Hayekian Competition Policy – A Historical Perspective

Abstract

Friedrich A. Hayek's (1899–1992) work on competition policy has been neglected. He saw competition as a dynamic market process that disseminates knowledge through prices in a world of relative ignorance operating under the rule of law. Hayek proposed several reforms consistent with his evolutionary liberalism which contrasted with the more dirigiste views of fellow liberals including those who later went on to form the Chicago School. I discuss Hayek’s general view of the ‘monopoly problem’ and his continued advocacy of reforms of corporation and patent laws, reduced government protectionist policies and the role of antitrust. I trace the development of Hayek’s views and how they influenced Chicago economists, particularly Aron Director. The discussion is placed in a historical context and compared to the development of Ordoliberalism, Henry Simons' positive liberalism and the evolution of the Chicago School. The relevance of Hayek’s thinking to the current debate on the objectives and role of antitrust is drawn out.

Keywords: Hayek, competition, Chicago School, liberalism, free-market, antitrust, Director, Mon Pelerin, monopoly, Ordoliberalism, Brandies, Stigler, Austrian

JEL Classification: B20, B25, B53, D23, D41, K21, L40, P22