In several of his essays ("Ethics and the Economic Interpretation," in particular), Knight attacks markets on account of their inability to satisfy consumer wants. Now this is an assumption that undergirds the entire laissez-faire philosophy -- competition (rivalrous or perfect) drives the market to respond efficiently to consumer demands. But Knight objects to this by arguing that ends (desires and wants) cannot be taken as given because they are not the ultimate source of action. Individuals do not actually try to satisfy given wants. They are concerned instead with the discovery and pursuit of higher, more enlightened wants. This is a remarkable insight. The market relies for its defense on the principle of efficiency in want satisfaction. And Knight does not question this. He goes much further and questions the very nature of the wants themselves, and arrives at the conclusion that an individualistic competitive market order creates wants that have as their aim emulation and rivarly rather than personal satisfaction and the promotion of happiness. This applies to production as well, with businessmen engaged in a "game" where the goal is to dominate your opponent much like you would in a game of chess.
Another important theme in this book concerns the ethical character of economics. Knight argues that economics is more than a branch of mechanics. And although ethical judgments can never claim to possess the status of objectivity, there is a very real sense in which the actions and motives to which they give rise are influenced by "social ideals." From here, Knight also argues that these social ideals can be used to criticize the outcomes generated by a laissez-faire economic arragement, even if all available alternative economic systems fare no better. Ethical judgment is never "a purely relative matter", but is instead concerned with the question of "ideals."
Now, traditional debates surrounding the virtues of competing economic systems have focused on the way in which resources are most efficiently allocated in direction of the satisfaction of wants. But Knight undermines this literature by observing that "wants" are never simply given; they are constantly changing and are inherently dynamic in character. Here is Knight:
" The individual who is acting deliberately is not merely and perhaps not mainly trying to satisfy given desires; there is always really present and operative, though in the background of consciousness, the idea of and desire for a new want to be striven for when the present objective is out of the way. ... [A]ll intelligently conscious activity is directed forward, onward, upward, indefinitely."
Knight also questions the traditional conception of "happiness." Consider this passage: "A man who has nothing to worry about immediately busies himself in creating something, gets into some absorbing game, falls in love, prepares to conquer some enemy, or hunt lions or the North Pole or what not."
This is all perfectly consistent with my (quite radical) interpretation of Mises and equilibrium (see earlier post "Austrians on Equilibrium"). Knight is saying everything that was already in my mind. I will end with one final quote by Knight: "It is a stock and conclusive objection to utopias that men simply will not live in a world where everything runs smoothly and life is free from care." This is exactly what Mises was getting at. Men who live vegetative existences are not really men; men are insatiable, erring, and explorative creatures. To put them in equilibrium is to deny them their humanity.
Frank Knight as a Post-Austrian!