The Review of Austrian Economics, 17:4, 307–321, 2004.
2004 Kluwer Academic Publishers. Manufactured in The Netherlands.
Monetary Calculation and the Unintended Extended
Order: The Misesian Microfoundations of the
Hayekian Great Society
STEVEN HORWITZ firstname.lastname@example.org
Department of Economics, St. Lawrence University, Canton, NY 13617, USA
Abstract. In the last decade, a small group of Austrians has attempted to argue that there are crucial distinctions
between the Misesian and Hayekian lines of inﬂuence, and that the former is the superior. This paper argues that
the group has both misread Hayek and underplayed the similarities of Mises and Hayek. More speciﬁcally, it sees
Mises’s emphasis on monetary calculation and goal-driven human action as providing the microfoundations for
Hayek’s emphasis on spontaneous order and the epistemic properties of the price system. The paper also disputes
the claim that Hayek held a “fully-informative,” neoclassical view of prices and explores the disequilibrium
foundation for Hayek’s understanding of the role of prices as knowledge surrogates. The relationship between
monetary calculation and cooperation in anonymity is discussed in the ﬁnal section.
KeyWords: Austrian economics, Ludwig von Mises, F. A. Hayek, knowledge, economic calculation, ideal
JEL classiﬁcation: B25, B41, B53.
Presidential addresses present opportunities to engage in some “Big Think” about the or-
ganization and its core ideas. One can engage in stocktaking and/or some forward-looking
vision. The argument below will attempt to do both. As the title suggests, this paper will
explore the two main lines of thinking, Mises’s emphasis on monetary calculation and
Hayek’s emphasis on spontaneous order, that have deﬁned Austrian economics for most
of the last 75 years, and it will argue that these two are connected in deep and important
ways. Arguing that Mises and Hayek are “connected in deep and important ways,” runs the
risk of being accused of stating the obvious. But in the very recent past, this point has not
been obvious at all to some who work in the Misesian tradition, as seen in the literature
attempting to “dehomogenize” Mises and Hayek that will be explored below (e.g., Salerno
1990, 1993, 1994). I wish to argue that modern Austrian economics both is and should be
the economics of both Mises and Hayek. In saying that, it is not that we need to just staple
together “what Mises said and Hayek said” and somehow have a full-ﬂedged approach to
economic and social phenomena. Rather, it is the work of both that provides the starting
An earlier version of this paper was the 2003 Presidential Address of the Society for the Development of Austrian
Economics, San Antonio, TX, November 2003. I thank those in attendance for helpful questions that have aided
in the revision process.