Political Works

"Religious prophets and ethical philosophers have of course at all times been mostly reactionaries, defending the old against the new principles. Indeed, in most parts of the world the development of an open market economy has long been prevented by those very morals preached by prophets and philosophers, even before governmental measures did the same. We must admit that modern civilization has become largely possible by the disregard of the injunctions of those indignant moralists. As has been well said by the French historian Jean Baechler, ‘the expansion of capitalism owes its origins and raison d’être to political anarchy’."

"I can already hear our modern intellectuals hurling against such an emphasis on tradition their deadly thunderbolt of ‘conservative thinking’. But to me there can be no doubt that it was favourable moral traditions which made particular groups strong rather than intellectual design that made the progress of the past possible and will do so also in the future. To confine evolution to what we can foresee would be to stop progress; and it is due to the favourable framework which is provided by a free market but which I cannot further describe here that the new which is better has a chance to emerge."

"Law, Legislation and Liberty opened with the avowal that his political ideals had not attracted the support they merited, and that he had failed to bring home that 'the predominant model of liberal democratic institutions' in the Western world, 'necessarily leads to a gradual transformation of the spontaneous order of a free society into a totalitarian system'. To avert this fatal propensity, which Hayek remarked that Schmitt had in his time understood — but also encouraged — more than any other observer, three truths urgently needed to be understood. The first was the fundamental difference between a spontaneous order and a purposive organization, or what Hayek now termed a cosmos and a taxis […]. The rule of law could be preserved only so long as the structure of government reflected a principled separation of the two, according an absolute priority to the maintenance of the first, as the condition of a market economy in a free society, and confining the second to strictly delimited, subordinate functions in the public interest. All current democracies confused these requirements, […] with the intrusion of macro-economic steering and the erection of a welfare state, in the name of an imaginary 'social justice' - a notion without meaning. For the spontaneous order of the market not only precludes equality, it necessarily ignores desert: success within it is undeniably often a mere matter of chance. But his theory still faced an awkward difficulty in the apparent institutional outcome of the spontaneous social mechanisms it celebrated. For was not the steady erosion of the division between taxis and cosmos, with the seemingly inexorable growth of the welfare state, itself pre-eminently an evolutionary process? To roll it back required — according to Hayek's new prescriptions — drastic redesigning of the structure of the state. Indeed, what he now proposed was nothing less than a dismantling of every known legislature into two novel bodies with different competences and disparate electorates, to correspond to the two ontological kinds of order — the more powerful chamber, guardian of the rule of law as such, striking anyone under the age of forty-five off the voting-roll. This, as even sympathizers could not fail to notice, was a violent attack of the very constructivism his theory had set out to purge. Hayek was unmoved. Such was the price of preserving nomos, or the law of liberty, from the logic of popular sovereignty. Assemblies had to be stripped of their powers of general meddling, in order to secure the limited government — based on the rigour of law, not the licence of consent — which was the only guarantee of freedom. The correct formula, Hayek explained, was demarchy without democracy."

"Law, Legislation, and Liberty shows Hayek at his most bold and pioneering. Volume I brilliantly explains the differences between unplanned orders (such as languages and market economies) and planned organizations (such as business firms and centrally planned economies). Volume II explains why the popular idea of “social justice” is meaningless. Volume III contains Hayek’s most ambitious attempt to describe in detail what the legal and political structure of his ideal society would look like. The greatest contribution of Law, Legislation, and Liberty, however, is Hayek’s explanation of the fundamental difference between law and legislation. Influenced by the Italian legal scholar Bruno Leoni, Hayek argued that law is that set of rules that emerges “spontaneously,” unplanned and undesigned. Law forms out of the countless interactions of ordinary people as they go about their daily lives. Legislation, in contrast, is a set of rules and commands that government consciously designs and imposes. Hayek believed that every good society must use a combination of law and legislation, but that much mischief is caused when the two are confused."

"It is not merely the outside critic who has difficulties with Hayek's rule-bound Evolutionism. Hayek has difficulty himself. If there is an inbred wisdom, not apparent to the naked eye, in the evolution of common law or common custom, why deny this hidden wisdom to more interventionist or authoritarian structures? After all, institutions such as rent control, price control, a large nationalised sector, and heavy progressive taxation have existed in many countries for generations and have often evolved gradually. Might they not contain their own wisdom, not obvious to Hayek when writing as an economist? And will not, say, the abolition of rent control in Britain—let alone the reproduction of capitalism, or free elections, in the Soviet Union—set in train all sorts of events not foreseeable by the simple-minded democrat or free-market economist who looks only at immediate consequences?"

