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Law and Spontaneous Order: Hayek's Contribution to Legal Theory Author(s): A. I. Ogus Reviewed work(s): Source: Journal of Law and Society, Vol. 16, No. 4 (Winter, 1989), pp. 393-409 Published by: Wiley-Blackwell on behalf of Cardiff University Stable URL: http://www.jstor.org/stable/1410327 . Accessed: 24/10/2012 09:48
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JOURNALOF LAW AND SOCIETY VOLUME16,NUMBER 4, WINTER 1989

0263-323X$3.00

LawAndSpontaneous Order: to Hayek'sContribution Legal Theory A. I. OGUS*

Ten years ago, I observedthat the work of Friedrichvon Hayek had been the unjustifiably neglectedby legalwritersin this country.1 Notwithstanding and influenceof New Right theoristsin the period since then,2the impact This situationhasnot alteredsignificantly.3 is all themoresurprising because, in his laterworks,Hayekaddresses issuescentralto legaltheory: particularly and the natureof law and the state,justice,constitutional structures, the rival meritsof commonlaw and legislation. Of course, Hayek'sexplorationof law has been, in no sense, a separate of unifiedrestatement rather,it is but one part of an overarching enterprise; liberalism,having at its base a theory of knowledgeand scientificinquiry, which is developed systematicallyfirst in relation to economic decision makingand systemsand thento the politicalorderas a whole.In this paperI to shallfocus on Hayek'scontribution legaltheoryas expounded principally in his lastmajorworkLaw,Legislation Liberty4 will attemptto place and but that in the context of his general theory of society, as it was developed his career.Aftera shortaccountof Hayek'sapproach throughout intellectual to socialsciencemethodology,I show how he uses an epistemological theory to developtwo models of social organization: spontaneousorder,which he withthemarketandwithcommonlaw,andrationalconstructivism, identifies whichis associated witha planned law. economyandregulatory Hayek'smain thesisis thatit is onlythefirstof thesewhich,by preserving only libertysubject to universalrules of just conduct, can guaranteethe progressof human civilization. I argue that the normative dimension of this assertion is flawedbutthat,as an explanatory of modelof thedevelopment fundamentally meritsseriousattention. law, Hayek'stheory

Professor of Law, The University,Manchester M13 9PL, England.

This paperis the secondin a seriesdealingwith the work of theoristswho have substantially influenced of H. contemporary understanding lawandsociety.(Seepreviously Collins,'Roberto Ungerand the Critical (1987)13J. of LawandSociety387.) LegalStudiesMovement'

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I. THE METHODSOF SOCIALSCIENCE Hayek'smethodof analysingsocietyhas its originin the Kantianconception the cannotobservephenomena thatindividuals 'externally'; humanmindis as as much a part of the naturaland social environment that which is being studied.5Social reality,then, cannot be 'explained'by an objective,intellectualprocess.The subjectivist theorywas centralto the Austrianschool of in whichHayekwas trainedand fromwhichhe derivedmuchof economics, In his earlyinspiration.6 contrastto the classicaleconomists,the Austrians had that resources no objective'value',determinable reference concluded by labourand capitalinput. 'Value'was, instead,a matterof to, for example, and individual subjective preferences choice. Hayekdevelopedthe notion in his own economicwork7but, more significantly, appliedit to the whole of of of socialsciences.8 Sincethesubject-matter thelatterwascomposedentirely in turn,theresultof attitudes, whichwas, human actionandinteraction beliefs, 'scientistic': and motives,objectiveanalysiswas impossibleand therefore
men between external Not onlyman's[sic]actiontowards objectsbutalsoall therelations can andall socialinstitutions be understood onlyin termsof whatmenthinkaboutthem. and Societyas we knowit is, as it were,builtup fromtheconcepts ideasheldby thepeople; can and socialphenomena be recognized us and havemeaningto us only as they are by in reflected the mindsof men.9

of How, then,is the socialscientistto derivean understanding societyand method: answeris by means of a 'compositive' social institutions? Hayek's can elements be selectedout of the totalityof connected of structurally groups the observedphenomena,revealing regularities, pattern,or generalorderof A humanbehaviour.10 strict Austrianwould argue that the complexityof variables inherent in human behaviour and motivation precludes the of the possibility.No doubtawareof the riskof undermining importance his he Roadto Freedom had spelt own essayin prophesy(in the highlyinfluential trendsin political for out whathe sawas the implications the futureof current not and a in his laterwritingreached different, perhaps Hayek institutions),11 conclusion.While specificpredictionsabout complex entirelysatisfactory, time) productat a particular phenomena(such as the price of a particular broadpatterns a cannotbe made,nevertheless theoryderivedfromobserving undercertainconditionsmay enableus to expectthosepatterns of behaviour is the if to recur theconditions prevail andin principle hypothesis testable,or sense.12 Hayek'ssweeping in at leastfalsifiable the Popperian generalizations aboutthehumanconditionstandor fallwiththismethodological assumption; to makesit difficult distinguish some wouldarguethat its inherentvagueness and betweenscientific prediction purespeculation.13 II. TWOMODELSOF SOCIALORGANIZATION
The anti-rationalist thrust of Hayek's approach to social science methodology applies to action as well as thought and is at the heart of his social theory. 394

facts whichmake up the humanconditionis Knowledgeof the innumerable and fragmentary. Individuals necessarily widelydispersed makingdecisions about courses of action can at best rely on limited informationnormally pertainingto localized environments.Interactionand co-operationwith othersare, of course,essential,but this does not implya plannedor directive form of social organization.The spontaneous orderwhich emergesis selfor broughtabout and has no generating endogenous:14 it is not deliberately explicit purpose;ratherit results from the instinctiveadoption of certain orderis exemplified the rules.Thisideaof unplanned by (oftenunformulated) of development humanlanguagebut also by animallife, for examplein the insectsocietiesof bees,ants, and termites.15 For societyto exist, the rulesmust be habituallyobeyed,but to overcome the Hobbesiandilemmawhich arises when self-interestconflicts with the commongoal compulsionmay be necessary:
of Some such rulesall individuals a societywill obey becauseof the similarmannerin which their environmentrepresentsitself to their minds. Others they will follow tradition. therewill But because theywillbe partof theircommoncultural spontaneously it be stillotherswhichtheymusthaveto be madeto obey,since,although wouldbe in the of interests eachto disregard them,the overallorderon whichthe successof theiractions will followed.16 depends ariseonly if theserulesaregenerally

