s “division of labor is limited by the extent of the market” to Julian Simon’s “the ultimate resource is the human imagination.” F. A. Hayek had several such intellectual nuggets he invited readers to mull over in their effort to unlock the mysteries of the world. To many, Hayek is most well-known as a critic of socialism – so his intellectual nuggets are associated with negating rival ideas, such as explaining “why the worst get on top,” or his exploration of the “knowledge problem” that socialist societies would confront in the attempt to plan the economic system. But Hayek also had several important propositions about what makes a liberal order desirable, and how a market economy actually works.

Find the full article here.