Spontaneous order and industrial policy

In recent years, the policy discourse has become more favorable towards large-scale transformative government activity in the economy, particularly in view of grand societal challenges such as climate change. The role of the state in shaping economic life is key for a range of recent policy proposals. On the other hand, Hayek, the chief theorist of the idea of spontaneous order interprets its normative implication to be a decisive rejection of many forms of government activity, including industrial policy. Yet different normative conclusions can be drawn from the same epistemic insights. This paper tries to disentangle the idea of spontaneous order from the policy implications Hayek draws from it, arguing that certain forms of industrial policy are also compatible with it. Besides arguing for the compatibility, we will yield insights into how such policies can be pursued without undermining the epistemic function of markets. What are the grounds and limits within which policy can pursue goals by shaping the market order?