of mighthaveto enforce Although,therefore, representatives the community the rules, under a spontaneousorder their specific content is not to be betweenindividualrulesand the overall designed.Becausethe relationship order is so complex, no individualis able to predictwhat will or will not succeed.Rulesarebestleft, by a processof evolutionary selection,to adaptto changesin the environment. with is Thespontaneous ordermodelof socialorganization to be contrasted whichassumesthat humaninstitutions capableof are rational constructivism humanpurposes, in thepasthavesuccessfully doneso, onlyif they and serving For Hayek,thisview,whichhasinfusedsocialand aredeliberately designed.17 that is it politicalthoughtsinceDescartes, deeplyfallacious: failsto recognize the humanmind is a part of, and thereforecannot transcend,spontaneous and 'the order; it resultsfromthesynopticdelusion: fictionthatall therelevant fromthis factsareknownto someonemind,andthatit is possibleto construct of the particulars desirable a socialorder'.18 knowledge
1. The Market as Spontaneous Order

was Theearlier partof Hayek'scareer devotedto pureeconomictheory 9 - he from 1931to heldtheTookeChairin EconomicScienceat LondonUniversity 1950- and his notion of spontaneous orderwas developedfirstin relationto the market.20 The latteris an unplannedprocesswherebyindividuals make and limitednormally localized to use of decentralized fragmented knowledge,
information about prices and costs, to advance their own interests in competition with others. The basis of the competitive market order is, then, a system for communicating information: individuals respond to signals, the 395

prices which reflect peoples' needs for products (demand), with profits those whose skill, or perhapsluck, enablesthem to adaptbest to rewarding thosesignals.Theyneedknownothingof whydemand changes,stilllessof the as a whole. The 'marvel'of prices is: 'how little the individual economy need to know in order to be able to take the right action. In participants abbreviated is form,by a kindof symbol,only the most essentialinformation on and passedon only to those concerned.'21 passed Plannedeconomic systems fail simply because no individual,or set of can to individuals, have the knowledgerequired co-ordinatethe activitiesof in any event,economicprogress dependent andconsumers; is and, producers on individualsbeing rewardedfor successfulexperimentation with what is whollyor partiallyunknown.22 Whiletheseideasmaybe largelysharedby neo-classical economists,Hayek fromtheirtraditional eitherof diverges theoryby not relyingon assumptions the perfectknowledgeof economic actors, or of perfectcompetition.The of phenomena the marketprocessare alwaysin a stateof flux.An individual entrepreneurmay, for example, offer a new product, guessing from information aboutotherproductsthattherewill be sufficient demandfor it;if is her or his guesswork good, she or he will enjoyan initialmonopolypower to but,unlesstherearebarriers entry,thatwillnot last.Thisviewof themarket as a dynamicprocess led Hayek to be highly criticalof the neo-classical obsessionwith supplyand demandequilibrium allocativeefficiency:23 and a to model in which, responding stable preferences, resourcesare assumedto gravitate towards such an equilibriumdistorts the reality of economic behaviour,becausethereis an inherenttendencyfor agents, in the light of newly-acquired knowledge,to move away from this state. Since Hayek's does not lenditselfto econometric modellingof the kindwhichnow approach it that dominatesthe economicsdiscipline, is perhapsnot surprising his work is neglected contemporary economists.24 by
2. CommonLaw as Spontaneous Order

of The germsof Hayek'sidentification the common law with spontaneous

order may be found in The Road to Serfdom"2 and The Constitution of

wherehe views 'genuine'law as possessinga generalityand thus Liberty26 from particular circumstances time and place. Further,and in of abstracted 'law' is distinguishedfrom sharp opposition to Austinianjurisprudence, in 'command' thatit does not presuppose sovereign a who issuesit; as such,it order. is a partof the unplanned The subject is explored in considerabledepth in Law, Legislationand the Liberty, largerpartof the firstvolumebeingdevotedto it.27Law-making as is hereportrayed a continuous,adaptative processdealingwithunforeseen consequences:
to Thepartsof a legalsystemarenot so muchadjusted eachotheraccording a compreto hensiveoverallview,as gradually of adaptedto eachotherby the successive application to that is, whichare often not even generalprinciples particular problems principles, knownbut merelyimplicitin the particular measures whicharetaken.28 explicitly

