Sunday 9 October 2016

Friedrich Hayek's Law, Legislation and Liberty – a personal evaluation.

By Trevor Watkins

I recently had the pleasure of reading F Hayek's seminal work “Law, Legislation and Liberty”. I found the experience rather like reading Ayn Rand for the first time – an unexpected epiphany, one profound insight after another.
The book was first published in one volume with corrections and revised preface in 1982 by Routledge & Kegan Paul Ltd.
The complete PDF of the book can be downloaded here Hayek - Law, Legislation And Liberty.
I felt compelled to put this new perspective on the old problem of liberty down in writing, to order my thoughts for my own benefit, and for any benefit it may supply to others who lack the time to read all 646 pages of the work.
The reader may assume that any text within quotes is taken directly from the book. Hayek's prose is so well constructed that it would do it a great injustice to summarise or amend it.
This is Hayek's major statement of political philosophy. Rejecting Marx, Freud, logical positivism and political egalitarianism, Hayek shows that the naive application of scientific methods to culture and education has been harmful and misleading, creating superstition and error rather than an age of reason and culture.”
The thesis of this book is that a condition of liberty in which all are allowed to use their knowledge for their own purposes, restrained only by rules of just conduct of universal application, is likely to produce for them the best conditions for achieving their aims; and that such a system is likely to be achieved and maintained only if all authority, including that of the majority of the people, is limited in the exercise of coercive power by general principles to which the community has committed itself.
Individual freedom, wherever it has existed, has been largely the product of a prevailing respect for such principles which, however, have never been fully articulated in constitutional documents. Freedom has been preserved for prolonged periods because such principles, vaguely and dimly perceived, have governed public opinion.”

The Great Society

Hayek frequently refers to “The Great Society”, a term coined by Adam Smith, similar to Karl Popper's “Open Society”. This is the society to which we should all aspire - a peaceful, free and just society in which the chances of success of anyone selected at random are likely to be as great as possible.
Through its development and adoption of markets and common law, Western society has approached closer to a Great Society than any other, but is currently turning away from these institutions and is declining accordingly.
The basic order of the Great Society
  • is not designed, and cannot aim at particular foreseeable results
  • arises not from rational analysis, but through a spontaneous order
  • allows coercion only if it is applied in the enforcement of universal rules of just conduct equally applicable to all citizens
  • Derives its legitimacy from a commitment to general principles approved by widespread opinion and applicable to all.
  • rests on a system of values which have evolved over time, which have survived by trial and error from the efforts of our ancestors and which have been more successful than all other alternatives.


Like so many other important concepts, the meaning of the word “Law” has been mongrelised by progressive forces to mean many things. Hayek uses “law” to mean the common law, traditional law, those rules of just conduct which at one time were regarded as the law. This law is sometimes described as private law, or lawyers law. This is the law referred to in “the rule of law”. For the sake of precision, Hayek allocates the Greek word Nomos to identify this law.
The law will consist of purpose-independent rules which govern the conduct of individuals towards each other, are intended to apply to an unknown number of further instances, and by defining a protected domain of each, enable an order of actions to form itself wherein the individuals can make feasible plans.”
The common law 'does not consist of particular cases, but of general principles, which are illustrated and explained by those cases.”


Legislation produced by governments for specific short term objectives he describes as “public law”. These are rules for the organisation of government, easily and often changed. Hayek allocates the word Cosmos to refer to this type of law.
“It turns out that the Americans two hundred years ago were right and an almighty Parliament means the death of the freedom of the individual. Apparently a free constitution no longer means the freedom of the individual but a licence to the majority in Parliament to act as arbitrarily as it pleases. We can either have a free Parliament or a free people. Personal freedom requires that all authority is restrained by long-run principles which the opinion of the people approves.”
“The lack of comprehension of the function of law has become significant. It has resulted in a frequent interpretation of law as an instrument of organization for particular purposes, an interpretation which is of course true enough of one kind of law, namely public law, but wholly inappropriate with regard to the nomos or lawyer's law. And the predominance of this interpretation has become one of the chief causes of the progressive transformation of the spontaneous order of a free society into the organization of a totalitarian order.”“Thus it came about that governmental assemblies, whose chief activities were of the kind which ought to be limited by law, became able to command whatever they pleased simply by calling their commands 'laws'”

