Hayek's The Constitution of Liberty - Institute of Economic Affairs

h ay e k ’ s t h e c o n s t i t u t i o n o f l i b e r t y
e c o n o m i c p o l i c y a n d t h e r u l e o f l aw
Policies measured by expediency
For policies that are compatible with the Rule of Law and the
requirements of a free society, the question is whether their
benefits are worth their cost. A wide range of activities, universally
undertaken by governments, fall into this category. Some
of these furnish information that individuals need to plan their
lives. Government’s most important function here is providing
‘a reliable and efficient monetary system,’ but scarcely less
import ant ‘are the setting of standards of weights and measures;
the providing of information gathered from surveying, land registration,
statistics, etc; and the support, if not also the organization,
of some kind of education.’ Other policies aim to provide
more material services. These include sanitary and health services,
road construction and maintenance, urban amenities, and ‘public
works’ generally (223).
Hayek does not favour passive government, but rather one
that seeks many benefits for the community. While he shares
the ‘strong presumption against government’s actively participating
in economic efforts,’ he nonetheless states that the ‘old
formulae of laissez faire or non-intervention do not provide us
with an adequate criterion for distinguishing between what is
and what is not admissible in a free system’ (221, 231; cf. 257–8).
As he explains, ‘it is the character rather than the volume of
government activity that is important.’ In economic matters, for
example, an active government that assists the spontaneous forces
of the market is preferable to a less active one that does the wrong
things. In this regard he sees himself as following the best of the
classical liberals, such as Adam Smith (220–22).
While Hayek does not object to government providing many
services, he does insist strongly on two points. First, these services
must be available to all. No citizen can be excluded arbitrarily
from their enjoyment. Second, government must not forcibly
monopolise the provision of these services or enjoy any special
advantage in offering them. If possible private suppliers must be
allowed to compete with government enterprise, or at least the
door must not be shut to them. Both arbitrary exclusion and sheltered
monopoly make state coercion impermissible.
The community’s interest
The highest standard for judging policy is neither the Rule of
Law nor expediency, but the interest of the community. As noted
earlier, government can in emergencies suspend individual rights
if the community’s interest requires it. In ‘normal’ times, government,
acting within the Rule of Law, pursues an expedient course;
but expedient actions must aim towards an end, which ultimately
is the community’s interest.
What policy measures can be justified by expediency, especially
when it comes to coercing individuals? Some of Hayek’s
formulations suggest that governmental coercion must be limited
to cases where individuals have violated the law, especially by
harming others: ‘Under the rule of law, government can infringe
a person’s protected private sphere only as punishment for
breaking an announced general rule’ (206). This statement would
indicate that only lawbreakers need fear government’s coercive
hand. As Hayek proceeds, however, it becomes clear that governmental
coercion need not be a form of punishment. Government
can coerce even law-abiding individuals if the community’s
interest requires it, so long as it does so in conformity to a general
rule and allows for review by independent courts (225).
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