"The biggest weakness of Hayek's proposals for a Legislative Assembly is not the method of selection but the lack of even a vague picture of how it would operate in practice in relation to the Governmental Assembly. He is explicit that the Budget must be considered by the latter body. But the majority party in that assembly would not have unlimited freedom to make any budgetary provisions it liked, or the whole point of the arrangement would go. Would it set rates within a tax structure designed by the legislators? Where would the boundary be? Would there be any limits to tax progression, or for that matter any guarantees for social security beneficiaries? Here we are merely told that the principles of public finance would have to be rethought."

"I think that there are two possible solutions. One is to say that Hayek’s criticisms of constructed orders and his evolutionary account of the development of ethics were on two different levels. Hayek himself was a type of rule utilitarian, and his criticisms of constructed orders had to do with the bad consequences he thought they entailed. On the other hand, his evolutionary writings were a positive account of the origins, persistence, and functions of a system of ethics and of certain specific ethical norms. This also may hold the key for explaining his model constitution proposal. Here we must distinguish between rule proposal or design, and rule selection. Anyone, including Hayek, is free to propose new designs for rules. Rule selection, though, takes place through an evolutionary process: new rules and practices are tried out, and they succeed or fail. (It must be admitted, though, that the model constitution goes considerably beyond the sort of “piece-meal” proposals for change that Hayek typically viewed as acceptable. Another solution for this particular problem is to take him at his word, that it is only a model, a kind of thought experiment.)"

"Law, Legislation and Liberty was written and published during a different period from The Constitution of Liberty. The earlier work was a product of the late 1950s—a generally optimistic and socially cohesive time when Hayek himself was in his late fifties, at the University of Chicago. Law, Legislation and Liberty, on the other hand, was a product of the 1960s and 1970s, a far more turbulent time, as he became an old man, was somewhat intellectually isolated in Freiburg and Salzburg, and experienced depression. That the later work has a different feel from the former is hardly to be unexpected. The relationship between the two works might be considered to be something like that between Plato’s Republic, a product of his prime, and Plato’s Laws, a product of his old age."

"Hayek’s attempt to fashion a regime in which the freedoms he cherished would be invulnerable to political challenge led him to some curious proposals. In The Political Order of a Free People (1979), the third volume of his last major work, Law, Legislation and Liberty, he outlined a scheme for a bicameral legislature in which the upper chamber is composed only of people elected at the age of 45 for a 15-year term by an electorate also consisting only of 45-year-olds. When they reached 60, members of the upper house would be retired and given a lifelong sinecure. Hayek liked to ridicule the idea that institutions could be designed on the basis of abstract models – a view he criticised as embodying a philosophy of “constructivist rationalism”. Yet his scheme for an ultra-liberal constitution was a prototypical version of the philosophy he had attacked."

"Von Hayek’s insistence that representative democracy must be restrained so that democracy can be protected from its own worst tendencies arguably placed much too much faith in the spontaneous freedoms allegedly generated by markets. It supposed rather too readily that constitutional mechanisms could be relied upon to have self-restraining effects upon the power and scope of government. There is as well the suspicion that ‘demarchy’ would in practice quickly degenerate into a species of state authoritarianism. Von Hayek was fond of proposing (see ibid., p. 113) a bicameral system of government regulated principally by an assembly charged with the task of defining and protecting the constitutional framework. The assembly members would comprise men and women aged between 45 and 60, elected as representatives for a fifteen-year term by voters who cast their ballots for a representative of their choice only once in their lives, in the calendar year in which they reached the age of 45. Quite aside from numerous technical objections to the whole proposal for an assembly that resembled a senate of the wise, Von Hayek never made clear exactly how public support could freely be won for constitutional rule by an elite based on such a restricted franchise. These and other criticisms of his attack on democracy have been well developed by others elsewhere. Here, the fundamental objection to von Hayek’s reasoning is quite different, and more elementary. It is an empirical objection: that von Hayek failed to spot the growth of monitory democracy, with its scores of new non-market and extra-constitutional mechanisms designed to monitor and make publicly accountable exercises of power, not only in the field of domestic and cross-border government but also in the local, regional and global fields of markets and other civil society institutions."

