knowledge of either enables him to foresee what will be

LAW AND ECONOMICS the consequences of his actions, and it helps him to make
HAYEK: CHAPTER 10 plans with confidence
Law, Commands, and Order laws of the state provide fixed features in the environment
in which he has to move; though they eliminate certain
1. choices open to him, they do not, as a rule, limit the choice
Law of liberty to some specific action that somebody else wants him to
- fixes the indivisible borderline within which being and activity of take.
individuals obtain a secure and free sphere
-conceived ideal of freedom and the law as "the science of liberty 4. Generality

Abstract rules Conception of freedom rests on the contention that when we obey
From unconscious habits, rules become more explicit and laws, in the sense of general abstract rules laid down irrespective of
articulated and at the same time, more abstract and general. their application to us, we are not subject to another man's will and
Familiarity prevents us from seeing the complexity of abstract are therefore free.
rules delimitation of individual spheres lawgiver does not know the particular cases to which his
Individual spheres are determined by observation of a rule rules will apply, and it judge who applies them has to
which is not known but honored in action follow existing body of rule, that it can be said that laws
Abstraction- when an individual responds in the same manner and not men rule.
to circumstances that have only some features in common. Because the rule is laid down in ignorance of the particular
Men generally act in accordance with abstract rules in this case and no man's will decides the coercion used to
sense long before they can state them enforce it, the law is not arbitrary
Abovementioned are only true if laws are general and applicable to
2. COMMAND V LAW all:
Generality is the most important aspect of the attribute of
arbitrariness
COMMAND LAW Law should not name particulars nor single out specific
Specific, particular General, abstract persons or groups
Presupposes a person who has Does not presuppose an issuer
issued it The movement of progressive societies has hitherto been a
Imposes conditions and a once-and-for-all command movement from Status to Contract
requirements that have to be directed to unknown people Status
satisfied and abstracted from particular assigned place that each individual occupies in society
circumstances of time and state in which the rules are not fully general but single out
place particular persons or groups and confer upon them special
Decision on particular action decision on what particular rights and duties
comes from issuer and leaves action is shifted to the acting privi-leges
those to whom it is addressed person and provides merely Contract
no chance to . additional information to be Misleading because contract is only one of the instruments that
use their own knowledge taken law supplies to the individual to shape his position
into account in the decision of True contrast is reign of general and equal laws
the actor. General laws
ends toward which all activity sphere of free action of each Rules are the same for all
is directed individual may be determined leges
are still those of the issuer and altered in accordance with
general rules laid down in Distinctions will not be arbitrary, will not subject one group to the
advance for longer periods, will of others, if they are equally recognized as justified by those
and such rules can make it inside and those outside the group
possible for each individual by
his own action 5.
Safeguard against severe restrictions on liberty: rules are equally
3. Instrumentality applicable to the government and to the governed

