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
incentive for individuals to pursue the outcomes that they think
best. Moreover, some authority would have to assign rewards for
merit.
Value is assigned not by central authority but by the market:
‘The market will generally offer for services of any kind the value
they will have for those who benefit from them’ (96). Marketbased
rewards stimulate individual efforts and extend economic
freedom to productive groups that might lack general approval
for their conduct. Judgements of individual merit are subjective,
but value is an ‘objective outcome,’ based on the results of one’s
actions and dispersed assessments of their benefits. Since the
market generally assures that value is rewarded, government’s
role is primarily to facilitate market distributions by maintaining
the rule of law. Certainly it has no business pursuing social justice
(96–100; cf. 80–83).
5 MAJORITY RULE AND LIMITED
GOVERNMENT (Chapters 7 and 10)
The problem of reconciling liberalism with democracy is
one of Hayek’s chief concerns in The Constitution of Liberty. The
problem is this: liberalism is a doctrine about human liberty or
freedom and how to protect and extend it by setting limits to
government. Democracy, as understood by many theorists and as
often practised, subordinates liberty to the quest for equality. Can
liberty flourish where the people are sovereign and the will of the
majority prevails? Hayek turns now to the question of majority
rule and its limits.
Majority rule and the community
Democratic government can be structured in different ways,
and Hayek is quite vague here as to the kind of arrangement that
he chiefly has in mind. The idea of majority rule presupposes
some collectivity within which this rule takes place. Any group,
of course, can entrust decision-making authority to a majority
of its members; but not every group or collectivity is decisive for
political life. Hayek has different ways of identifying the politically
relevant group – state, country, society – but the one he settles on is
‘the community.’ As we get deeper into The Constitution of Liberty,
it becomes clear that Hayek assigns vast powers to the community
and gives it a surprisingly important role in political life.
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