396

Theindividual withinthisprocessis morean 'unwitting tool judgefunctioning . than a conscious initiator'.The judge's task is to apply the general . of principles law, not to questionthem.Stabilityensuesbecause,in applying the generalto the particular, judge will interpretit in such a way as to the render it consistent with other general principles and thus generate coherence.29 The principlesthemselvesare 'universalrules of just conduct'.30 This means, in the first place, that there is an equalitybefore the law, in that or particular groupswithinsocietyarenot the subjectof specificprescription the principlesdo not purportto providea specificdispensation.Secondly, concretesolutionto all the many(andunknowable) whichmay contingencies arise.Thirdly,they are purpose-independent; applicationin particular their instancesis not designed to achieve particularsocial or economic ends. whichhaveevolvedin the spontaneous the order Rather,theyreflect practices conformto theexpectations whichthe parties and,as such,should,in general, wouldhave'reasonably formedbecausetheycorresponded thepractices to on which the everydayconduct of the membersof the group was based'.31 environmentsome Granted, however, the fact that in an ever-changing individualswill be exploiting new knowledge,it will be impossible(and to The aim, then,is to maximizethe inappropriate) protectall expectations. in possibilityof expectations generalbeing fulfilledand, as we shall see, for Hayek this implies laying down for each individuala range of permitted actions(liberty) designating has by rangesof objectsoverwhichtheindividual controlandrightsof disposal(property).32 Legislationis frequently,though not always, used as an instrumentof rationalconstructivism. performsthis function when it lays down rules It designed to achieve particularends or supplementspositive orders that shouldbe done,or creates,or conferspowerson, an agencyfor this something to Hayek is here referring what we would call regulatory purpose.33 law,34 he thoughconfusingly usesthe term'publiclaw',thereby failingto appreciate that part of public law, for example that governingjudicial review of administrative rulesof just conduct'.In contrastto action,contains'universal therulesevolvingunderspontaneous measures purposeare order,regulatory often by means of targetingrules (or exemptionsfrom rules) on specific, specific groups, thus infringing equality before the law, and typically to set attempting lay down a comprehensive of solutionsfor all foreseeable in omniscience the sovereignruler. impliedlyassuming contingencies, concern to identify law under the spontaneousorder with the Hayek's common law does not, however,lead him to the position that legislation shouldbe dispensed withaltogether.35 course,statutelawmay,in part,be a Of codificationof the principlesof private law which have evolved through Morethanthis,Hayekrecognizes legislation that judicialdecisions.36 may be to law necessary correctjudge-made wherethe latteris too slow to adapt to this cannot be wholly new circumstances; can occur becausedevelopments reversedif judges are not to disappointreasonableexpectationscreatedby earlierdecisions.Most significantly all, in a passagewhich is frequently of 397

overlooked, he concedes that judicial error, and thereforethe need for of legislation, mayresultfromthefactthat'thedevelopment thelawhaslainin of thehandsof members a particular classwhosetraditional viewsmadethem of regardas just what could not meet the more generalrequirement justice'; law andhe instances labourlaw,landlordandtenantlaw,andcreditor/debtor fromthe class of one of as fieldswherejudgesweredrawnalmostexclusively the interested groups.37 III. BLUEPRINTFOR THE 'GREATSOCIETY' As we have seen, Hayek'sapproachto social science,while preventing him fromformulating or abouthumanbehaviour inductive by specific predictions deductivemeans, nevertheless enableshim to make broad generalizations, derivedfrom observationsof 'patterns'of events. The main thesis of Law, and Legislation Libertyinvolvessucha generalization:
... that a conditionof libertyin whichall are allowedto use theirknowledge their for is purposes,restrained only by rulesof just conductof universalapplication, likelyto theiraims;and that sucha systemis producefor themthe best conditionsfor achieving of and that likelyto be achieved maintained if all authority, only including of themajority of to the people,is limitedin the exercise coercivepowerby general principles whichthe has itself.38 community committed

Hayek's blueprintfor the Great Society39is drawn, of course, from the ordermodel.Its constituent spontaneous partsnow call for examination. 1. Liberty is Liberty not viewedby Hayekas an endin itself,butas the meansto an endhuman progress.40Whether or not civilizationis 'better' as a result of increased demandfor materialprogressof wealth,thereis an overwhelming this kindand it cannotbe achievedwithoutliberty.For socialprogress,each for individual shouldbe ableto act on heror his ownparticular knowledge her as to manyof or his ownparticular Sincethereis inevitable ignorance purpose. the factors on which the pursuit of individualpurposes rests, 'liberty is and essentialin orderto leave room for the unforeseeable unpredictable'.41 for to Thegoal shduldbe the maximization opportunities individuals learn of of facts hithertounknown,even though, of course,this involvesthe risk of failureas well as of success. The concept of libertyemployedhere is, it should be noted, a restricted one.42 It means freedomfrom coercion by others but does not extend to freedom in the political sense of people participatingin the choice of government.It insists that individualshave some privatesphereprotected by against interference others, but this does not imply that society is to amountof resources. that has guarantee eachindividual accessto a minimum who argue that some In this respectHayek differsfrom those libertarians materialsupportfor disadvantaged personsmay be necessaryif they are to 398

It exercisepoliticalrights.43 is truethat he acceptsas inevitable government of is still actionto dealwithextremes povertybutthejustification not 'liberty', less 'citizenship'; ratherit is in the interestsof those 'who requireprotection on which againstacts of desperation the partof the needy'44 an explanation is more fully exploredin Marxist analsysis.45 The essence of the 'private is ('freedom sphere',therefore, not thepossessionof property maybe enjoyed no a personwith practically propertyof his own'46)but the rightto use by assetswhichare possessed,for whichpurposefreedomand enforceability of are as for contracts vital.Assetsareacquired rewards merit,as determined by the market.Inheritance defendedsimplybecauseit arisesfromthe natural is instincts of parents and if it is prevented those instincts will manifest in It themselves less attractive ways,for examplenepotismand corruption.47 as follows that Hayekacceptshistoricalpatternsof entitlements a givenand makesno attempt,in the mannerof Nozick,48to justifythem.
Clearly there must be some exceptions to freedom from coercion. We have

order,the alreadyseenthat compulsionto obey the rulesof the spontaneous common law, is necessary.Defence of a society againstexternalenemiesis
another uncontroversial justification for governmental control. But it may

come as a surpriseto Hayek'scriticsto learn that he is, by no means, an advocateof the 'minimalstate' and that thereis a wide rangeof regulatory
measures that he is prepared to tolerate.49 Most cases arise as a result of

that is, wheresome of the adverseor marketfailure,notably externalities,

beneficial consequences of an activity are not reflected in the prices which agents charge, thus leading to an overproduction, or underproduction, of the

for It activityin question.50 is on this groundthat he rationalizes, example,

centralized provision of roads51 and the public financing of education. More generally, since information is a commodity not easily supplied by the market