"Hayek's political philosophy either invokes a number of different, and incompatible, moral theories to defend different claims, or lacks any normative moral theory at all. [...] Hayek presents three kinds of argument to defend his liberal social order and the conception of justice he sees at its heart. The first is a contractarian argument which invokes Kantian considerations to deny that patterning principles of social justice can be morally justified. The second is a conservative argument which not only points to the value of established traditions but also repudiates the claim that reason can present complete justifications for the rules governing any social order. The liberal order is preferred as that order which makes the fewest demands upon individual reason, for its principles of justice aim primarily at maintaining the abstract order of rules rather than at the rational reconstruction of society according to principles of distributive justice. The third is a utilitarian argument drawing attention to the beneficial consequences of a stable regime of liberal justice: progress and material prosperity. While each of these arguments appears in Hayek's work, none, as we have seen, can clearly be held to be fundamental."

"Hayek himself, then, was a partisan of the milder version of Hayekianism. This version is not so much a prescription as an attitude. Respect tradition. Reject utopianism. Plan for mistakes rather than for perfection. If reform is needed, look for paths that follow the terrain of custom, if possible. If someone promises to remake society on rational or supernatural or theological principles, run in the opposite direction. In sum: Move ahead, but be careful. Good advice. But not advice, particularly, against gay marriage. Remember Hayek's admonition against dogmatic conservatism. In a shifting current, holding your course can be just as dangerous as oversteering. Conservatives, in their panic to stop same-sex marriage, jeopardize marriage's universality and ultimately its legitimacy. They are taking risks, and big ones, and unnecessary ones. The liberal tradition and the Declaration of Independence are not currents you want to set marriage against."

"To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection — the comparative increase of population and wealth — of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be 'fruitful, and multiply, and replenish the earth, and subdue it' (Genesis 1:28). This process is perhaps the least appreciated facet of human evolution."

"The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised."

"I wish neither to deny reason the power to improve norms and institutions nor even to insist that it is incapable of recasting the whole of our moral system in the direction now commonly conceived as 'social justice'. We can do so, however, only by probing every part of a system of morals. If such a morality pretends to be able to do something that it cannot possibly do, e.g., to fulfill a knowledge-generating and organisational function that is impossible under its own rules and norms, then this impossibility itself provides a decisive rational criticism of that moral system. It is important to confront these consequences, for the notion that, in the last resort, the whole debate is a matter of value judgements and not of facts has prevented professional students of the market order from stressing forcibly enough that socialism cannot possibly do what it promises."

"Our moral traditions, like many other aspects of our culture, developed concurrently with our reason, not as its product."

"It is no accident that many abstract rules, such as those treating individual responsibility and several property, are associated with economics. Economics has from its origins been concerned with how an extended order of human interaction comes into existence through a process of variation, winnowing and sifting far surpassing our vision or our capacity to design."

"Information-gathering institutions such as the market enable us to use such dispersed and unsurveyable knowledge to form super-individual patterns."

"This evolution [of extended order] came about, then, through the spreading of new practices by a process of transmission of acquired habits analogous to, but also in important respects different from, biological evolution. I shall consider some of these analogies and differences below, but we might mention here that biological evolution would have been far too slow to alter or replace man's innate responses in the course of the ten or twenty thousand years during which civilisation has developed - not to speak of being too slow to have influenced the far greater numbers whose ancestors joined the process only a few hundred years ago."

"Part of our present difficulty is that we must constantly adjust our lives, our thoughts and our emotions, in order to live simultaneously within the different kinds of orders according to different rules. If we were to apply the unmodified, uncurbed, rules of the micro-cosmos (i.e. of the small band or troop, or of, say, our families) to the macro-cosmos (our wider civilisation), as our instincts and sentimental yearnings often make us wish to do, we would destroy it. Yet if we were always to apply the rules of the extended order to our more intimate groupings, we would crush them. So we must learn to live in two sorts of world at once."

"It is true that the greater part of our daily lives, and the pursuit of most occupations, give little satisfaction to deep-seated 'altruistic' desires to do visible good. Rather, accepted practices often require us to leave undone what our instincts impel us to do. It is not so much, as is often suggested, emotion and reason that conflict, but innate instincts and learnt rules. Yet, as we shall see, following these learnt rules generally does have the effect of providing a greater benefit to the community at large than most direct 'altruistic' action that a particular individual might take."

"The evolution of rules was far from unhindered, since the powers enforcing the rules generally resisted rather than assisted changes conflicting with traditional views about what was right or just."

"Just as instinct is older than custom and tradition, so then are the latter older than reason: custom and tradition stand between instinct and reason - logically, psychologically, temporally. They are due neither to what is sometimes called the unconscious, nor to intuition, nor to rational understanding. Though in a sense based on human experience in that they were shaped in the course of cultural evolution, they were not formed by drawing reasoned conclusions from certain facts or from an awareness that things behaved in a particular way. Though governed in our conduct by what we have learnt, we often do not know why we do what we do."

