Bylund, “Austrian Economics and Knowledge”

by Stephan Kinsella on November 4, 2026

Interesting new paper: Per L. Bylund, “Austrian Economics and Knowledge,” Q. J. Austrian Econ. 29, no. 2 (2026): 1-24.

Abstract: This article develops a typology of knowledge in economics, drawing on the works of Carl Menger and F. A. Hayek, to clarify how different types of knowledge affect production, coordination, and entrepreneurial profit. It organizes economically relevant knowledge along two axes—the physical world versus the catallactic world, on the one hand, and general versus applied, on the other—and adds a temporal dimension to distinguish knowledge problems from uncertainty. The framework reveals that while physical-world knowledge sets the boundaries of what can be produced, catallactic-world knowledge guides what should be produced and how. The article applies this typology to Austrian theories of the market process, showing that uncertainty arises when value knowledge is unavailable at the time of action and that entrepreneurial profit stems from bearing this uncertainty rather than from superior knowledge. This conceptual separation advances the understanding of economic causality and the distinct functions of knowledge in market processes.

See also Kinsella, “Bylund’s Typology of Knowledge: Physical vs. Catallactic; General vs. Applied,” PFS Blog (Aug. 13, 2026).

I steered Claude to write some commentary on this–have not reviewed yet completely so might not agree with it all but it has good references to other related writing of mine.

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Per Bylund has a new article in the Quarterly Journal of Austrian Economics, “Austrian Economics and Knowledge.” ¹ He argues that Austrians use the term “knowledge” loosely, and he offers a typology to sort it out. I first reacted to it in an update to my post on Lockean creationism, excerpted on the PFS blog, and Bylund and I had a brief exchange about it on X. ² Here I pull these together: a summary of his argument, my earlier reaction and his reply, and some further thoughts on how his typology relates to my own view of the role of knowledge in human action. A list of my related writing follows.

1. Bylund’s Typology and Thesis

Bylund sorts economic knowledge along two axes: knowledge of the physical world vs. the catallactic (market) world, and general vs. applied knowledge. This gives four types: scientific knowledge (general, physical), technological knowledge (applied, physical), value knowledge (general, catallactic: what consumers will value, and thus what to produce), and productivity knowledge (applied, catallactic: how to produce it economically). Physical-world knowledge tells us what is possible; catallactic knowledge tells us what should be done.

He then adds time. Scientific, technological, and productivity knowledge exist, however imperfectly, when production decisions are made. Value knowledge does not. It comes into being only later, when consumers value and buy (or refuse to buy) the product. So the producer’s core problem is not ignorance but uncertainty. Bylund uses Mises’s evenly rotating economy to separate the two: in the real world, actors face both knowledge problems and uncertainty; in the transition to the ERE, only knowledge problems remain; in the ERE itself, neither. Entrepreneurial profit and loss, then, stem from bearing uncertainty, not from superior knowledge; returns to knowledge show up instead as wages and quasi-rents.

Bylund applies this to the Mises-Hayek “dehomogenization” debate. Hayek’s market is a mechanism for coordinating dispersed, present productivity knowledge via prices. This resembles Mises’s transition period more than the real market process, and it largely assumes away value knowledge, and with it uncertainty. Mises’s market process, by contrast, is forward-looking, driven by entrepreneurs who appraise uncertain future demand with the aid of economic calculation.

2. My First Reaction, and Bylund’s Reply

My core point in the Lockean creationism post was that action is necessarily guided by knowledge, including knowledge of causal laws and contingent facts about the world, and that scarce means, not knowledge, are what can be owned. That point does not depend on sorting knowledge into further types. So, as I wrote, “Bylund’s breakdown does not matter for the general point I am making,” though it is interesting.

I also doubted that his “neat and apparently comprehensive 4-quadrant chart” is fully rigorous or exhaustive. As I put it, “when someone says here are the X categories of something, my hackles are raised.” Some dichotomies are exhaustive by construction, like jogging vs. not jogging, or movables vs. immovables in Louisiana law, where “movable” is simply the residual category. Others are not: not every liquid is coffee or water. Many familiar economic and legal categories are useful but not sharp. Are all goods present or future goods, or producer or consumer goods? Where does money, perhaps a sui generis good, fit? Is every action either labor or leisure, and what if you enjoy your job? The public-private goods dichotomy is not sharp either, and the civil law, sensibly, recognizes innominate contracts alongside the named ones. ³

Likewise with knowledge. Is all knowledge either general or applied, and either physical or catallactic? Where do Rothbard’s “recipes” fit? The term does not appear in Bylund’s paper; I would guess causal laws go in his first quadrant and recipes in the second. And the chart seems to leave out much of what actually guides action and forecasting: contingent factual data (say, the number of eggs produced worldwide each day, which is neither science nor technology but just a fact), history, knowledge of existing institutions and how states operate, economic and philosophical knowledge, knowledge of other people’s character and preferences, and intuition or “the mythical, unteachable ‘verstehen’” of the entrepreneur. ⁴ Every actor is an entrepreneur, because the future is uncertain, knowledge is limited, and people are fallible. The actor weighs all of this in choosing ends, means, and recipes, and in deciding which causal laws to treat as true and relevant. That is a matter of judgment, and I doubt it can be captured by a 2×2 chart.