the but facilitatesthe workingof that process,he recognizes appropriateness

of building regulations, pure food law, the certification of certain professions, and some safety and health regulations - intervention of this kind 'certainly for assistsintelligent choiceand sometimes may be indispensable it'.52 Nevertheless, he is quick to point out important limitations. First, while regulatory legislation inevitably involves some departure from the ideal of

of universal rulesof conduct,to mitigatethe evil certaingeneralrequirements

justice, such asthe avoidance of arbitrarydiscrimination,ought to be observed. Secondly, though the public financing of some services may be justified, it does

not followthatgovernment shouldnecessarily itselfprovidethem- hencethe

argumentfor publicly funded education vouchers valid for private institutions. In short, it should be recognized that the adoption of collective measures

involvesresortingto an inferiormethod of provisionand the spontaneous

mechanism of the market should be relied on as much as possible.53 2. The Rule of Law A continual theme in Hayek's work from Road to Serfdom through to Law,

and has Legislation Liberty beenthatlibertyis not a naturalstatebut is rather 399

createdand preservedby the 'rule of law'. The latter mirrorsclosely the and conceptfamiliarfromDicey'swork54 assertsas meta-legal requirements thatlawsshouldbe universal, knownandcertain,andshouldapplyequallyto all.55Viewedas such, the rule of law has suffereda markeddeclinein the twentieth The a century. original conceptof Rechtsstaat, productof theliberal movement, which demandedsubservienceof the state to the meta-legal principlesof the rule of law was displacedby a purelyformalinterpretation which requiredonly that all state action be authorizedby the legislature. in Hayek is ruthlessin his criticismof developments legal thoughtwhichhe considers contributedto this decline: the overwhelmingsuccess of legal positivism- 'the "puretheoryof law" ... expounded ProfessorH. Kelsen by the signalledthe definiteeclipse of all traditionsof limited goverment';56 violent attackson the certaintyof law by JeromeFrank- 'it was the young men broughtup on such ideas who becausethe ready instruments the of paternalistpolicies of the New Deal';57 and the literatureoutlining an antirule-of-law doctrinepromulgatedby a group of 'socialistlawyersand and politicalscientists' includingIvorJennings W. A. Robson.58 ForHayek,theinstitutions practices theadministrative/welfare and of state infringethe meta-legalprinciplesin severalimportantrespects.Collectivist economic measurescannot be accommodatedto generalprincipleswhich preventarbitrariness:
The planning ... authority mustprovidefor the actualneedsof peopleas theyariseand thenchoosedeliberately between them.It mustconstantly whichcannot decidequestions be answeredby formalprinciplesonly, and in makingthese decisionsit must set up of the people.59 distinctions meritbetween needsof different

In making these decisions, the authorityand its subordinateagents must considerable inevitably possessandexercise discretionary powers.Theruleof law would insist that such discretion be constrained by a system of administrative whichenablesthejudiciaryto reviewthe substance the law of to actionby reference general but principles; the courts'concernis, in general, limitedto the questionwhether particular the actionwas formallyauthorized by legislation.60 Thesearguments familiar andmuchdebatedby, administrative to, lawyers do not call for detailedconsideration here;sufficeit to observethat Hayek would probablyfind unpersuasive view that the principlesof judicial the review developed in our legal system - particularlythe 'Wednesbury'61 of and principle reasonableness fit his model,62 wouldbe evenmorehostile to the opinion which casts doubt on the alleged superiorwisdom of the courtsand, therefore, extensive on ordinary judicialactivism.63
3. ConstitutionalConstraints

The need to impose constraintson governmentaction arises nor merely

because such action inevitably infringes the meta-legal principles of the rule of law. As Hayek has argued in his later work, it is a consequence also of the weaknesses of traditional democratic structures. If, as we have seen,64 power 400

must be conferred representatives the community orderto avoid the on of in Hobbesian dilemma created conflictsof self-interest, doesnot followthat it by the existenceof democratic institutions representing majorityopinionis able to solvethatdilemma. Giventhe unlimited of legislative bodiesto enact power measures benefitson particular regulatory conferring groups,a government the majorityof votes in those bodies will need to offer such commanding measures those on whose supportit relies.Groupswith commoninterests to and to will, then,co-ordinate organizethemselves demandbenefits.Thus:
an and wasteful of ... in thecourseof thiscentury enormous exceedingly apparatus parahas of unionsandprofessional trades government grownup,consisting tradeassociations, organizations,designed primarilyto divert as much as possible of the stream of favourto theirmembers.65 governmental

The concept of parliamentary sovereignty,particularlythe Westminister is the root causeof the problem.Theclassicaltheoryof representative model, governmenttook the wrong direction: the equal claims of democratic and government democratic legislationled to a situationin whichthe powers of the two brancheswere effectivelycombined and to a revival of the establishment an absolutepowernot restricted any rules.66 of 'monstrous' by in thisformis a sham;it is 'increasingly the Democracy becoming nameforthe those special very process of vote-buying,for placatingand remunerating interests whichin morenaivetimesweredescribed the"sinister as interests" '.67 At the same time as Hayek was formulating these ideas, a highly sophisticatedand influentialversion of them was being developedby the public choice school of economics.68Because most of this analysis is flow institutional predictive whatconsequences fromdifferent arrangements - the economistsinvolvedhave tendedto fight shy of adumbrating reform proposals.Hayekis not so cautious.In the thirdvolumeof Law,Legislation he which,in hisview,wouldsolvethe andLiberty outlinesan idealconstitution The of problems.69 key to his model is the establishment two representative bodieswith different functions.The Legislative Assemblywould be charged with maintaining developing'proper'law which,throughoutthis work, and Hayek identifieswith spontaneousorder,that is the universalrules of just conduct. As such, its role would be sharplycontrastedwith that of the GovernmentAssembly which would be concerned with organizing the and makingdecisionsabout the use of resources apparatusof government entrusted the government. to the Crucially, secondbody wouldbe boundby the rulesof just conductlaid down by the first,so that it could not issueany ordersto privatecitizenswhichdid not follow 'directly necessarily' and from the rules emanating from the latter.70Consistentlywith the theory of spontaneous order that the rules of just conduct should be purposeindependent, they shouldbe determined opinion(whatis rightor wrong) by andnot by interests. achievethis,it is obviouslydesirable themembers To that of the Legislative fromthe demands pressure of Assemblyshouldbe insulated groups.Hayektherefore suggeststhattheyshouldbe electedfor long periods, for examplefifteenyears.Afterthis period,they wouldnot be eligiblefor reelection,norindeedforcedto earna livingin themarket; rather, theywouldbe 401

