Friedrich August von Hayek

Friedrich August von Hayek set essential new accents in the modern economic theory of Ordnungspolitik, as worked out by the Freiburg School.

In particular, he expanded that approach into a comprehensive theory of the functional conditions of the market order and of the prerequisites of a free social order in general.

Like no other academic of the 20th century, he promoted and influenced research in the following areas:



Preservation and protection of the freedom of the individual have to be the unconditional objective of all government policy and, therefore, must also define the restraints on such policy.

Market Economy

Only the market economy is a free economic order, for only in the market economy can human beings set their own goals and pursue these through actions of their own choice. Furthermore, the market economy, better than any other known economic order, creates general prosperity and promotes an efficient allocation of resources.


The main problem in the coordination of individual economic actions is that knowledge about relevant economic matters is very limited and dispersed among many individuals. An economic order will, therefore, be the more successful, the better it makes such individual knowledge accessible to others and the more it helps to discover new knowledge. In the market economy competition causes individuals to use their individual skills and their specific knowledge in an especially intensive manner, and induces them to acquire and to utilize new knowledge as quickly as possible: Competition is a discovery procedure.

Social Progress

Social progress relies essentially on dynamic ventures of individuals to modify existing conditions and on the capacity of citizens to react flexibly and quickly to changed circumstances. In this respect, the most important incentives are competition and the prospect of individual profit. A society that eliminates competition or that socializes profits destroys its own dynamic evolution. In the long run this leads to a paralysis of all progress and to social decline.


Modern democracies are exploited by lobbies that pursue special interests at the expense of society as a whole. Politicians are frequently defenceless, because they are dependent on these special interest groups in order to gain a majority for their own political goals. The result is an impenetrable tangleof privilege and discrimination. This erosion of the democratic principle can only be stopped by a fundamental reform of democracy: Government must be deprived of those instruments of power whereby it can serve special interests.