How Hayek Interprets the Rule of Law - Essay Example

Running head: Social policy Social policy [The of the appears here] [The of appears here] Social policy Hayekinterprets the rule of law as referring to an ideal condition in which all government actions are bound by general rules that are fixed and announced beforehand. Hayek’s ideal is one that can never be entirely realized in practice, but it does provide him with a fundamental standard against which all governments (however democratic) and their policies (however popular) can and must be measured. The rules must be general in the sense that they are not aimed at the needs, wants, or activities of particular people. Rather, they should identify circumstances in which government would use its coercive powers. The individuals against whom those powers might be used are just those who infringe the general rules; they should not be identified in any other way. Since the point is to restrain the coercive activities of government, these general rules should not be framed so as to discriminate either against or in favour of any group of persons known in advance—against Jews or Blacks, for example. Laws against speeding lay down general rules of this kind: they apply equally to all motorists, and they do not single out particular individuals (say, BMW drivers) for special attention. Retrospective legislation is likely to violate the rule of law on this interpretation since its victims and beneficiaries usually can be identified in advance. 1 General rules of this kind that are announced in advance are a defence against the arbitrary actions of governments. They are necessary in Hayek’s view both for the proper working of the market and for the existence of liberty precisely because they allow individuals to plan their affairs secure in the knowledge that government powers will not be used deliberately to frustrate their efforts. Once governments go beyond the enforcement of certain general rules, their activities inevitably involve the coercion of particular individuals. Since general rules of the kind Hayek favours are not aimed to produce particular effects on particular people, their precise consequences cannot be known in advance. They provide a framework for the decisions and actions of individuals, but they do not determine what those decisions and actions will be. From this point of view there is no reason in principle why governments should not concern themselves with the regulation of economic affairs. But their interventions should take the form of a framework of laws within which markets can operate, rather than the direction of economic activity by a central authority. 2 Here and elsewhere, Hayek discusses government social and economic policy as if interference with market operations inevitably involves the infringement of liberty. It is not clear why that should be the case. Consider the example raised by Pigou in his review of The Road to Serfdom (Pigou 1944). The wartime practice of directing particular individuals into specific jobs is an infringement of liberty that may be defended for a limited period on the grounds of national emergency.3 This example, the occupational choices of individuals is certainly constrained as a result of government policy. But, from the point of view of those affected, the manner in which they are constrained is no different from the effects of market forces. It seems then that government interference in markets is to count as a coercive infringement of liberty, whether or not it is experienced as such by the individuals concerned. 4 Similar considerations apply to the welfare state. It is entirely proper for governments to be concerned with the welfare of their citizens, provided only that their welfare activities are constrained by the rule of law. The difficulty in discussing ‘the welfare state’, in Hayek’s view, is that the term has no clear meaning. Some of the activities normally included under that heading are unobjectionable and may even ‘make a free society more attractive, others are incompatible with it’. For this reason Hayek is not opposed to the welfare state as such, and he tends to favour state involvement in limited areas of welfare. For example, there are cases where it may be in the interests of all members of the community that there be public provision of amenities such as parks, museums, and some kinds of sports facilities. Or again, governments in all the economically advanced societies have concerned themselves with health and education, and with some level of provision for the indigent and disabled. 5 Such concerns are not necessarily illegitimate, provided that their pursuit does not involve the adoption of coercive powers by government. Unfortunately, the welfare state is not always so benign: there are welfare objectives whose pursuit inevitably conflicts with the rule of law, and coercive measures are sometimes introduced in pursuit of otherwise legitimate objectives. On the second point, for example, we have noted that governments may concern themselves with the provision of health services, education, and a variety of amenities. In many cases governments provide these services directly. We shall see that liberals have reasons to question the wisdom of relying on government for the provision of such services because of doubts about their efficiency or effectiveness, but they do not necessarily regard them as an infringement of liberty. 6 Liberty is threatened not by government provision of services but rather by its claim to the exclusive right to provide them. State provision of health or education services may be more or less effective, but it is a threat to liberty only if their use is made compulsory. Where state services are provided, it should be possible for market-based provision to develop alongside them. This is not to say that there should be no public regulation of private services, only that the standards applied to them should apply equally to the public services themselves. 