Spontaneous orders

We are familiar with the concept of the market as a spontaneous order, which produces desirable outcomes for the majority of participants, despite the limitations on their available knowledge and reasoning powers. The “invisible hand” of the market guides the actions of participants, through the pricing mechanism, to be of service to their fellows in the most efficient way, although that was never the intention of the individuals involved.
There are many successful spontaneous orders in addition to the market. Nature itself is a large and complex spontaneous order, largely self-regulating, unplanned and unknowable. So is the development of language, and of morals. The internet is a human made spontaneous order, which has evolved to become unplanned, unknowable in its full extent, beyond individual human direction.
Hayek's critical insight is that law itself arises from a spontaneous order which is beyond the knowledge and understanding of any one individual or group. There are limits to our power of reasoning: there are limits to our knowledge: but the spontaneous orders of the market and the development of law allow us to compensate for these limits in order to be successful and productive.

The role of reason

Because our knowledge is always limited and imperfect, we cannot rely on reason alone to tell us what we ought to do.
“Reason is merely a discipline, an insight into the limitations of the possibilities of successful action, which often will tell us only what not to do. This discipline is necessary precisely because our intellect is not capable of grasping reality in all its complexity.”
“But the desire to use our reason to turn the whole of society into one rationally directed engine persists, and in order to realize it, common ends are imposed upon all that cannot be justified by reason and cannot be more than the decisions of particular wills.”

Freedom and justice

Freedom is when you may use your particular knowledge and property to accomplish your own particular purposes. Justice is those rules of conduct that equally limit the freedom of each so as to assure the same freedom to all. A rule of just conduct serves the reconciliation of the different purposes of many individuals. In a free society coercion is permissible only to secure obedience to universal rules of just conduct.
“It is only by extending the rules of just conduct to the relations with all other men, and at the same time depriving of their obligatory character those rules which cannot be universally applied, that we can approach a universal order of peace which might integrate all mankind into a single society.”
“The only moral principle which has ever made the growth of an advanced civilization possible was the principle of individual freedom, which means that the individual is guided in his decisions by rules of just conduct and not by specific commands. No principles of collective conduct which bind the individual can exist in a society of free men.”
“Justice is thus emphatically not a balancing of particular interests at stake in a concrete case, or even of the interests of determinable classes of persons, nor does it aim at bringing about a particular state of affairs which is regarded as just. It is not concerned with the results that a particular action will in fact bring about. The observation of a rule of just conduct will often have unintended consequences which, if they were deliberately brought about, would be regarded as unjust. And the preservation of a spontaneous order often requires changes which would be unjust if they were determined by human will.”
“A judge's decision is not guided by any knowledge of what the whole of society requires at the particular moment, but solely by what is demanded by general principles on which the order of society is based.”
“Justice is not concerned with the results of the various transactions but only with whether the transactions themselves are fair.”
“In a free society the state does not administer the affairs of men. It administers justice among men who conduct their own affairs.” (Walter Lippmann, An Inquiry into the Principles of a Good Society (Boston, 1937), p. 267).


A principle describes how you ought to behave. It does not proscribe how you will behave. It is not changed by circumstances. It does not vary relative to prevailing conditions. It does not take utility or the greatest good into account.
The Consent Axiom is an example of a general principle. It says that you may take no action against another human being without their full and informed consent.
“If we are not guided by a body of coherent principles, the outcome is likely to be a suppression of individual freedom.”
“Classical liberalism rested on the belief that there existed discoverable principles of just conduct of universal applicability which could be recognized as just irrespective of the effects of their application on particular groups.”
“Liberal principles can be consistently applied only to those who themselves obey liberal principles, and cannot always be extended to those who do not.”
“The power of all authorities exercising governmental functions ought to be limited by long run rules which nobody has the power to alter or abrogate in the service of particular ends: principles which are the terms of association of the community that recognizes an authority because this authority is committed to such long-term rule.”
“Lawyers in many fields have become the tools, not of principles of justice, but of an apparatus in which the individual is made to serve the ends of his rulers.”

