The economics of information, market socialism and Hayek’s legacy

Hayek's advocacy of capitalism has been recently questioned by a new generation of models of market socialism. These models take stock of the recent developments in the economics of information which are critical of the Walrasian view of the market mechanism. This paper focuses on Hayek's interpretation of the market mechanism by making reference to the main issues which emerge from the socialist calculation debate in the 1930s. lt is argued that Hayek's notion of knowledge can be applied to an analysis of the functions performed by competitive markets which is compatible with the post-Walrasian developments of the economics of information. As a result, a tentative assessment of the relevance of Hayek's arguments for the new generation of market socialism models is provided.