assured of continuous public employment as lay judges. To reflect wouldbe electedby of standards rightandwrong,themembers contemporary of all personsin thecommunity the sameage, say forty-five yearsold. Finally, with the task of resolvingdisputes a constitutional courtwouldbe entrusted of about the propercompetence each of the two assemblies and, to preserve of fromgovernment, judgeswouldbe electedby a committee its independence of formermembers the Legislative Assembly. 4. Justice If, for Hayek, law properly so called comprises 'universalrules of just conduct', such as evolve through common law decisions or, in his ideal Whatmakes constitution, the Legislative by Assembly,whatis theircontent? them 'right' or 'wrong'?What is 'justice'?Since justice is a part of the constantlyevolvingspontaneousorder,we cannot expect,and certainlydo not receive,concretizedanswersto these questions;to providesuch would In smackof rationalconstructivism. the secondvolumeof Law, Legislation titledTheMirageof SocialJustice,Hayektherefore andLiberty, appropriately on and concentrates howjust rulesshouldbe 'discovered' whatis not'justice'. The rules of just conductare abstractguides to behaviourin a world in are whichmost of the particulars unknown.71 Theycommandgeneralassent to sincethey correspond generalusage.Internalconsistencyand application over a reasonably long periodare importantqualities,becausethey become the basis of planningby individuals.The functionof the rulesis to protect thanto is domainswithinwhichthe individual freeto act, rather ascertainable determineparticularcourses of action; consequently,they are typically negative in character." Likewise, since knowledgeof the importanceof is ends for particular individuals lacking,the test of justiceis also particular negative:
of interests stakein a concrete at not ... justiceis ... emphatically a balancing particular nor of classesof persons, doesit aimat bringing case,or evenof theinterests determinable whichis regarded just.73 as stateof affairs abouta particular

Utilitarian evaluations are therefore dismissed as being constructivist fallacies.74 with 'natural Hayekwouldpreferhis conceptof justicenot to be identified which as typically used denotes some deontological theory.75 law', the Nevertheless, mannerin whichthe rules,andnotionsofjustice,developis the result of a 'natural'process, in the anti-positivistsense of that being of independent deliberatechoice by sovereignwills:it is 'naturalselection' the evolutionwhichdetermines successand thejusticeof the rules.(I through shallreturnto this crucialpropositionin the next sectionof the paper.) just Onlyhumanconduct,and thatwhichaffectsothers,can be considered or unjust. The action of governmentsand other organizationscan be so of but qualified not the order(or situation) societyas a wholesince,in termsof of a state of affairs,the particulars a spontaneousorder, Hayek's theory, cannot be the intended aim of individual actions.'7 This leads to the
402

and of important, also highlycontroversial, enormously rejection conceptsof social,or distributive, justice:
be as justice'willultimately recognized a will-o'-the '[S]ocial wispwhichhas luredmento abandon many of the values which in the past have inspiredthe developmentof civilization."

For Hayek, the term has no meaningexcept undersystemswhererulers to the arrogate themselves powerto determine impossible whatis good- and in whichindividuals orderedwhat to do. In a social orderunderwhich are peopleare free to experiment extendingknowledgeand therebyenabling by to improvements be madeto the generalwealthof all, the inevitable priceis that individualsand groups risk unmeritedfailure.To replacea systemof rewardsdetermined the marketwould halt progress.Further,'rational by constructivist' attemptsto distributeresourceson the basis of 'justice'are doomed to failure becausewe lack objectivecriteriafor determining and 'merit'or 'need'.As the failureof medievalsystemsto locatejust comparing pricesand just wages reveals,'value to society' is immeasurable except by marketmethods;nor can the need of one individual,for example,to decent with that of another,for example,to relieffrompain. housing,be compared Decisionson suchmattersinevitably leadto arbitrariness. Theyalso resultin of infringement the universalrules of just conduct since people would be treateddifferently to materialsituation: according theirapparent
Thedistributive with aimsis thusirreconcilable the ruleof law, justiceat whichsocialism andwiththat freedom underthe law whichthe ruleof lawis intendedto secure.7"

IV. CRITIQUE: THE NORMATIVEDIMENSION 1. TheProblem Values Evolution and of In my accountof Hayek'sworkI haveattempted showhow he developshis to evaluative framework socialinstitutions, hencealso his highlycritical for and from an judgementsof some forms of social and political arrangements, epistemologicalbase. What is good for mankindcannot be known and rationalplansfor the futurecannotbe made;institutions be shouldtherefore in into the unknown appraised termsof theircapacityto fosterexplorations and to disseminatethe findings.But a crucialquestion is raisedas to the normativecontentof this theory.It is throughaddressing questionthat this we can locate what I believeto be the fundamental weaknessesin Hayek's work. Values are a Hayek arguesthat the spontaneousorder is value-neutral. productof, and may be alteredby, evolutionary processes:
It is not only in his knowledge, also in his aimsandvaluesthatmanis thecreature but of civilization;in the last resort, it is the relevanceof these individualwishes to the of whetherthey will persistor perpetuation the groupor the speciesthat will determine change.79

