Critical rationalism and institutional change in Hayek

Abstract

The institutional analysis promoted by F. A. Hayek seeks to understand how human
action and coordination among individuals occur in an environment where the knowledge
held by each person is incomplete and not fully transmittable. In such an environment,
the institutional framework plays an important role in conditioning, at least partially, the behavior
of members within a spontaneously emerging social order. In light of this, the objective
of this article is to present Hayek’s evolutionary institutional approach by organizing the
discussion proposed by the Austrian economist on the subject. To do so, it will discuss
Hayek’s distinction between critical rationalism and constructivist rationalism. It will also
address Hayek’s explanation of institutional change and delve into his evolutionary approach
to the social sciences, as opposed to the natural sciences.

JEL Classification: B25; B31; B53.