The archive.

Before the knowledge economy could be measured, someone had to decide what counts as knowledge-producing activity—otherwise the category would swell to include everything or shrink to nothing. Machlup's foundational answer distinguishes the stock of knowledge held at a moment from the flow disseminated over time, and locates economic significance not in private discovery but in costly circulation: teaching, publication, research, professional service. He separates knowledge industries, defined by their output, from knowledge occupations, defined by the work performed in any industry whatsoever, and ranges across the types and qualities of knowing—practical, intellectual, pastime, spiritual, even unwanted. Opening an eight-volume expansion of his 1962 study, this first volume assembles the conceptual architecture—stock versus flow, generation versus dissemination, industry versus occupation—on which later analyses of human capital and information services would rest.

Generation of knowledge without dissemination is socially worthless as well as unascertainable.

Schumpeter’s later enthusiasm for macroeconomics and econometrics makes his early defence of methodological individualism an unexpected encounter. In this brief preface, first published in 1980 and reprinted here in 2013, Hayek introduces an English translation of a chapter from Schumpeter’s 1908 book. He reads it as a distinctly Austrian contribution that its author subsequently abandoned, and cautiously suggests that Schumpeter’s changed convictions explain his reluctance to have the first book translated. Hayek’s interest is not simply in claiming Schumpeter for a school: it is in preserving the value of an argument despite its author’s later departure. The preface offers a compact corrective to reading an economist’s early work through the lens of his mature reputation.

Agreement that inflation has monetary causes need not imply agreement about its cure. In this 1980 letter to The Times, republished here with editorial notes, Friedrich August von Hayek defends the quantity theory of money while rejecting Milton Friedman’s fixed money-growth rule and the gradual reduction of inflation. His sharpest claim concerns the cost of delay: because inflation sustains unprofitable businesses only while accelerating, he argues, slowing it must bring failures and unemployment, and gradualism merely prolongs the suffering. The letter exposes a concrete division among advocates of monetary restraint over rules, timing and political endurance. The later editorial notes add a revealing counterpoint: Thatcher’s government pursued gradual disinflation and retained power, contrary to Hayek’s prediction that prolonged adjustment would prove politically unsustainable.

Pigou, Keynes, and Jöhr had built the business cycle partly on waves of optimism and pessimism, and Haberler begins there to stage a wider reckoning with rational expectations at the moment it was reshaping macroeconomics. He grants the new school its central insight, that anticipated inflation erodes any stimulus and no permanent Phillips-curve trade-off exists, but rejects its strong claim that systematic monetary and fiscal policy touches only nominal variables. That neutrality, he argues, assumes homogeneous, model-consistent agents and instantly clearing markets, and so neglects downward money-wage rigidity, unions, and contracts. Invoking Arrow against shared-model assumptions and Barro on the 1973-74 oil shock, he defends limited monetary accommodation when nominal wages cannot fall. His preferred synthesis is Fellner's credibility hypothesis: disinflation works only when wage- and price-setters believe the authorities will persist.

But money illusion is a fairly hardy plant.

A correction of economic terminology becomes an argument about the political limits of austerity in Hayek’s short letter to The Times of March 29, 1980. Reducing inflation is not deflation, he insists, though its effects may be similarly painful. Rather than use that distinction to promise an easy adjustment, Hayek argues that a severe depression is unavoidable—and that prolonging the process over five years would be politically untenable. His demand for rapid monetary restraint leads to an equally compressed timetable for restoring government finances. The letter shows how he connects conceptual precision with a stark judgement about how long a government can sustain painful policy, without specifying the fiscal measures required.

I do not deflate a bladder or balloon by blowing a little less strongly into it.

'Every man is free to do that which he wills, provided he infringes not the equal freedom of any other man' — Spencer made this formula the axis of his politics, and Hazlitt's chapter treats it as a powerful anti-coercive instinct yet a rule too vague for the weight it must carry. Equal freedom, he objects, defines liberty better than justice unless aggression, fraud, and legitimate competition are carefully distinguished; all practicable liberty is liberty under law. What Hazlitt prizes are Spencer's strikingly modern warnings: that democratic majorities use public agencies to shift costs onto minorities, that hidden taxation corrodes political responsibility, and that legislators mistake society for a manufactured object rather than an evolved order of voluntary cooperation — with only Auberon Herbert beside him against the collectivist tide.