403

What is 'good' or 'bad' is thus a questionof what provesto be effectivein terms of survival. Within any given society there will be competition between differentgroups and individualswith differentsets of aims and values:
Whether groupwill prosperor be extinguished a as depends muchon the ethicalcode it that obeys,or the idealsof beautyor well-being guideit, as on the degreeto whichit has to learned satisfyits material needs.80

is Cultural conflictsof norms,withnatural development thusseenas involving selectionoperatingto resolvethe conflicts. This Darwinianapproachis paralleledby the currentfashion to apply modelsof evolutionto legalandeconomicinstitutions"8 and socio-biological thesisof Priest,82 by the well-known amongothers,that thelitigationprocess generates a natural tendency for common law rules to evolve towards as ruleswill havethe incentive to efficiency, thosedisadvantaged inefficient by These other exponents of challenge then until they are overturned.83 or modelstypicallyuse themas explanatory descriptive devices. evolutionary In contrast,Hayek'scentralpurposeis to arguethat the libertyinherentin rulesof just conduct ordershouldbe preserved the universal spontaneous by which constitutethe rule of law. Clearlythis propositionhas a normative character thusmustbe positedon some moralvalue,presumably of and that But this opens the door to a numberof powerfulobjections,which liberty. in orderof importance. may be considered increasing it has been arguedthat the rule of law, even under Hayek's own First, rulesof just conduct',is compatiblewith a systemthat definition,'universal This does not upholdlibertybut ratherpermitshighlyoppressive policies.84 if, objectionmay perhapsbe overridden as has been suggested,the test of 'universalizability' implies not merely a consistencyof treatmentbetween as similarcasesbut also that the rulesshouldbe impartial to the interestsand of Secondly,libertycannotstandby itselfas the preferences all concerned.85
sole moral value being invoked. Hayek, it will be recalled, regards liberty as

of he essentialfor the progress civilization. Inevitably, postulatesas a goal the himself of maximizing the welfareof mankindas a whole,86thus rendering vulnerable the manywell-known to criticisms utilitarianism.87 Thirdly,the of simplybecausetheyarethe implicitnotion thatrulesaremorallyappropriate result of undesignedevolutionaryprocessesis, to say the least, extremely Survivalis no test of moralworth and the theorycan be used to dubious.88 set of ruleswhichdevelopovertime.In so far as the evolutionaryjustifyany utilitariancriterionis identifiedwith the capacityto sustain the maximum humanpopulation,it leads to the absurdpropositionthat the systemwhich can support the largest population is also the best."9 The outcome of competitionbetweengroups with differentsets of aims and interestsmay be determinedby accident, local factors, and also less morally-neutral conditions,such as the exploitationof poweror use of force;90 and, wereit
otherwise, how can the considerable differencesbetween the rules operating in

it differingsocietiesbe explained? Given these difficulties, would seem that

404

for Hayek,if he wishesto adhereto his 'Blueprint the GreatSociety',is forced of his idealorder,a courseof actionwhich to arguefor the 'rational' adoption haveto condemnas beingitself'rational he would,of course,wholeheartedly constructivism'.91
2. Social Justice and UniversalRules of Just Conduct

Many - I count myselfamong them- must find morallyoffensiveHayek's of and rejection anynotionof social,or distributional, justice92 thearguments in he marshals supportof the thesisarenot his strongest. proposition The that 'justice'can apply only to humanconduct(and not states of affairs)would seem to be a semanticone, becauseit rests on his own definitionof justice which does not accordwith common usage.93The fact that it may not be to thanaccording themarket to needotherwise possibleobjectively determine criterion abilityto payshouldnot leadto theconclusion of thatthatmethodof allocationis necessarily morejust. The pricesthat individuals willingto are of pay areas mucha reflection theirwealthpositionas of the intensityof their measure desirefor the goods in questionand,as such,constitutean imperfect of socialwelfare.As Calabresi Bobbitthaveso eloquently and demonstrated, allocationpurelyby reference the marketmethodmay be acceptablefor to for washingpowdersbutis intolerable the 'tragicchoices'forcedon societyby the scarcityof some resources, examplekidneymachines;94 perhaps for and the argument holds for manychoiceswhichareless thantragic.In a moral,if not a formal,sensemarket-based decisionson suchresources as arbitrary are as thosegroundedin othercriteria. Evenif we wereto accedeto Hayek'smeta-legal that requirement legislation shouldaccordwiththe 'universal rulesofjust conduct',it is farfromclearwhy redistributive should be regardedas necessarilyinfringingthose mineasures To prescribe all citizensmustbe guaranteed that accessto a minimum rules.95 amountof resources,sufficient enablethem to participate to activelyin the or thatall thosewithincomeabovea certainthreshold shouldpay community taxeswould seemto be no less 'universal' than to insist that all occupiersof owe premises a commondutyto lawfulvisitorsto see thattheyarereasonably safe in using the premises.96 Thereis an evidentdifficulty reachingfirm in conclusionson this mattersimplybecauseHayek is vague on the degreeof generalityrequiredfor his universalrules and, indeed,is loth even to offer one examples." But, froman historical perspective, maylegitimately inquire how the principles commonlaw couldproperly of satisfythe test of 'equality' when in practicethey were formulatedin relation only to the claims of individuals hadthemeansandwillingness takelegalproceedings the who to in as in more recenttimesaccessto those courtshas highercourts.Conversely, been facilitatedby legal aid and other developments, judges have clearly alloweddistributional to influence formulation general the of goals principles,
for example, the broadening of tort liability to accord with loss-distributing techniques such as insurance"9 and the attempts to modify contract obligations in the light of fairness considerations.99 405

