Unlike the other theorists who are discussed in this and subsequent chapters who were trained as and earned their livelihoods as academic philosophers, F.A. Hayek was trained as an academic economist^ and the primary focus of his work from the early 1930s through the mid-1940s was in economic theory. For this work he was a co-recipient of the Nobel Prize in Economics in 1974. In the early 1940s, Hayek’s attention shifted to political and legal theory. Hayek published an enormous number of important essays and books in these areas from his 1944 The Road to Serfdom to his 1988 The Fatal Conceit. His two outstanding works of political and legal philosophy within this period are The Constitution of Liberty and the three-volume work Law, Legislation, and Liberty. Both these treatises seek to provide a restatement of strongly classical liberal principles – although the policy recommendations that accompany these restatements are often less libertarian than one would expect. Hayek’s recurrent insistence on the importance of strict loyalty to certain liberty-friendly principles is often accompanied by the endorsement of certain coercive state actions that seem to contravene those principles.

It is a bit unclear what Hayek has in mind when offering a “restatement” of fundamental principles. Hayek’s restatements seem to be offered as justifications; yet the use of “restatements” seems to be Hayek’s way of tiptoeing between his desire to offer justifications for liberty-friendly principles and his sense that to offer such vindications is to engage in illicit inferences from “claims capable of a scientific resolution” to “judgments of value” (1973: 6). Hayek may think that he can avoid reliance upon such an inference because of the way in which different claims about the nature of social order and law – claims that are capable of scientific assessment – give rise to different judgments of value. As he sees it, mistaken views about the nature of social order and law give rise to certain judgments of value that are unsound, at least in the sense that they presuppose those mistaken factual views. These unsound judgments of value “dethrone” the judgments of value that would reign were scientifically correct understandings of the nature of social order in place. Correlatively, the reinstatement of a correct understanding of social order and law will re-enthrone judgments of value that are sound in the sense that the acceptance of these values is essential to the existence of a social and legal order that fosters robust cooperation to mutual advantage.

Thus, according to Hayek, the real action lies within disputes about the nature of and conditions for social order and law; and his socialist opponents are not to be attacked for their wicked values but, rather, for their mistaken social scientific doctrines. Statist doctrines are false, not because of the values on which they are based, but because of a misconception of the forces which have made the Great Society and civilization possible. The demonstration that the differences between socialists and non-socialists ultimately rest on purely intellectual issues capable of a scientific resolution and not on different judgments of value appears to me one of the most important outcomes of the train of thought in this book … [The] destruction of values by scientific error … has increasingly come to seem to me the great tragedy of our time – a tragedy, because the values which scientific error tends to dethrone are the indispensable foundation of all our civilization. (1973: 6-7)

Following Hayek’s lead, I will focus first and primarily on his contrast between different conceptions of social order and law. This, indeed, is probably his most important contribution to classical liberal and libertarian thought. I will begin with a crucial early moment in Hayek’s intellectual career and present further developments in Hayek’s thought as a deepening and generalization of the insights about social order and law from that crucial early moment.^ Hayek offers an essentially Millian restatement of the case for liberty in The Constitution of Liberty and an essentially Humean restatement of the case for liberty-protective principles of justice in Law, Legislation, and Liberty I shall focus on the latter, more successful restatement.

Like Nozick (Raico 2002), in his student days, Hayek thought of himself as a democratic socialist. Shortly thereafter, Hayek’s reading of Ludwig von Mises’ Socialism [Mises 1981] persuaded him of the defects of socialism and the virtues of an economic order based on private ownership and market relationships.— Speaking of himself as one of the many “young idealists returning to their university studies [in Vienna] after World War I,” Hayek wrote, “Socialism promised to fulfill our hopes for a more rational, more just world. And then came this book. Our hopes were dashed. Socialism told us that we had been looking for improvement in the wrong direction” (1981: xix). One of the most powerful attractions of socialism throughout the nineteenth century and well into the twentieth was the idea that rational economic order had to be planned order. According to this idea, the creation of an economic order should be thought of as an engineering project. Just as the rational creation of a bridge requires a careful inventory of the material and human resources that are available for the bridge’s construction, a determination of precisely what role each of these resources will best serve in that construction, and the issuance of detailed directives to the human resources at hand,—the rational creation of an economic order requires a like process of inventory, design, and direction (1964: 94­102). In order to have a rational economic system, all economic activity has to be organized through a single, comprehensive plan for the utilization of all of society’s economic resources so as to best achieve society’s goals.

