Thursday, October 29, 2020

Hayek Secured the Capital-Theoretic Foundation of Austrian Theory By Replacing “Average Period of Production” with the “Structure of Production”

 By the time that Hayek published his next major theoretical work, The Pure Theory of Capital, the world was at war. Few in the profession even noticed the book. Furthermore, it was clear to Hayek that even after a prodigious effort he had not gotten very far. True enough, he had been able to clear away Böhm-Bawerk’s “average period of production” and replace it with the far more complex notion of a structure of production, thereby securing the capital-theoretic foundation of Austrian theory. But he had made no further progress towards building on this new foundation a fully dynamic theory of the cycle. Hayek never returned to this task, hoping that it would be completed by others. It remains unfinished.

—Bruce Caldwell, ed., editor’s introduction to The Collected Works of F. A. Hayek, vol. 9, Contra Keynes and Cambridge: Essays, Correspondence, by F. A. Hayek (Indianapolis: Liberty Fund, 1995), 42.


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