Hayek's unqualifiedpreferencefor generaljudicial principlesprovokes more criticism.These principles are, of course,intendedto fostereconomic growth by meeting the parties' reasonable expectations but the very of of to unpredictability the application a generalprinciple specificfacts will often hinder planningwhich is so essential for that growth. It has been demonstratedthat the economicallyoptimal precision of rules typically requiresa much greaterdegree of specificitythan Hayek's model would in Moreseriously, perhaps, an age whenfast-expanding technology allow.100 threatsto theenvironment humanwelfare, universal and rules posesimmense of just conductcan hardlyprovidethe protectionwhichmembers society of will demandagainstuncontrolled experimentation. V. CONCLUSION For the reasons outlined in the last section, my conclusion is that the normative of dimension Hayek'sworkis untenable. an explanatory As model of the development politicaland legal institutions,his epistemologicallyof while weakenedby a tendencyto push based theoryof spontaneousorder,, an to too contribution ourunderstanding arguments far,represents important of law and certainlydoes not deserveits neglect by legal theorists.The insistenceon the limits to humanknowledgeand hence on the constrained to measures, ability'rationally' controlbehaviour, particularly regulatory by provides a powerful antidote to the more optimisticviews expressedby and others.We might not agreewith the specificcharacteristics Weberians which Hayek attributesto the common law in his 'universalrules of just notion of liberty,but these conduct',notablythe unduefocus on a restrictive very assertionsforce us to reflecton, and explorefurther,the sets of values fromthe stranglehold whichgive integrityto thatlaw. Indeed,once liberated resultingfrom that insistenceon liberty,those retainingfaith in regulatory systems of law should accept the challengeand attempt to articulatethe cohere. and principles valuesaroundwhichsuchsystemsmightplausibly NOTESAND REFERENCES
1 A. I. Ogus, 'Economics,Libertyand the CommonLaw' (1980) 15 J. Societyof Public
Teachersof Law 55.

2 N. P. Barry,TheNewRight(1987). 3 The only leadinglegal theoristwho appearsto have grappledseriouslywith Hayek's writings is Professor Neil MacCormick.See, particularly,Legal Right and Social Order Ruleof Law:SomeProblems' and (1986) (1982),ch.1and'Spontaneous Democracy
35 Jahrbuch des Offentlichen Rechts der Gegenwart 1. The literature on Hayek of other

is voluminous: usefulbibliography to be foundin J. Gray,Hayek a is, disciples in contrast, on Liberty (2nded. 1986)210-49.
4 F. A. Hayek, three volumes: Rules and Order (1973); The Mirage of Social Justice (1976); and The Political Order of a Free People (1979).

5 Hayek,op. cit., n. 4 (1973),p. 17.

406

T. C. Taylor, The Fundamentalsof Austrian Economics (2nd ed. 1980). Hayek, Individualismand Economic Order(1949) ch. 2. F. A. Hayek, The Counter-Revolutionof Science (1952).

in 7 For example,'Economicsand Knowledge'(1937) 4 Economica reprinted F. A. 33,

8

9 id., pp. 34-5. 10 id., p. 39. learnfromthepastto 11 'Although itself,... we canin a measure historyneverquiterepeats F. of avoida repetition the sameprocess': A. Hayek,TheRoadto Serfdom (1944)1.
12 F. A. Hayek, Studies in Philosophy, Politics and Economics (1967) 17, 28.

13 14 15 16 17 18
19

cf. E. Butler,Hayek(1983)147. Hayek,op. cit., n. 4 (1973),ch. 2. Hayek,op. cit., n. 12,p. 69. Hayek,op. cit., n. 4 (1973),p. 45. Hayek,op. cit., n. 12,ch. 5; op. cit., n. 4 (1973)ch. 1. Hayek,op. cit., n. 4 (1973),p. 14.
His major pre-war publications were: Prices and Production (1931); Monetary Theoryand the Trade Cycle (1933); Profits, Interest and Investment(1939). I am not concerned in this

20 21 22 23 24 25
26

on workon money,credit,andtradecycles; this,seeF. anti-Keynesian paperwithHayek's in to Contribution Economics' EssaysonHayek,ed. F. Machlup (1977) Machlup, 'Hayek's 19-33. Hayek,op. cit., n. 7, chs. 2, 4; see also op. cit., n. 4 (1976),ch. 10. Hayek,op. cit., n. 7, p. 86. id. chs. 7-9; Hayek,op. cit., n. 4 (1976),pp. 1-5. Hayek,op. cit., n. 7, ch. 5. in Economics' TheBoundaries J. Gray,'Hayek,the ScottishSchoolandContemporary of eds. Economics, G. C. Winstonand R. F. Teichgraeber (1988)66-8. Hayek,op. cit., n. 11,p. 57.
F. A. Hayek, The Constitutionof Liberty (1960) ch. 10.

27 Hayek,op. cit., n. 4 (1973),chs. 3-6. 28 id.,p. 65. Law's 'lawas integrity' M. Dworkin, herewithDworkin's 29 Thereis an obviousparallel (R. to the judgeis expected interpret Empire (1986)),thoughunderthe latter,the Herculean viewsof justice. of in general principles the lightof his perceptions changing 30 Hayek,op. cit., n. 4 (1973),p. 131. 31 id., pp. 96-7. 32 id., p. 107. 33 id., p. 125. 34 cf. Ogus,op. cit., n. 1, p. 56. and this 35 Using Hayekianarguments, extremepositionis takenin B. Leoni,Freedom the Law(1961). is of the can 36 Hayekadmitsthat legislation increase certainty the law but 'thisadvantage that leadsto the requirement onlywhat has thus been morethan offsetif its recognition in op. expressed statutesshouldhavethe forceof law'[hisitalics]: cit., n. 4 (1973),p. 116. 37 id., p. 89. 38 id., p. 55. 39 Deliberately adoptingthis term,as usedby AdamSmith,amongothers:cf. op. cit., n. 4 (1973),p. 138,n. 11. 40 Hayek,op. cit., n. 26, chs. 2-3. 41 id.,p. 29. 42 id., pp. 11-13.
43 A. E. Buchanan, Deriving WelfareRightsfrom LibertarianRights (1979). See also C. Bay,

of The (1971) 1 PoliticalScience Privilege' 'Hayek'sLiberalism: Constitution Perpetual

Rev. 110-23.

socialinsurance. 44 Hayek,op. cit., n. 26, p. 285:hencethe case forcompulsory 45 V. Georgeand P. Wilding, and (1976)ch. 5. Ideology Social Welfare

407

46 Hayek,op. cit., n. 26, p. 141. 47 id.,p. 91.

48 50 R. Nozick, Anarchy, State and Utopia (1974). cf. A. I. Ogus and C. Veljanovski, Readings in the Economics of Law and Regulation (1984)

49 Hayek,op. cit., n. 4 (1979),ch. 14. 64-5. 51 Exceptwhere,as in long-distance Hayek, op. cit., n. 4 highways,tolls are practicable: (1979),p. 44. 52 id., p. 62. 53 id., p. 46.
54 A. V. Dicey, Law of the Constitution(10th ed. 1961).

