Robert Solow is here quoted with: “The Good Hayek was a serious scholar who was particularly interested in the role of knowledge in the economy (and in the rest of society).” (See intro)
This is a misunderstanding that is grounded in the fact that most people/economists have no proper understanding of what economics is all about. Therefore it is, first of all, of utmost importance to distinguish between political and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics, scientific standards are observed.
Theoretical economics has to be judged according to the criteria true/false and NOTHING else. The history of political economics from Adam Smith to Hayek and beyond can be summarized as an utter scientific failure. A closer look at what is naively called economics as if it were a homogeneous entity shows that theoretical economics has been captured by the agenda pushers of political economics. Smith and Ricardo fought for Liberalism, Marx and Keynes were agenda pushers, so were Hayek and Friedman, and so are Krugman and Varoufakis.
It is a widespread misunderstanding to think that people who talk about the economy understand how the economy works. Hayek’s ‘Road to Serfdom’ is a political pamphlet and it is not backed by the true economic theory simply because Hayekian economics is scientifically worthless storytelling until this day.
Hayek, of course, had the right to write political pamphlets, to defend capitalism, to support Thatcher, to found the political club Mont Pelerin and to dabble in sociology and political philosophy. One thing, though, should be perfectly clear: the moment an economist starts with politics he leaves economics, understood as a science, for good.
Political economists of all stripes are characterized by four common traits: (i) They are mainly occupied with sociology, psychology, anthropology, political science, history, law/institutions, Darwinism/evolution theory, social philosophy, etcetera. That is, they miss the essentials of economics proper.#1 (ii) They use theoretical economics as a means/support for their agenda. By this, they abuse science unknowingly or knowingly. (iii) As far as they have tried to underpin their agenda theoretically it can be proved in each case that their approaches lack formal and material consistency. (iv) Political economists have no idea about how the actual economy works because they lack the correct profit theory.
It is not decisive what the political agenda is: ALL of the political economics is cargo cult science (Feynman’s term). Political economics has not produced anything of scientific value since Adam Smith.
One task of Heterodoxy is to refute false theories. The more important task, though, is to develop the true theory of how markets work (2015). Hayek argued that the existing economic system is self-adjusting. He could never prove it in a way that satisfies the criteria of material and formal consistency. Neither could General Equilibrium Theory. Worse, it can be rigorously proved that the existing economy is NOT self-adjusting#2 and that it must ― inescapably programmed by the Profit Law ― eventually break down (2014) even if the price mechanism is perfectly flexible and perfectly efficient. Hayek never understood the profit mechanism which is the essential feature of the existing economy. Neither did the rest of the Mont Pelerin "thought collective"#3.
Kakarot-Handtke, E. (2014). Mathematical Proof of the Breakdown of Capitalism. SSRN Working Paper Series, 2375578: 1–21. URL
Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: The Market. SSRN Working Paper Series, 2547098: 1–10. URL
#1 Economics is the science that studies how the monetary economy works and NOT how society works, which means methodologically, it is NOT subjective-behavioral but objective-structural. See the working paper Objective Principles of Economics.
#2 Could we, please, all focus on the key question of economics?
Related 'Why Hayek was not a scientist' and 'Hayek was not an economist' and 'Hayek: mad, bad, or just another incompetent economist?' and 'Hayek or how economists miss their subject matter since more than 200 years'.