F.A. Hayek: Between Classical Liberalism and Conservatism?

A dozen years before Rules and Order, Hayek published another monumental work, The Constitution of Liberty, with a Postscript titled “Why I Am Not a Conservative.” The reader of Rules and Order, especially perhaps its first chapter, might find Hayek more conservative than he announced. Evaluating this issue provides another reason for reviewing this important book on the eve of its 50th anniversary.

Hayek as a Conservative?

Rules and Order proposes a strong defense of traditional moral and legal rules— “rules of just conduct”—as a product of the experience of generations and an adaptation to our ignorance of all the multitude of facts we need to take into account when acting. These rules are customs, habits, practices, even prejudices, which may not be formulated or even capable of articulation. “Man,” Hayek wrote, “is as much a rule-following animal as a purpose-seeking one.”

Law is made of those rules of conduct that need to be enforced for the maintenance of society. Historically, law is older than legislation. It was considered as given, something that a “legislator” might discover but not change. Especially under democratic assemblies, the law morphed into what legislators say it is. People now speak of “lawmakers.”

Efficient rules and institutions, including law, are a product of social evolution. These evolved rules “enabled the group in which they had arisen to prevail against others.” Hayek explains that he is speaking of cultural evolution, not selection by war.

Viewing society as intentionally designed by humans is, in his opinion, naively rationalistic, constructivist, and anthropomorphic. Our language reflects a childish anthropomorphism with “current notions as that society ‘acts’ or that it ‘treats’, ‘rewards’, or ‘remunerates’ persons, or that it ‘values’ or ‘owns’ or ‘controls’ objects or services or is ‘responsible for’ or ‘guilty of’ something, or that it has a ‘will’ or ‘purpose’, can be ‘just’ or ‘unjust’, or that the economy ‘distributes’ or ‘allocates’ resources.”

Interestingly, as Hayek shows, it was the classical liberal social theorists of the 18th and 19th centuries who developed the evolutionary approach. They were “Darwinians before Darwin.” Charles Darwin copied them and applied their idea to biology. So-called “social Darwinism” was a later sociological corruption of biological Darwinism.

Autoregulated Order and Reform

The spontaneous or autoregulated order of society is neither natural in the sense of the exact sciences nor cultural in the sense of man-made. It is, as Adam Ferguson said in a 1767 book, “the result of human action, but not the execution of any human design.”3

A related distinction is between an organization and a spontaneous order. An organization (say, an association or corporation) is designed to accomplish a particular purpose and is ultimately managed by commands. A spontaneous order, on the contrary, is self-regulating. The rules that guide it are not directed towards a common purpose. They are “the same, if not necessarily for all members, at least for whole classes of members not individually designated by name” and apply “to an unknown and indeterminable number of persons and instances.” These rules are thus said to be “abstract,” as opposed to the concrete information (Hayek uses the word “knowledge”), to the purposes of the several individuals, and to individualized, discriminatory rules.

Two clarifications may be useful. The concrete knowledge or information that Hayek talks about pertains to what each individual knows about his own circumstances and the constraints and opportunities of his immediate environment. In an autoregulated order, there is no common purpose—except the purpose of maintaining the abstract order serving all individuals.

The function of social rules is to coordinate the expectations of the several individuals. A social order is called an order precisely because it asures the “matching of the intentions and expectations of individuals.” Evolved rules embody information dispersed across all individuals. They work like prices in the economy, conveying more information than any single individual can possess.4 This capacity for marshaling information explains why only a spontaneous social order can generate prosperity.

A general argument against government interference follows. It is impossible to improve the results of a spontaneous order with specific commands from political authorities, as those prevent people from using their own information for their own purposes, thereby maximizing the use of information. Rulers, including democratic assemblies, cannot possess all that information and are thus incapable of “running the country” as one runs a factory or any other organization. The best they can do is to assist the functioning of an abstract social order.

In a dynamic order, of course, “only some expectations can be protected.” Protecting everybody’s expectations would lead to economic and social stasis. In practice, it means that “authority is to decide who is to be hurt.”

The maximal coincidence of expectations is achieved by “the delimitation of protected domains,” that is, equal private property rights in a general sense. This way, in pursuing their own goals, individuals don’t constantly bump into each other.

Hayek does not deny that rules guiding a spontaneous order are sometimes in need of reform, which makes him less conservative than it may first appear. The common law (which is spontaneously grown law) may develop in undesirable directions, in favor of a ruling elite for example, and deliberate corrective legislation may be the only practicable way out. Note also how Hayek’s spontaneous order is categorically opposed to the traditional European right’s vision of society as a biological organism whose brain is an elitist state.

Principles Vs. Expediency

Each individual being allowed to use his own knowledge for his own purposes is, for Hayek, the very definition of individual freedom. It underlies his whole thesis:

• The thesis of this book is that a condition of liberty in which all are allowed to use their knowledge for their 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.

Public policy must be guided by principles, not by expediency (or cost-benefit analysis):

• Since the value of freedom rests on the opportunities it provides for unforeseen and unpredictable actions, we will rarely know what we lose through a particular restriction of freedom … And so, when we decide each issue solely on what appear to be its individual merits, we always over-estimate the advantages of central direction.

Hayek believed that “freedom will prevail only if it is accepted as a general principle whose application to particular instances requires no justification.” “Opinion,” in the sense of long-term general agreement on basic principles, as opposed to the temporary fluctuations of public opinion, is what ultimately guides government policy. He hoped that opinion would return to classical liberalism.