"No one who takes an evolutionary approach to the study of culture can, however, fail to be aware of the hostility often shown towards such approaches. Such hostility often stems from reactions to just those 'social scientists' who in the nineteenth century needed Darwin to recognise what they ought to have learnt from their own predecessors, and who did a lasting disservice to the advance of the theory of cultural evolution, which they indeed brought into discredit."

"If morals and tradition, rather than intelligence and calculating reason, lifted men above the savages, the distinctive foundations of modern civilisation were laid in antiquity in the region surrounding the Mediterranean Sea. This is not necessarily true."

"An important aspect of this freedom - the freedom on the part of different individuals or sub-groups to pursue distinct aims, guided by their differing knowledge and skills - was made possible not only by the separate control of various means of production, but also by another practice, virtually inseparable from the first: the recognition of approved methods of transferring this control."

"Nothing is more misleading, then, than the conventional formulae of historians who represent the achievement of a powerful state as the culmination of cultural evolution: it as often marked its end. In this respect students of early history were overly impressed and greatly misled by monuments and documents left by the holders of political power, whereas the true builders of the extended order, who as often as not created the wealth that made the monuments possible, left less tangible and ostentatious testimonies to their achievement."

"Having written of the pretence of reason and the dangers of 'rational' interference with spontaneous order, I need to add yet another word of caution. My central aim has made it necessary to stress the spontaneous evolution of rules of conduct that assist the formation of self-organising structures. This emphasis on the spontaneous nature of the extended or macro-order could mislead if it conveyed the impression that, in the macro-order, deliberate organisation is never important."

"This 'chain reaction' sparked by new settlement and trade may be studied more closely. While some animals are adapted to particular and rather limited environmental 'niches' outside of which they can hardly exist, men and a few other animals such as rats have been able to adapt themselves almost everywhere on the surface of the earth. This is hardly due merely to adaptations by individuals."

"To create such an order, such individuals had to be able to use information for purposes known only to themselves. They could not have done so without the benefit of certain practices, such as that of the xenos, shared in common with distant groups."

"Indeed, by the nineteenth century, serious intellectual appreciation and discussion of the role of property in the development of civilisation would seem to have fallen under a kind of ban in many quarters. During this time property gradually became suspect among many of those who might have been expected to investigate it, a topic to be avoided by progressive believers in a rational reshaping of the structure of human cooperation."

"I have just written that the study of traditional institutions such as property 'fell under a ban'. This is hardly an exaggeration, for it is highly curious that so interesting and important a process as the evolutionary selection of moral traditions has been so little studied, and the direction these traditions gave to the development of civilisation so largely ignored. Of course this will not seem so peculiar to a constructivist. If one suffers under the delusion of 'social engineering', the notion that man can consciously choose where he wants to go, it will not seem so important to discover how he reached his present situation."

"The influence of rationalism has indeed been so profound and pervasive that, in general, the more intelligent an educated person is, the more likely he or she now is not only to be a rationalist, but also to hold socialist views (regardless of whether he or she is sufficiently doctrinal to attach to his or her views any label, including 'socialist'). The higher we climb up the ladder of intelligence, the more we talk with intellectuals, the more likely we are to encounter socialist convictions. Rationalists tend to be intelligent and intellectual; and intelligent intellectuals tend to be socialists."

"Moreover, it is perhaps appropriate to remind readers in this place of my essay 'On Why I Am Not a Conservative' (1960: Postscript), lest they draw inaccurate conclusions. Although my argument is directed against socialism, I am as little a Tory-Conservative as was Edmund Burke. My conservatism, such as it is, is entirely confined to morals within certain limits. I am entirely in favour of experimentation - indeed for very much more freedom than conservative governments tend to allow."

"Like other traditions, the tradition of reason is learnt, not innate. It too lies between instinct and reason; and the question of the real reasonableness and truth of this tradition of proclaimed reason and truth must now also scrupulously be examined."

"Hence I wish to concede forthwith that most tenets, institutions, and practices of traditional morality and of capitalism do not meet the requirements or criteria stated and are -from the perspective of this theory of reason and science - 'unreasonable' and 'unscientific'. Moreover, since, as we have also admitted, those who continue to follow traditional practices do not themselves usually understand how these practices were formed or how they endure, it is hardly surprising that alternative justifications', so-called, that traditionalists sometimes offer for their practices are often rather naive (and hence have provided fair game for our intellectuals), and have no connection with the real reasons for their success. Many traditionalists do not even bother with justifications that could not be provided anyway (thus allowing intellectuals to denounce them as anti-intellectual or dogmatic), but go on following their practices out of habit or religious faith. Nor is this in any way `news'."