55 Hayek,op. cit., n. 11,ch. 6; Hayek,op. cit., n. 26, ch. 14. of see criticism Kelsenandlegalpositivism, 56 Hayek,op. cit., n. 26, p. 238. For an extended op. cit., n. 4 (1976),pp. 44-56. 57 Hayek,op. cit., n. 26, p. 247. in to The 58 id., p. 241, referring, particular the former's LawandtheConstitution (1933)and 59 Hayek,op. cit., n. 11,p. 55. See also op. cit., n. 26, pp. 227-8. 60 id., pp.213-4.
61 63 64 Associated Provincial Picture Houses Ltd. v WednesburyCorp. [1948] 1 K. B. 223. P. Craig, AdministrativeLaw (1983) 30-1. Supra. Law the latter's Justice and Admninistrative (3rd ed. 1951).

Law 62 H. W. R. Wade,Administrative (6thed. 1988)33-4 andch. 12. 65 Hayek,op. cit., n. 4 (1979),p. 13. 66 id., pp. 36-7. 67 id., p. 32.
68 Notably, J. M. Buchanan and G. Tullock, The Calculusof Consent:Logical Foundationsof a Constitutional Democracy (1962) and J. M. Buchanan, The Limits of Liberty: Between

see and (1975).For a reviewof the literature, D. C. Mueller,Public Anarchy Leviathan see to Choice(1979),and for its application Britishinstitutions R. C. O. Matthews (ed.),
Economy and Democracy (1985).

to reluctant proposethata countrywith 69 Hayek,op. cit., n. 4 (1979),ch. 17.He is, however, shouldadopthis model:p. 107. a 'firmly established constitutional tradition' 70 id.,p. 119. 71 Hayek,op. cit.,n. 4 (1976),p. 1. with whereindividuals placedin closecommunity others,positiveduties are 72 Exceptionally, example beingfamilylaw:op. cit., n. 4 (1976),p. 36. mayarise,the mostprominent 73 id., p. 39. 74 id., pp. 17-23.
75 cf. J. M. Finnis, Natural Law and Natural Rights (1980).

76 77 78 79 80
81

Hayek,op. cit., n. 4 (1976),p. 33. id., p. 67. id., p. 86. Hayek,op. cit., n. 26, p. 36. id., p. 36.
See, generally, R. O. Zerbe (ed.), Evolutionary Models in Economics and Law; (1982) 4 Research in Law and Economics. Legal Studies 65.

Rules'(1977)6 J. 82 G. L. Priest,'TheCommonLawProcessand the Selectionof Efficient that to extension thistheory,P. H. Rubinhasargued statutelawwillhave 83 In an interesting rules sinceundercertainconditionsthosedisadvantaged inefficient a similar by property, than to litigate:'CommonLaw and Statute may find it cheaperto lobby the legislature
Law' (1982) 11 L. Legal Studies 205.

Rev. 84 J. Raz, 'TheRuleof Lawand Its Virtues' (1977)93 LawQuarterly 185. 85 Gray,op. cit., n. 3, pp. 61-8.

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86 More specifically the maximizing chancesof membersof society to achieveunknown Hayek,op. cit., n. 12,pp. 173-5.It shouldbe notedthatthoughHayekdescribes purposes: utilitarianism a 'constructivist as fallacy'(op. cit., n. 4 (1976), pp. 17-23), he is there to calculus evaluate to thansystems as rules,rather referring theuseof hedonistic particular a whole. 87 Usefullysummarized J. L. Coleman, in MoralsandtheLaw(1988)ch. 4. Markets, 88 cf. S. Gordon,'ThePoliticalEconomyof F. A. Hayek'(1981) 14 Canadian Economics J. 470. 89 Gray,op. cit., n. 3, p. 141. 90 Bay,op. cit., n. 43. 91 cf. MacCormick, cit., n. 3 (1986). op. 92 A reaction whichhe anticipated: cit., n. 26, p. 306. op. 93 D. Miller,SocialJustice(1976)17-20. 94 G. Calabresi P. Bobbitt,Tragic and Choices (1978).
95 D. Miller, 'Review of Law, Legislation and Liberty, vol. II: The Mirage of Social Justice'

(1977)4 Br.J. LawandSociety142;MacCormick, cit., n. 3 (1986)p. 13. op. 96 Occupiers' Act Liability 1957s. 2. 97 Thoughat one point he notes that freedom contract,inviolability property, the of of and another damage for in causedby faultinvariably feature contemporary dutyto compensate systemsof privatelaw:op. cit., n. 4 (1976),p. 40.
98 P. Cane, Atiyah's Accident Compensationand the Law (4th ed. 1987) p. 234. For a striking

influences negligence on claims,see the recentHouse of Lords exampleof distributional decisionSmithv EricBush[1989]2 All E.R. 514, wherein formulating dutyowed by the the surveyorsto house purchasers judges drawa clear distinctionbetweeninexpensive housesandotherproperty.
99 H. Collins, The Law of Contract (1986) ch. 9.

and 100 I. Ehrlich R. Posner,'An Economic Analysisof LegalRulemaking' (1974)3 J. Legal A. Rulesand JudicialDecisionMaking'in TheEconomic Studies; I. Ogus,'Quantitative to and Approach Law,eds. P. Burrows C. Veljanovski (1981)ch. 9.

409