Competition as an AmbiguousDiscovery Procedure: A Reappraisal ofHayek’s Epistemic Market Liberalism

Epistemic arguments play a significant role in Hayek’s defense of market liberalism. Hisclaim that market competition is a discovery procedure that serves the common good is acase in point. The hypothesis of the markets’ efficient use of existing knowledge issupplemented by the idea that markets are also most effectively creating new knowledge.However, in his assessment Hayek neglects the role of new technological knowledge. Heignores that the discovery procedure induces not only price and cost competition but alsocompetition by innovations. Thence he overlooks the ambiguity that follows from theunpredictability of the consequences of innovations. This fact is shown to challenge theepistemic foundations and the stringency of Hayek’s version of market liberalism.