Rules of custom
Specific and concrete - prescribe specifically how he must
proceed to achieve particular results
Law
General and abstract - provide the framework within
which the individual must move but within which the
decisions are his
prohibitions are almost entirely of a negative character
lawgiver cannot foresee what will be their effect on
particular people or for what purposes they will use them
Most restrictions on what we regard as private affairs have usually
been imposed only on selected groups of people or were practicable
only because the government reserved the right to grant exceptions.
Freedom can never mean more than that they are restricted only by
general rules. It can mean only that what we may do is not
dependent on the approval of any person and is limited only by the
same abstract rules that apply equally to all. This is true only of the
law in this sense of abstract general rule, or of what is called "the
law in the material meaning," which differs from law in the merely
formal sense by the character of the rules and not by their origin.
 Spontaneous formation of a polycentric order
If "to rule" means to make men obey another's will, government has
no such power to rule in a free society. He can be ruled, however, in
the sense in which "to rule" means the enforcement of general
rules, laid down irrespective of the particular case and equally
applicable to all.
6.
Why make it known to the individual the range w/in which he can
decide on his actions?
to enable him to make the fullest use of his knowledge,
especially that of the particular circumstances of time and place
extends the range within which he can predict the
consequences of his actions
Thus, what he is required to do must depend only on circumstances
he can be presumed to know or be able to ascertain
Rules
are not deliberately invented but have grown through a process
of trial and error.
- nobody knows the reasons that have led to a rule being
given a particular form
- We must thus often endeavor to discover the functions that
a rule actually serves in order to improve it by deliberate
legislation.
constitute an adaptation of the whole of society to its
environment and to the general characteristics of its members.
serve to assist the individuals in forming plans of action that
they will have a good chance of carrying through
three fundamental laws of nature: stability of possession, of
transference by consent, and of the performance of promises
justification of any particular rule must be its usefulness even
though it may not be demonstrable by rational argument but known
only because the rule has in practice proved itself But generally
speaking, only the rule as a whole must be so justified not its every
application.
- order involving an adjustment to circumstances,
knowledge of which is dispersed among many people,
cannot be established by central direction
- It can arise only from the mutual adjustment of the
elements and their response to the events that act
immediately upon them.
- When order is achieved by allowing people to interact with
each other on their own initiative-subject only to the laws
which uniformly apply to all of them- we have a system of
spontaneous order in society.
- Efforts of these individuals are coordinated by exercising
their individual initiative and that this self-coordination
justifies this liberty on public grounds
- These actions are FREE and not determined by any specific
command
- The use of these spontaneous forces, which in such
instances is our only means of achieving the desired result,
implies that many features of the process creating the
order will be beyond our control
- We can produce the conditions for the formation of an
order in society, but we cannot arrange the manner in
which its elements will order themselves under
appropriate conditions.
- Task of the lawgiver is not to set up a particular order but
merely to create conditions in which an orderly
arrangement can establish and ever renew itself.
- purpose of the human laws we enforce is to secure such
limited regularity as will make the formation of an order
possible
- Where the elements of such an order are intelligent
human beings whom we wish to use their individual
capacities as success; fully as possible in the pursuit of
their own ends,the chief requirement for its establishment
is that each know which of the circumstances in his
environment he can count on.

End of the law ought to be the welfare of the people that the
general rules should be so designed as to serve it but not that any
conception of a particular social end should provide a justification
for breaking those general rules. A specific end can never be a law.

7.

Anti-liberals
- order requires that one should give orders and others obey
- inability to conceive of an effective coordination of human
activities without deliberate organization by a commanding
intelligence

