Too often in economics the understanding of how things work by and large--not axiomatically or categorically--and the idea that we generally cannot know the economic system well enough to intervene into it beneficially are done less than justice. Yet they were Adam Smith's central messages for public policy, and they authorized a presumption of liberty, thus exceptions to liberty should be treated as exceptional and bear the burden of proof.

In Knowledge and Coordination, Daniel Klein reexamines the elements of economic liberalism. He interprets Friedrich Hayek's notion of...