Protected domains and property rights

The discipline of freedom and civilisation allows each individual to try to build for himself a protected domain with which nobody else is allowed to interfere and within which he can use his own knowledge for his own purposes. These are our “property rights”.
“The individual domains which the rules of just conduct protect will have to be referred to again and again, and the manner in which such domains are acquired, transferred, lost, and delimited will usefully be stated once and for all in rules of just conduct. All the rules which state the conditions under which property can be acquired and transferred, valid contracts or wills made, or other 'rights' or 'powers' acquired and lost, serve merely to define the conditions on which the law will grant the protection of enforceable rules of just conduct.”
“The rules [of just conduct] do not confer [property] rights on particular persons, but lay down the conditions under which such rights can be acquired. What will be the domain of each will depend partly on his actions and partly on facts beyond his control. The rules serve merely to enable each to deduce from facts which he can ascertain the boundaries of the protected domain which he and others have succeeded in cutting out for themselves.”


“What today we call democratic government serves, as a result of its construction, not the opinion of the majority but the varied interests of a conglomerate of pressure groups whose support the government must buy by the grant of special benefits, simply because it cannot retain its supporters when it refuses to give them something it has the power to give. The resulting progressive increase of discriminating coercion now threatens to strangle the growth of a civilization which rests on individual freedom.”
“For those, on the other hand, who make the power of the legislator necessarily unlimited, individual freedom becomes a matter 'beyond salvation' and freedom comes to mean exclusively the collective freedom of the community, i.e. democracy.”
“So long as the present form of democracy persists, decent government cannot exist, even if the politicians are angels or profoundly convinced of the supreme value of personal freedom. We have no right to blame them for what they do, because it is we who, by maintaining the present institutions, place them in a position in which they can obtain power to do any good only if they commit themselves to secure special benefits for various groups.”


Hayek regards taxation as a “special measure”, an exception to the rules of his nomos. He asks whether a burden that a majority is willing to bear may also be imposed on a minority unwilling to do so. How a given total burden is to be apportioned between the different persons and groups does raise questions of justice. But he does concede that the state must raise funds through taxation, and that this will be in conflict with the principle for the use of coercion. He relies on the good nature and integrity of those in government to levy taxes fairly and evenly across the population.
For me, this represents a flaw in his otherwise admirable thinking – a concession to the status quo.


Libertarians and classical liberals believe in the possibility of a Great Society – a peaceful, free and just society in which everyone's chances of success are optimised. But they are often confused as to what the elements of such a society would be, and how it would arise. Hayek has applied his mind to this problem, and defines the nature of this society, the conditions from which it arises, and the constraints and conditions under which it must operate in order to be successful.
The Great Society is not designed. It is not brought about through rational analysis and concerted action. It arises as a spontaneous order through the participation and cooperation of willing individuals, none of whom know or understand the entirety of what they have wrought. It is based on principles - negative rules of an abstract nature, applicable to all, identifying what may not be done rather than what must be done. It allows coercion only under limited and specific conditions. It respects the right to own property. It is not democracy. It is not concerned with “social justice'. It is not intuitive.
What does this mean for the future?
The Great Society will not be achieved through democracy, which is merely a means for selecting the most popular group to shoulder the burden of the organisation of the state.
It will not come about through politics.
It will not come about through force, or directed action, or supreme effort.
The achievement of the Great Society depends on persuading the general populace to adopt the negative laws of just conduct as the basis of order within society. It requires men of reason to have faith in the power of spontaneous orders to bring about positive results, even where this is not the intention. It requires men of action to do less. It requires men of wisdom to acknowledge their ignorance. It requires men and women for whom peace, freedom and justice are their primary values.

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