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0263-323X$3.00
LawAndSpontaneousOrder:Hayek'sContribution
to Legal
Theory
A. I. OGUS*
Ten years ago, I observedthat the work of Friedrichvon Hayek had been
unjustifiablyneglectedby legalwritersin this country.1Notwithstandingthe
impactand influenceof New Right theoristsin the period since then,2the
Thisis all themoresurprisingbecause,
situationhasnot alteredsignificantly.3
in
issuescentralto legaltheory:
his
later
addresses
works,Hayek
particularly
the natureof law and the state,justice,constitutionalstructures,and the rival
meritsof commonlaw and legislation.
Of course, Hayek'sexplorationof law has been, in no sense, a separate
enterprise;rather,it is but one part of an overarchingunifiedrestatementof
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
shallfocus on Hayek'scontributionto legaltheoryas expoundedprincipally
in his lastmajorworkLaw,LegislationandLiberty4but will attemptto place
that in the context of his general theory of society, as it was developed
throughouthis intellectualcareer.Aftera shortaccountof Hayek'sapproach
to socialsciencemethodology,I show how he uses an epistemologicaltheory
to developtwo models of social organization:spontaneousorder,which he
identifieswiththemarketandwithcommonlaw,andrationalconstructivism,
whichis associatedwitha plannedeconomyandregulatorylaw.Hayek'smain
thesisis thatit is onlythefirstof thesewhich,by preservinglibertysubjectonly
to universalrules of just conduct, can guaranteethe progressof human
civilization. I argue that the normative dimension of this assertion is
flawedbutthat,as an explanatorymodelof thedevelopmentof
fundamentally
law, Hayek'stheorymeritsseriousattention.
This paperis the secondin a seriesdealingwith the work of theoristswho have substantially
influencedcontemporary
of lawandsociety.(SeepreviouslyH. Collins,'Roberto
understanding
Ungerand the CriticalLegalStudiesMovement'(1987)13J. of LawandSociety387.)
393
prices which reflect peoples' needs for products (demand), with profits
rewardingthose whose skill, or perhapsluck, enablesthem to adaptbest to
thosesignals.Theyneedknownothingof whydemandchanges,stilllessof the
economy as a whole. The 'marvel'of prices is: 'how little the individual
participantsneed to know in order to be able to take the right action. In
abbreviatedform,by a kindof symbol,only the most essentialinformationis
passedon and passedon only to those concerned.'21
Plannedeconomic systems fail simply because no individual,or set of
individuals,can have the knowledgerequiredto co-ordinatethe activitiesof
producersandconsumers;and, in any event,economicprogressis dependent
on individualsbeing rewardedfor successfulexperimentationwith what is
whollyor partiallyunknown.22
Whiletheseideasmaybe largelysharedby neo-classicaleconomists,Hayek
divergesfromtheirtraditionaltheoryby not relyingon assumptionseitherof
the perfectknowledgeof economic actors, or of perfectcompetition.The
phenomenaof the marketprocessare alwaysin a stateof flux.An individual
entrepreneurmay, for example, offer a new product, guessing from
informationaboutotherproductsthattherewill be sufficientdemandfor it;if
her or his guessworkis good, she or he will enjoyan initialmonopolypower
but,unlesstherearebarriersto entry,thatwillnot last.Thisviewof themarket
as a dynamicprocess led Hayek to be highly criticalof the neo-classical
obsessionwith supplyand demandequilibriumand allocativeefficiency:23
a
model in which, respondingto stable preferences,resourcesare assumedto
gravitate towards such an equilibriumdistorts the reality of economic
behaviour,becausethereis an inherenttendencyfor agents, in the light of
newly-acquiredknowledge,to move away from this state. Since Hayek's
approachdoes not lenditselfto econometricmodellingof the kindwhichnow
dominatesthe economicsdiscipline,it is perhapsnot surprisingthathis work
is neglectedby contemporaryeconomists.24
2. CommonLaw as Spontaneous Order
396
403
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
Democracy(1982),ch.1and'SpontaneousOrderandRuleof Law:SomeProblems'(1986)
35 Jahrbuch des Offentlichen Rechts der Gegenwart 1. The literature on Hayek of other
F. A. Hayek, three volumes: Rules and Order (1973); The Mirage of Social Justice (1976);
and The Political Order of a Free People (1979).
406
13
14
15
16
17
18
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.
19
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
25
26
20
21
22
23
24
407
cf. A. I. Ogus and C. Veljanovski, Readings in the Economics of Law and Regulation (1984)
64-5.
51 Exceptwhere,as in long-distancehighways,tolls are practicable:Hayek, op. cit., n. 4
(1979),p. 44.
52 id., p. 62.
53 id., p. 46.
54
59 Hayek,op. cit., n. 11,p. 55. See also op. cit., n. 26, pp. 227-8.
60 id., pp.213-4.
61
76
77
78
79
80
81
See, generally, R. O. Zerbe (ed.), Evolutionary Models in Economics and Law; (1982) 4
Research in Law and Economics.
408
D. Miller, 'Review of Law, Legislation and Liberty, vol. II: The Mirage of Social Justice'
P. Cane, Atiyah's Accident Compensationand the Law (4th ed. 1987) p. 234. For a striking
409