When Alfred Schutz developed a “philosophical foundation for the social sciences,” he considered economics “one of the most advanced” among those sciences (Schutz 1932). However, phenomenology led him to question the basic tenets of Friedrich Hayek (1937, 1945), who understood economics as a foundational science of social action. Schutz’s pertinent texts are usually read as “methodological,” and his own position is often classed – approvingly or critically – with the Austrian School that Hayek came from (Prendergast 1986, Waldenfels 2015). In contrast, I argue that what Schutz presented was a radical critique. Schutz distinguishes between scientific models of social action and the phenomenological complexity of choice and action on the social scene. Like all sciences, the social sciences are founded upon our intersubjective lifeworld, but unlike the natural sciences, they necessarily refer to this lifeworld. When a social science mistakes its models for the actual lifeworld, it falls into a pure circularity exemplified by Hayek’s market fundamentalism.