The average legislator, equally with the average citizen, has no faith whatever in the beneficent working of social forces, notwithstanding the almost infinite illustrations of this beneficent working.

Hazlitt continues his inquiry into the proper limits of government by turning from Nozick to John Stuart Mill, a thinker raised in the laissez-faire tradition whose exceptions, he contends, quietly dismantle any stable boundary around the state. Mill sorts government's work into 'necessary' functions — courts, inheritance rules, coinage, weights and measures, contract enforcement — and 'optional' ones whose expediency stays open; but the optional list swells with compulsory education, protection of children and the insane, limits on working hours, poor relief, and ceilings on monopoly transport. Each concession looks humane, yet together they normalize discretion. The fatal move, for Hazlitt, is Mill's warrant for any task private persons could perform but will not — a formula loose enough to sanction nearly any coercion, and, he argues, a seed of the modern welfare state.

After having warned us that the state may carry out its delegated powers very badly, he assumes in particular instances that they will carry out these powers very well.

Prices can rise faster than the money supply without disproving a monetary explanation of inflation: that is Hayek’s reply to Wynne Godley in this brief 1980 letter to The Times, republished here in 2022. His explanation turns on expectations: anticipating further price rises, people reduce their cash holdings, increasing the velocity of circulation. Yet this defence of monetarism offers no promise of painless recovery. Hayek judges that past inflation has probably made depression unavoidable and urges that the adjustment be completed as quickly as possible. The letter makes a sharp distinction between explaining inflation and escaping its consequences, while leaving the case for inevitable depression asserted rather than developed.

Every postwar slump revived the same dread, and by 1980, amid inflation, recession, a weak dollar, and a soaring gold price, it returned with fresh urgency. Whether another Great Depression could strike, Haberler answers by separating trigger from amplifier. The catastrophe of the 1930s, he argues, was largely homemade, a cumulative monetary contraction the Federal Reserve could have arrested, worsened by a fragile unit-banking system, rigid gold-standard parities, and beggar-thy-neighbor protection. Drawing on Friedman and Schwartz, he rejects the Marxist collapse theory, Keynesian secular stagnation, and the Austrian overinvestment account associated with Hayek and Robbins, noting that Robbins himself recanted. A deflationary depression on that model he judges almost inconceivable now, given deposit insurance and flexible exchange rates; the real modern danger is inflationary recession, policy panic, and the protectionism that once turned national rescues into collective ruin.

Money GNP fell by 16 percent, real GNP by 13 percent, industrial production by 32 percent and unemployment shot up from 11 percent in March 1937 to 20 percent in June 1938—all in the short span of 13 months.

Admiration is not advice: this is the distinction Hayek draws in his brief letter to The Times, published in 1981 and reproduced here in the 2022 edition. Correcting his description as one of Margaret Thatcher’s economic advisers, he affirms his admiration for her principles while declining any claim to guide her particular decisions. His reason is precise: limited knowledge of political possibilities. The letter offers a compact clarification of Hayek’s public relationship to Thatcher, showing how warmly expressed intellectual affinity can coexist with restraint about the practical choices of government.

Why should sound economic arguments prevail when political privileges reward those best organized to defend them? In this review of Ludwig von Mises’ Economic Policy, Murray N. Rothbard praises his teacher’s accessible defense of capitalism but challenges the adequacy of his political analysis. Rothbard endorses Mises’ account of markets as systems of mass provision rather than fixed privilege, then asks why politicians should be expected to rise above ordinary self-interest. Sugar protection supplies the concrete test: producers have a concentrated stake in lobbying, while consumers bear costs too dispersed to command sustained attention. The review’s interest lies in this turn from intellectual allegiance to criticism. For Rothbard, economic education needs both an account of institutions that favor intervention and a moral argument against special privilege.

Can protecting existing jobs obstruct lasting recovery? In this brief letter to The Times, published in 1981 and republished here in 2022, Hayek answers the 364 economists who challenged the Thatcher government’s policies. He argues that inflation has sustained particular kinds of employment that monetary stability cannot preserve: unemployment during stabilization therefore exposes, in his account, an inherited distortion rather than proving the policy mistaken. His defence is uncompromising—he faults the government for moving too slowly and expects recovery within months once inflation stops. The letter sharply distinguishes preserving jobs now from securing durable employment, while leaving the practical transition and its social costs largely unexplored. An editorial note also qualifies his polemic by identifying wording he attributes to the economists that their letter did not use.