Hayek and Lindahl on disequilibrium dynamics

This chapter deals with the contributions of Hayek and Lindahl to the development of a dynamic theory. The two authors first made a point which was innovative in the late 1920s and early 1930s, when reference to stationary conditions was dominant. The point was that equilibrium analysis could be meaningful only if it included the role played by individual agents’ expectations about an uncertain future; introducing the notion of intertemporal and temporary equilibrium would serve this purpose. While Lindahl’s approach to disequilibrium may appear more remarkable than Hayek’s discussion of how order may emerge, Hayek’s main point was that a sound analysis of disequilibrium adjustment could not be provided until the processes through which knowledge was acquired and communicated were fully understood.