7 The other respect in which the activities of the welfare state may be a cause for concern in Hayek’s view is that the pursuit of some kinds of welfare objectives inevitably undermine the rule of law. Consider the question of security against the risks of ill health, injury, or unemployment, or against the consequences of old age. Here government may well be able to reduce these risks or help people to provide for them: ‘however, an important distinction has to be drawn between two conceptions of security: a limited security which can be achieved for all and which is, therefore, no privilege, and absolute security, which in a free society cannot be achieved for all. The first of these is…the assurance of a given minimum of sustenance for all; and the second is the assurance of a given standard of life, which is determined by comparing the standard enjoyed by a person or group with that of others.’ 8 There are, of course, problems about what the minimum standard should be and the conditions under which it should be provided. In his earlier discussion of these issues in The Road to Serfdom Hayek goes on to suggest that ‘there is particularly the important question whether those who thus rely on the community should indefinitely enjoy all the same liberties as the rest’. There is no question here of social policy operating to secure that equality of citizenship which plays such an important part in Marshall’s account of the welfare state. 9 The second kind of security raises considerations of what a person deserves, and therefore questions of distributive justice. Hayek does not object to government involvement in welfare activities, but he does object in principle to ‘the kind of welfare state that aims at “social justice” and becomes “primarily a redistributor of income”. It is bound to lead back to socialism and its essentially coercive and arbitrary methods’. 10 The pursuit of ‘social’ or ‘distributive’ justice inevitably conflicts with the rule of law. It aims to secure for sections of the population a level of income and standard of living which they could not or do not secure for themselves through the exchange of services in the market. Public policy must therefore discriminate to the advantage of some and the disadvantage of others, with the result that citizens are no longer equally subject to the same general rules. On similar grounds it could be argued that the exercise of administrative discretion conflicts with the requirement that the same general rules should apply to all. The pursuit of social justice or the attempt to tailor social-policy provision to the specific needs of individuals undermines the rule of law. Hayek’s objection to the pursuit of social justice does not involve the view that market outcomes are just. The point rather is that any attempt to alter market outcomes after the event in the name of social justice (or anything else) is an attack on the rule of law and an infringement of liberty. 11 Here the decisive consideration concerns the practical possibility of judicial review of administrative and executive action, and therefore the existence of a framework of laws and institutional conditions in which such reviews can take place. In terms of that consideration the rule of law is limited, in Britain, by the doctrine of the supremacy of Parliament, and in Britain and the USA, by the existence of a considerable area of non-reviewable administrative discretion. The contrast with Hayek’s account of the rule of law is instructive. The importance of judicial review in Pound’s account is that it grounds the rule of law in social practices and institutional conditions rather than in a wholly abstract relation between government action and certain principles. There is nothing in the idea that the legality of government action should be subject to judicial review to rule out government interference with the operations of markets, the pursuit of social justice, the exercise of administrative discretion, and other practices to which Hayek objects. The central concern of Hayek’s account is not so much the institutional conditions which make possible judicial review of government action, but rather the subordination of government action to certain general principles. The rule of law means simply that the liberty of the individual, as Hayek understands it, must take priority over all other concerns and objectives. 12 Reference: 1. Barry, N. et al. (1984) Hayek’s ‘Serfdom’ Revisited. London: Institute of Economic Affairs. 2. Hayek, F.A. (1944) The Road to Serfdom. London: Routledge & Kegan Paul. 3. Pigou, A.G. (1944)) Review of Hayek, The Road to Serfdom. Economic Journal 54. 4. John Dixon, Mark Hyde (2001). The Marketization of Social Security; Quorum Books 5. Thomas W. Merrill, Henry E. Smith (2001). What Happened to Property in Law and Economics?; Yale Law Journal, Vol. 111 6. Joseph Baldacchino (2002). Ethics and the Common Good: Abstract vs. Experiential; Humanitas, Vol. 15 7. Robert Grant (1999). Morality, Social Policy and Berlins Two Concepts; Social Research, Vol. 66 8. James Midgley, Michael Sherraden, John Breaux (1997). Alternatives to Social Security: An International Inquiry; Auburn House 9. John Dixon (1999). Social Security in Global Perspective; Praeger 10. Jeremy Shearmur (1996). Hayek and after: Hayekian Liberalism as a Research Programme; Routledge 11. Eric W. Orts (2001). The Rule of Law in China; Vanderbilt Journal of Transnational Law, Vol. 34, 2001 12. Meir Kohn (2004). Value and Exchange; The Cato Journal, Vol. 24 Read More