"There is the question of how our knowledge really does arise. Most knowledge - and I confess it took me some time to recognise this - is obtained not from immediate experience or observation, but in the continuous process of sifting a learnt tradition, which requires individual recognition and following of moral traditions that are not justifiable in terms of the canons of traditional theories of rationality."

"The information that individuals or organisations can use to adapt to the unknown is necessarily partial, and is conveyed by signals (e.g., prices) through long chains of individuals, each person passing on in modified form a combination of streams of abstract market signals. Nonetheless, the whole structure of activities tends to adapt, through these partial and fragmentary signals, to conditions foreseen by and known to no individual, even if this adaptation is never perfect. That is why this structure survives, and why those who use it also survive and prosper."

"Whereas, in fact, specialised students, even after generations of effort, find it exceedingly difficult to explain such matters, and cannot agree on what are the causes or what will be the effects of particular events. The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. To the naive mind that can conceive of order only as the product of deliberate arrangement, it may seem absurd that in complex conditions order, and adaptation to the unknown, can be achieved more effectively by decentralizing decisions and that a division of authority will actually extend the possibility of overall order. Yet that decentralization actually leads to more information being taken into account."

"The whole process of calculating in terms of market prices was, indeed, sometimes even represented as part of a devious manoeuvre on the part of owners of capital to conceal how they exploited workers. But such retorts quite fail to address the arguments and facts already rehearsed: some hypothetical body of objective facts is no more available to capitalists for manipulating the whole than it is to the managers that the socialists would like to replace them. Such objective facts simply do not exist and are unavailable to anyone."

"There is a difference between following rules of conduct, on the one hand, and knowledge about something, on the other. (...) The habit of following rules of conduct is an ability utterly different from the knowledge that one's actions will have certain kinds of effects."

"There is the important point that an order arising from the separate decisions of many individuals on the basis of different information cannot be determined by a common scale of the relative importance of different ends."

"Such an order, although far from perfect and often inefficient, can extend farther than any order men could create by deliberately putting countless elements into selected 'appropriate' places. Most defects and inefficiencies of such spontaneous orders result from attempting to interfere with or to prevent their mechanisms from operating, or to improve the details of their results. Such attempts to intervene in spontaneous order rarely result in anything closely corresponding to men's wishes, since these orders are determined by more particular facts than any such intervening agency can know."

"Comprehending the role played by the transmission of information (or of factual knowledge) opens the door to understanding the extended order. Yet these issues are highly abstract, and are particularly hard to grasp for those schooled in the mechanistic, scientistic, constructivist canons of rationality that dominate our educational systems - and who consequently tend to be ignorant of biology, economics, and evolution."

"There is an irony here: that precisely those who do not think of economic events in literally materialistic terms - that is, in terms of physical quantities of material substances - but are guided by calculations in terms of value, i.e., by the appreciation that men have for these objects, and particularly those differences between costs and price that are called profits, should habitually be denounced as materialists. Whereas it is precisely the striving for profit that makes it possible for those engaged in it not to think in terms of material quantities of particular concrete needs of known individuals, but of the best way in which they can contribute to an aggregate output that results from the similar separate efforts of countless unknown others."

"Perhaps the main force behind the persistent dislike of commercial dealings is then no more than plain ignorance and conceptual difficulty. This is however compounded with preexisting fear of the unfamiliar: a fear of sorcery and the unnatural, and also a fear of knowledge itself harking back to our origins and indelibly memorialised in the first few chapters of the book of Genesis, in the story of man's expulsion from the Garden of Eden. All superstitions, including socialism, feed on such fear."

"Some habits that have crept into mathematical analysis of the market process often mislead even trained economists."

"The creation of wealth is not simply a physical process and cannot be explained by a chain of cause and effect. It is determined not by objective physical facts known to any one mind but by the separate, differing, information of millions, which is precipitated in prices that serve to guide further decisions."

"Ignorance of the function of trade, which led initially to fear, and in the Middle Ages to uninformed regulation, and which only comparatively recently yielded to better understanding, has, then, now been revived in a new pseudo-scientific form."

"Money, the very 'coin' of ordinary interaction, is hence of all things the least understood and - perhaps with sex - the object of greatest unreasoning fantasy; and like sex it simultaneously fascinates, puzzles and repels."