Economic theory
- mutual adjustment of activities are brought about by the market
provided that there is a known delimitation of the sphere of control
of each individual
- orderliness shows itself in the fact that the individual can carry out
a consistent plan of action that rests on the expectation of certain
contributions from others
-Order with reference to society thus means essentially that
individual action is guided by successful foresight
HAYEK: CHAPTER 11
The Origins of the Rule of Law
Locke
- end of the law is to preserve and enlarge freedom
- where there is no law, there is no freedom
- liberty
o to be free from restraint and violence of others
o not to do whatever he wants
o but to dispose and order his person, actions,
possessions and his whole property within the
allowance of law
o not subject to will of another but free to follow
his own
1. Medieval Doctrine
Individual liberty
- by product of a power struggle
- its preservation and perfection became a guiding ideal
Middle Ages
- liberties in the sense of privileges granted to estates or
persons and NOT as a general condition of people
- conceptions about nature and sources of law and order
prevented the modern form of liberty
- medieval view: the state cannot itself create or make law,
and of course as little abolish or violate law, because this
would mean to abolish justice itself, it would be absurd, as
in, a rebellion against God who alone creates law.
- English Parliament: law-finding -> law-creating body
- Reproach for acting arbitrarily about authority to legislate
cause of individual freedom inadvertently advanced
- 15th & 16th century -> national state which used legislation
as an instrument of deliberate policy
- Absolute monarchy threatened medieval liberties
- Magna carta, constitutio libertatis served as weapons in
this struggle
2. Classical Inheritance
- Revived at the beginning of the modern period
- Nature of the influence of the classical tradition
o There are many places which did not know the
individual liberty but not in ATHENS
o Pericles : freedom in government extends to
ordinary life where we do not feel called upon to
be angry with our neighbor for doing what he
likes
What is the characteristic of the freest countries?
ISONOMIA
from Italian; equality of laws to all manner of persons
contrasted with arbitrary rule of tyrants;
isonomia demokratia
Equality of laws to all lanner of Equal participation in
persons government
Older concept Demand of demokratia is a
consequence of isonomia
Was used as justification and Soon came to disregard
disguise of character isonomia
demokratia
- ISONOMY- englished form; state of equal laws for all an
responsibility of the magistrates;
- 17th century; equality before the law, government of law,
rule of law
- Solon in Athens; Equal laws for the noble and the base
- Aristotle
o condemns kind of government in which the
people or majority govern and not the law,
which for him is not a free state
o A government that "centers all power in the
votes of the people cannot, properly speaking,
be a democracy: for their decrees cannot be
general in their extent
o Laws should define all points and leave as few as
possible to the decision of the judge
3. 17th century
- Influence of the Latin writers and from tradition of Roman
Republic
- Laws of the Twelve Table
o Imitation of Solons laws
o Foundation of liberty
o First fully developed system of private law came
from the first of the public laws
No privileges, or statutes shall be
enacted in favour of private persons,
to the injury of others contrary to the
law common to all citizens, and which
individuals, no matter of what rank,
have a right to make use of."
- Cicero main authority for modern liberalism
o general rules or leges legum
o we obey the law in order to be free
o judge as merely the mouth through which the
law speaks
o no conflict between law and freedom
o freedom is dependent upon certain attributes of
law- its generality and certainty and restrictions
on decisions of authority
- complete economic freedom -> prosperity and power of
Rome
- state socialism advanced and destroyed conception of
freedom as equality before the law because of demand for
another kind of equality
- state increased control over economic life
- conception that legislation should protect individual
freedom was lost after time of Constantine and Justinian
- legislation was lost and when it emerged Justinian concept
wherein prince is above the law prevailed
4. 19th century
- Influence of classical authors during Elizabethan reign
- After her death, struggle between king and Parliament ->
INDIVIDUAL LIBERTY as a by-product
- Case of Monopolies (Charles I wanted to nationalize coal
industry)
o grant of exclusive right to produce anything was
against common law and the liberty of the
subject
o Demand for equal laws for all citizens- main
weapon of Parliament in oppositions to king
- Petition of Grievances
o First great statement of the basic principle
o Kings regulation of building in London and
prohibition of making starch to wheat
o Plea for right of the people of this kingdom, not
to be made subject to any punishment that shall
 extend to their lives, lands, bodies, or goods, 6. 1st half of 18th century
other than such as are ordained by the common - Main period of consolidation
laws of this land, or the statutes made by their - Restatement of nulla poene sine lege in House of
common consent in parliament Commons
- Discussion of Statute of Monopolies by Sir Edward Coke - Lord Camden: public policy is not an argument in a court of
o Interpretation of Magna Carta law
o Grant of sole making and dealing of certain
things is against the liberty and freedom of the 7. 2nd half of 18th century
subject, that before did, or lawfully might have - Produced coherent exposition of ideals
used that trade, and consequently against this - Hume: government of will -> government of law
great charter - Later, ideals are more often taken for granted
o Warned Parliament to leave causes to be - Paley: first maxim of a free state is that laws be made by
measured by law and not to discretion one set of men and administered by another
- Civil War Restoration - Revolution
o Abolition of prerogative of courts 8. 19th century
o Prevention of arbitrary action of the government
Arbitrariness WN it is in conformity - little further development
with the general principles of law - New liberalism under influence of rationalism
No punishment without pre-existing - French concept of political liberty displaced the English ideal
law providing for it
Prospective operation of statutes
Circumscription of discretion of
magistrates
o How to safeguard basic ideals:
Written constitution
Separation of powers
o Declaration of Parliament Assembled at
Westminister
There being nothing more essential to
the freedom of a state, than that the
people should be governed by the
laws, and that justice be administered
by such only as are accountable for
mal-administration, it is hereby further
declared that all proceedings touching
the lives liberties and estates of all the
free people of this commonwealth,
shall be according to the laws of the
land, and that the Parliament will not
meddle with ordinary administration,
or the executive part of the law: it
being the principle [sic] part of this, as
it hath been of all former Parliaments,
to provide for the freedom of the
people against arbitrariness in
government."

5. America
- John Locke
o Codification of the victorious political doctrine of
practical principles which should control the
power of the government
o How can power be prevented from becoming
arbitrary?
Whoever has the legislative or
supreme power of any,
commonwealth is bound to govern by
established standing laws promulgated
and known to the people, and not by
extemporary decrees; by indifferent
and upright judges, who are to decide
controversies by those laws; and to
employ the forces of the community at
home only in the execution of such
laws.