Hayek: Technischer Fortschritt und Überkapazität

Hayek’s 1936 lecture treats “overcapacity” not as a narrow industrial problem but as a political idea: the belief that technical progress under competition either arrives too slowly or wastes capital by making usable equipment idle. Its thesis is that such apparent waste usually comes from uncertainty and from confusing technical with economic capacity, not from competition as such.

die Pflicht hat, sich in erster Linie mit den grundlegenden Ideen unserer Zeit auseinanderzusetzen

English translation: has the duty to engage first and foremost with the fundamental ideas of our time

The central question is whether competition adequately uses the welfare gains opened by technical progress, or whether a planned economy could multiply income. Hayek’s answer begins with ignorance. Any system works toward a future it cannot fully foresee; a planning authority may gather information, but it is not endowed with superior judgment. Its apparent advantage often lies only in its power to force consumers to accept its choices.

keinerlei Grund besteht anzunehmen, daß eine zentrale Planungsbehörde über mehr Wissen oder Voraussicht verfügen würde als der individuelle Unternehmer.

English translation: there is no reason whatsoever to assume that a central planning authority would possess more knowledge or foresight than the individual entrepreneur.

The first analytical movement concerns inventions. If competition fails to adopt cost-saving techniques, Hayek attributes this not to competition but to its restriction, especially monopoly and patent power. The sharper accusation is the opposite: that competition introduces innovations too fast, scraps still-serviceable machines, and thereby creates overcapacity. Against this, Hayek distinguishes capital costs from operating costs. Old plant should remain in use so long as the total cost of the new method exceeds the old plant’s mere operating cost. Only when the new method’s full cost falls below that operating cost is scrapping economically justified.

Das neue Kapital wird also nicht verwendet, um das alte und verlorene zu ersetzen, sondern um an anderen Produktionsfaktoren zu sparen.

English translation: The new capital is thus used not to replace the old and lost capital, but to economize on other factors of production.

This is the lecture’s conceptual core. New capital is not a duplicate of the old machine’s service; it economizes on labor, raw materials, or other scarce means and releases them elsewhere. The visible survival of unused equipment is therefore not proof of waste. Hayek’s decisive move is to separate technical capacity from economic capacity: a machine may still be physically able to produce, yet no longer be worth using.

Obwohl technisch die Produktionskapazität noch besteht, ist sie wirtschaftlich verschwunden, und das findet auch darin seinen Ausdruck, daß die Anlagen ihren Wert verloren haben.

English translation: Although technically the productive capacity still exists, it has disappeared economically, and this finds its expression in the fact that the plants have lost their value.

From this follows his attack on “capital preservation” as a policy principle. Capital goods matter because they render useful services, not because past expenditure has been embodied in them. To protect railways against automobiles, or state-owned assets against devaluation, is to turn a means into an end and to make society pay for obsolete arrangements.

ein Volk ärmer und nicht reicher macht.

English translation: makes a nation poorer, not richer.

Hayek then extends the argument to product differentiation and imperfect competition. Proposals for standardization promise lower costs by forcing consumers toward fewer variants, but Hayek asks who is entitled to decide that brand loyalty, taste, or habit is irrational. If uniformity truly benefited consumers, producers could prove it through lower prices; compulsion reveals a planner’s substitution of his valuation for theirs.

ich wenigstens kann mich nicht für die Idee begeistern, daß jemand anderer für mich entscheiden soll, was mir gefallen oder schmecken soll und was nicht.

English translation: I, at least, cannot warm to the idea that someone else should decide for me what I ought to like or find tasty and what not.

The later sections turn from the origin of idle capacity to its effects. Not every unused plant is waste: daily and seasonal fluctuations can make intermittent use rational, and large seasonal capacity may save working capital otherwise tied up in inventories. Hayek’s paradox is that scarcity of capital can itself leave fixed plant idle. This also undermines empirical studies that sum the technical reserves of individual industries and infer a possible national output gain; they ignore that expanded production requires labor, materials, and capital drawn from other uses.

Kapitalmangel dazu führen kann, daß die vorhandenen Kapitalanlagen nicht voll ausgenützt werden können

English translation: a shortage of capital can lead to the existing capital investments not being fully utilized

The conclusion applies the same reasoning to investment after crises and to state-led modernization. Idle old capacity need not block new investment, since much of it may be obsolete, badly located, or unable to cover operating costs. Nor is technical modernity enough: engineers’ preference for the newest plant must be checked by profit-and-loss calculation as a social test of economy. Hayek concedes that this may sound like a utopian laissez-faire standard, yet he defines the academic economist’s role precisely as resisting fashionable technocracy and preserving the distinction between technical possibility and economic reason.

die Vernunft zu vertreten, ohne Rücksicht darauf, ob sie in naher Frist Wirkung haben wird.

English translation: to advocate reason, regardless of whether it will take effect in the near term.