Why did Hayek virtually give up on serious technical work in economics, you might ask?
The answer is given eloquently by Ingrao:
“The very critique of general equilibrium theory that Hayek advanced … undermined his own research project on equilibrium and [sc. the] business cycle as structured in the early 1930s. In the programme to build a dynamic approach inspired by general equilibrium theory (such was the original intention and aspiration), reconciliation between equilibrium and cycle proved impossible, since there appeared to be no way to incorporate disappointed expectations and change into equilibrium models. The result was reached by Hayek himself as also by Lindahl and Hicks, while they were rethinking a common core of analytical questions about equilibrium left open by the Lausanne school. It turned out to be not the provisional weakness of an incomplete research project, but a substantial theoretical difficulty, which brought the project to a dead end. In 1937 Hayek’s efforts to embody expectations and change in the structure of equilibrium models was not so much a solution to the insoluble problem as the beginning of new investigation, which brought Hayek practically to abandon the equilibrium scaffolding.When Hayek’s economics essentially failed, he turned to a different program: social and political theorising.
In the 1940s Hayek’s research project ran aground due to difficulties in the theory of capital. A Pure Theory of Capital … marked another critical point on the ambitious path to merging equilibrium and cycle, starting from the Austrian vision of capital as investment of resources in structured time sequences. Complexity prevailed and Hayek gave up the project to incorporate monetary theory into his capital theory ... Meanwhile Hayek was moving in other directions, new tasks absorbed him, leaving the earlier research programme to take second place in his mind. Actually, it was never resumed.” (Ingrao 2005: 244–245).
Ingrao, B. 2005. “When the Abyss Yawns and After. The Correspondence between Keynes and Hayek,” in M. C. Marcuzzo and A. Roselli (eds.), Economists in Cambridge. A Study Through their Correspondence, 1907–1946. Routledge, London. 236-256.