A full-employment policy produces unemployment. Keynesian economics became the dominant theory wherein inflation was endorsed as a method of increasing aggregate demand which should boost employment.
Hayek opposed this expansionist policy of Keynes. Inflation misdirects labor and distorts prices. Halting inflation produces unemployment.
Hayek would prefer to have a better term than equilibrium. It is over simplified.
(Anecdote: Hayek was almost deaf in his left ear. Marx was deaf in his right. Hayek suggests this says something about their politics.)
Friedrich A. Hayek explains Austrian Economics at the Department of Economics of the University of Colorado on April 28th, 1975. Special thanks to Mr. Fred Glahe for his generous donation of this lecture audio to the Ludwig von Mises Institute.
F. A. Hayek (1899–1992) is undoubtedly the most eminent of the modern Austrian economists, and a founding board member of the Mises Institute. Student of Friedrich von Wieser, protégé and colleague of Ludwig von Mises, and foremost representative of an outstanding generation of Austrian School theorists, Hayek was more successful than anyone else in spreading Austrian ideas throughout the English-speaking world. He shared the 1974 Nobel Prize in Economics with ideological rival Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." Among mainstream economists, he is mainly known for his popular The Road to Serfdom (1944).