Bylund replied that he didn’t disagree with what I said about knowledge, but that it is “too vague to make the point.” Property is necessary for prices, and prices for economizing, but Mises and Hayek rest those prices on different foundations. “The problem of uncertainty is a matter of the value produced,” which is the goal of economic action and the standard for judging economizing choices. And he said it is “somewhat misleading to reference Mises’s ‘cannot know’ as a knowledge problem” in the same sense as Hayek’s. ⁵

3. Means, Knowledge, and Judgment

I think the article and the exchange show that Bylund and I are mostly talking past each other, not disagreeing. My view of the structure of action is simple. To act, you need causally efficacious scarce means, and knowledge to guide your use of them. That knowledge goes by many names: information, data, ideas, know-how, Rothbard’s “recipes,” Hayek’s “fund of experience.” It includes bare facts and statistics, technical recipes and engineering methods, and the general laws of physics and the other sciences. It is all part of one bundle, and it is up to the actor to judge which of the knowledge he has is relevant, accurate, and efficacious for his purposes. What matters, for praxeology and for property theory, is the distinct roles of means and knowledge in action: means are scarce and can be owned; knowledge is nonscarce and cannot. ⁶

This is why I have long been skeptical of attempts to draw hard lines between innovation and invention, invention and discovery, data and information, and so on. As I put it in an earlier post, the fundamental point “is not between types of information or knowledge,” but between the distinct roles of scarce means and knowledge in human action: actors “employ scarce means, guided by knowledge.” ⁷ Such distinctions may be loosely useful for some purposes, but they are not rigorous, and they are irrelevant to the question of what can be owned.

Bylund’s typology is in the same category. It is neither confused nor off track; it is answering a different question. He is not asking what action requires, or what can be owned. He is asking what a producer needs to know to decide what to produce and how, in order to clarify the market process and the difference between Mises and Hayek. For that purpose his categories can be useful heuristics, and my generality may well be “too vague” for his purposes. But it is general for a reason: for the theory of action and of property, the type of knowledge does not matter. All four of his types are nonscarce, all serve as guides to action, and the actor must judge their relevance. “Productivity knowledge,” such as how to divide labor or which inputs minimize cost, is just another recipe, no different in kind from an engineering method. And “general vs. applied” is a spectrum, not a dichotomy. Nothing in the typology changes the means-knowledge structure of action, or the case against IP.

Bylund has also defended the innovation-invention distinction, arguing that it “is only confusing if one fails to recognize the entrepreneurship necessary to make something (anything) valuable.” ⁸ True enough, but this is not a distinction between two types of knowledge. It is the distinction between knowledge and action: the entrepreneur employing scarce means, guided by knowledge, under uncertainty. An invention is a recipe; bringing it to market is an action. The means-knowledge framework already captures this.

4. “Value Knowledge” Is Not Knowledge

Here is where I think Bylund and I actually converge. His most interesting point is the temporal one, and his own reply to me makes it: Mises’s “cannot know” is not a knowledge problem like Hayek’s. I agree. But then the label “value knowledge” gets in the way. Bylund notes a seeming paradox: value knowledge is supposed to guide production, yet it does not exist until after production. The paradox dissolves if we stop calling it knowledge. Knowledge that does not yet exist cannot guide anything. What guides the entrepreneur is his expectation of future valuations and prices: a judgment he forms using whatever knowledge he has, including past money prices, data, and his understanding of other people. As Mises put it, “understanding is the only appropriate method of dealing with the uncertainty of future conditions.” ⁹

Put that way, Bylund’s thesis is correct, and it is essentially Mises’s. Action always aims at an uncertain future. Money prices are historical exchange ratios that serve as the starting point for appraising future prices; they are not carriers of “encoded” knowledge. The calculation problem is not a knowledge problem. And Bylund’s point that property is needed for prices, and prices for economizing, fits what I have long argued: property rights in scarce means, knowledge, and money prices are three distinct and important ingredients. The first two are needed for any successful action; money prices are needed for economic calculation. ¹⁰ So I welcome Bylund’s paper as a useful addition to the dehomogenization literature, even if the typology is not needed to make the point.

Two caveats. First, I would not draw too sharp a line between bearing uncertainty and having knowledge. The successful entrepreneur profits because his judgment of the future was better than his rivals’, and that judgment is informed, though not determined, by his knowledge. Second, Bylund’s framework should not be read to downplay the role of knowledge in human progress, as I noted in response to his earlier piece “The Impotence of Knowledge in Economics.” ¹¹ Physical-world knowledge may “only” set the boundary of what is possible, but that boundary has expanded enormously as the fund of experience has grown, and that growth is a major reason we are so much wealthier today. Which is exactly why restricting the spread of knowledge with patent and copyright is so destructive.

My Related Writing

The Mises-Hayek debate: calculation vs. knowledge

“The Great Mises-Hayek Dehomogenization/Economic Calculation Debate,” StephanKinsella.com (Feb. 8, 2016)
“Knowledge vs. Calculation,” Mises Blog (July 11, 2006)
“Knowledge, Calculation, Conflict, and Law,” Q. J. Austrian Econ. 2, no. 4 (Winter 1999): 49–71, revised as ch. 19 of Legal Foundations of a Free Society (Houston: Papinian Press, 2023) (LFFS)
“Legislation and the Discovery of Law in a Free Society,” J. Libertarian Stud. 11, no. 2 (Summer 1995): 132–81, revised as LFFS, ch. 13; see esp. the introductory note to Part III.C, p. 316 (now rejecting Leoni’s Hayekian, knowledge-based analogy between central economic planning and legislation)
“Economic Calculation Under Socialism,” App. I in Protecting Foreign Investment Under International Law: Legal Aspects of Political Risk (Dobbs Ferry, N.Y.: Oceana Publications, 1997)
“Hayek, IP, and Knowledge,” Mises Blog (Jan. 16, 2009)
“Verstehen and the Role of Economics in Forecasting, or: If You’re so Rich, Why Aren’t You Smart?,” StephanKinsella.com (Sept. 1, 2009)
“Don’t tell me to read Hayek,” StephanKinsella.com (Sept. 30, 2025)