A Theory of the Rule of Law

Although grounded in economics, Rules and Order is more about the legal theory of a free society. Hayek laments the invasion of public law, which for a century has been dislodging the rule of law in favor of rules of organization and commands from authority. It was mainly under the excuse of social justice that the distinction between rules of just conduct and rules of organization “has been progressively obliterated.” Hayek had more to say about this last point in The Mirage of Social Justice, the second volume of Law, Legislation, and Liberty.

In Rules and Order, he presents an impressive argument in favor of the common law, judge-made law, trying to demonstrate that its properties are conducive to a spontaneous order. This kind of law produces “rules regulating the conduct of persons towards others, applicable to an unknown number of future instances and containing prohibitions delimiting the boundary of the protected domain of each person.” It will apply to all individuals equally. In this classical-liberal perspective, law is not opposed to liberty but, on the contrary, a guarantee of equal liberty to all, an idea dear to Hayek.

He persuasively explains how, in a common-law system, “a judge cannot be concerned with the needs of particular persons or groups, or with ‘reasons of state’ or ‘the will of government’, or with any particular purposes which an order of actions may be expected to serve.” Thus, “a socialist judge would really be a contradiction in terms.” I would add that this crucial point would also apply to a fascist judge, and Hayek would certainly agree.5

He expresses a strong idea that the more radical Anthony de Jasay, who claimed to be both liberal and anarchist, later pushed to its logical end. 6 Hayek wrote:

• Since [the representative assembly] possesses authority to arrange everything, it cannot refuse responsibility for anything. There will be no particular grievance which it will not be regarded as capable of removing; and since in every particular instance taken by itself it will generally be capable of remedying such a grievance, it will be assumed that it can remove all grievances at the same time. However, it is a fact that most of the grievances of particular individuals or groups can be removed only by measures which create new grievances elsewhere.

Some Interrogations

Rules and Order contains some unresolved questions. One is, what is the scope of government? Its essential function, Hayek answers, is “to secure obedience to universal rules of just conduct.” Another function that justifies coercion is the levying of non-exploitative taxes. The government should also be barred from reserving itself a monopoly in any of its other endeavors. But this leaves a relatively wide domain of potential intervention, including “the provision by government of certain services [to] the weak or those unable to provide for themselves … either on moral grounds or as an insurance against contingencies which may affect anybody.” Volume 3 of Law, Legislation, and Liberty, also part of the Shearmur consolidated edition, further adds to the scope of government through regulation.

It is true that, in line with Hayek’s non-discriminatory principles, legislating “higher wages for particular groups of workers, or higher incomes for small farmers, or better housing for the urban poor” would be unlawful. Obviously, so would subsidies to special corporate interests. This limit might satisfy the typical classical liberal, but it is clear that Hayek did not support a minimal state. He was not a radical libertarian.

A second unresolved issue in Rules and Order is, where exactly must the law stop encroaching on the individual’s private choices? Hayek argues that actions not directed towards others, “such as what a person does alone within his four walls, or even the voluntary collaboration of several persons, in a manner which clearly cannot affect or harm others, can never become the subject of rules of conduct that will concern a judge.” This would also ban rules “imposing religious conformity,” but he immediately suggests a worrying exception: “at least where it is not believed that the whole group may be punished by a supernatural power for the sins of individuals.”

With the creeping irrationality of public opinion that seems to mark the beginning of the 21st century, this sort of externality argument looks like a door wide open to virtually any abuse. Hayek did not solve the problem that a general, abstract, and non-discriminatory rule can still be tyrannical.

While sharing most of Hayek’s classical-liberal ideas, James Buchanan, another economist and Nobel prizewinner, served a pointed criticism to the former’s reverence for traditional legal rules. Buchanan argued that any evolved rule must pass a rational-calculus test in the sense that it must be shown to presumably meet the consent of all rational individuals, as if it had been designed that way.7 He believed that Hayek had become too conservative after The Constitution of Liberty.

After more than half a century, Rules and Order remains an essential book for anybody interested in politics or law. The other two books in the (now consolidated) trilogy are largely elaborations of the basic ideas of Rules and Order. For somebody new to Hayek’s work, Jeremy Shearmur’s observation is relevant: Law, Legislation, and Liberty “is not an easy read.” As Hayek himself recommended, The Constitution of Liberty may provide a useful introduction.

Footnotes

[1] F.A. Hayek, Law, Legislation, and Liberty (1973-1978), edited by Jeremy Shearmur (Chicago: University of Chicago Press, 2022). My quotations are from the Shearmur edition.

[2] Rules and Order, by F.A. Hayek. Volume 1 of Law, Legislation, and Liberty, University of Chicago Press, 1973.

[3] Adam Ferguson, An Essay on the History of Civil Society, 5th Edition (London: T. Cadell, 1782), available online at https://oll.libertyfund.org/title/ferguson-an-essay-on-the-history-of-civil-society.

[4] Hayek started developing this idea in the 1930s and 1940s: see his “The Use of Knowledge in Society,” American Economic Review, 1945, available online at https://www.econlib.org/library/Essays/hykKnw.html.

[5] See his The Road To Serfdom (Chicago: University of Chicago Press, 1944; and my review “Where Are We on the Road to Serfdom,” Regulation 44:3 (Fall 2021), pp. 58-59, available online at https://www.cato.org/sites/cato.org/files/2021-09/regulation-v44n3-8.pdf.

[6] Anthony de Jasay, The State (1985) (Indianapolis: Liberty Fund, 1998), available online at https://www.econlib.org/library/LFBooks/Jasay/jsyStt.html. See also my review of that book: “An Unavoidable Theory of the State,” Econlib, June 4, 2018.

[7] James M. Buchanan, Why I, Too, Am Not a Conservative (Cheltenham UK and Northampton MA: Edward Elgar, 2005), pp. 74-75.