Prices and Production: A Few Historical Notes

      Prices and Production arose, not as a book in and of itself, but out of a series of four lectures that Hayek gave during the 1930-1931 session of the LSE about Hayek’s recent contributions to, in his own words, “theoretical economics”. This provided him a unique, and unprecedented opportunity to give his continental economics an English audience that had been under the sway of the Neoclassical economic paradigm. Despite the many inevitable oversimplifications, and defects that Hayek made during this exposition, it lead to him having a greater desire to publish his ideas than would have otherwise occurred.

      Once the first edition was published, Hayek admitted that he was able to profit from the criticisms that came along with it and hence was able to refine his theories faster than had he worked on the problems alone. In addition, the first publication displayed that he needed to introduce to his readers the core Austrian conception of capital whose underpinnings were not fully comprehended, or even known in England. Furthering the problems with this edition, the compression of the material into the original form had bred misreadings that a more comprehensive analysis would have easilly prevented. However, when all the feedback on the first edition had been received, he felt neither ready to enlarge the work into a work adequate enough to elucidate the chosen problems, nor ready to see Prices and Production be returned in the same form.  

      Eventually, around 1934, Hayek finally went about the task of improving the first edition. To do this, he chose the middle course of editing his work: he kept the original text the same, but he added further explanations and elucidations where they seemed necessary, and further elaborations of certain concepts. An advantage that Hayek had with publishing the second edition was that many of Hayek’s works from which Prices and Productions was a continuation from (e.g. The Monetary and Trade Cycle, and “The Paradox of Saving”) were translated into English just prior. The access to these publications gave the English readers more of an understanding of the foundations upon which this book had been built upon. Nevertheless, there were still some matters that would present difficulties for the reader because of the time constraint put on his lectures, and the fact that to clear them up would entail writing an entirely new composition.

To clarify the potential dilemmas found in his work, Hayek decided to forewarn the reader about them during the introduction of the second edition. The next blog post shall be about these forewarnings.