Description: In his governmentality studies in the late 1970s Foucault held a course at the Collège de France on the Austrian liberal economist Friedrich von Hayek and referred to the work of his predecessors, Menger, Boehm-Bawerk, Wieser, and von Mises. Among Foucault's great insights in his work on governmentality was the critical link he observed in liberalism between the governance of the self and state government - understood as the exercise of political sovereignty over a territory and its population. He focuses on government as a set of practices legitimated by of government based on a permanent critique of the state and in inspiring contemporary forms of neoliberalism that Foucault considers as a set of techniques for governing the self through the market. Liberal modes of governing, Foucault tells us, are distinguished in general by the ways in which they utilise the capacities of free acting subjects and, consequently, modes of government differ according to the value and definition accorded the concept of freedom. These different mentalities of rule, thus, turn on whether freedom is seen as a natural attribute as with the philosophers of the Scottish Enlightenment, a product of rational choice making, or, as with Hayek, a civilizational artefact theorised as both negative and anti-naturalist. Using Foucault's approach this paper examines Hayek's conception of freedom as one that characterizes the market as neither natural nor artificial but rather the product of a spontaneous social order governed by rules selected in a process of cultural evolution. Hayek's conception of freedom and 'the constitution of liberty' has special application in the so-called 'knowledge economy' where, as Foucault also acknowledges, following a Kantian critique, the state is strictly limited in its power to know. Hayek argued that the price mechanism of the 'free' market conveys information about supply and demand that is dispersed among many consumers and producers and cannot be coordinated by any central planning mechanism. His early work emphasized that the key to economic growth is 'knowledge' and this insight provided him with the grounds for casting doubt on socialism and state planning, and for advocating that the market was the best way to organize modern society. These Hayekian features of liberalism are used to explain, à la Foucault, how neoliberal and Third Way education policy relies on government through the market.Keywords: Foucault, governmentality, freedom, power, liberalism, neoliberalism, education policy