Bylund, “Austrian Economics and Knowledge”

[Cross-posted at StephanKinsella.com]

And update to Bylund’s Typology of Knowledge: Physical vs. Catallactic; General vs. Applied:

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.

Read more>>

1. Per L. Bylund, “Austrian Economics and Knowledge,” Q. J. Austrian Econ. 29, no. 2 (June 8, 2026): 1–24. [↩]
2. Kinsella, “Bylund’s Typology of Knowledge: Physical vs. Catallactic; General vs. Applied,” PFS Blog (Aug. 13, 2026), excerpting an update to idem, “Libertarian and Lockean Creationism: Creation As a Source of Wealth, not Property Rights; Hayek’s ‘Fund of Experience’; the Distinction Between Scarce Means and Knowledge as Guides to Action,” C4SIF Blog (May 6, 2025). [↩]