Mises’ elegant argument against central economic planning turns on its inability to allocate economic resources rationally. The rational allocation of economic resources is essentially a matter of devoting low- value inputs to the production of high- value outputs; it is a matter of maximizing the difference between the value of the basic inputs of production and the value of the final consumer products. Thus, rational allocation depends upon knowledge of the value of the many different sorts of inputs, the value of all the different sorts of the intermediary products – e.g., enhanced labor and capital goods – that more basic inputs might be used to produce, and the value of the many sorts of final consumer products that might be produced by the many different possible allocations of basic and enhanced inputs. Mises’ revolutionary insight is that knowledge of the relevant economic values is available only in the form of market prices. For the value of this or that input or output is a function of the relative scarcity of and demand for those specific inputs and outputs; and market prices are formed by and encapsulate the best information that individuals possess about the current (and future) relative scarcity of and demand for this or that input or output. However, central economic planning eliminates markets and, hence, market prices. Thus, central economic planning eliminates the possibility of the information that central economic planning needs in order to achieve the rational allocation of economic resources.

To make Mises’ point more intuitively vivid, imagine that you are assigned the job of central planner for the economy of some society. And let us make the totally unrealistic supposition that you are presented with a comprehensive list of all the material and human resources available for your plan and of the results of an exhaustive study of what products people have said they would like to have. So, you would have information about where under the ground certain mineral deposits lay and where certain machinery was that might be used to mine this or that mineral (but also might be used to dig canals or contour golf courses) and what sorts of delivery systems exist for moving machinery or ore to factories or manufactured consumer products to local distribution centers. Now you have to decide how many washing machines and of which size and what quality should be manufactured and out of which material, for example stainless steel or aluminum or titanium. Of course, you also have to decide how much stainless steel or aluminum or titanium should be devoted to producing buses, air conditioners, surgical implants, and statues of the Great Leader.

How could you rationally make any of these decisions in the absence of knowledge of the value of all the inputs and outputs at issue? And how could you have knowledge of those values in the absence of market prices? What would people be willing to pay – if they had money to pay with – to purchase tickets to see the Great Leader’s statue? How much more or less would that be than people would be willing to pay – if they had money to pay with – for each of the other uses of the resources that would go into the production of that statue? Consider why we all know that it would be insane for a central planner to order that washing machines be made out of titanium rather than stainless steel. The reason is that, while most of us know very little about the extent of the supply of and many alternative uses for titanium and stainless steel, we all know that the price per unit of titanium is vastly greater than that of stainless steel.—

Hayek further develops this Misesian argument, in a series of articles in the 1930s on the “Socialist Calculation” debate,— by emphasizing an additional category of information that central planners would not possess. This is information that would not be reflected in – or would barely be reflected in – market prices even were market prices not eliminated by central planning. This information is the highly particular knowledge – or hunches – that individual economic agents have about local circumstances, for example, knowledge about an unused piece of machinery that could be brought back into service, or about a local artisan’s as yet unrecognized ability to modify that piece of machinery, or about the suitability of one raw material as a substitute for the commonly used material in some productive process, or about the degree of demand that will exist for an as-yet non­existent good or service.

Often this highly dispersed information is tacit; individuals have the information in the sense that it is available to guide their actions even though they have not made it explicit to themselves. Individuals often only tacitly know that they can carry out some particular task or how they would weigh against one another the fulfillment of their various goals. Often the dispersed information will be in the form of “know-how” rather than in the form of known propositions. On Hayek’s view, successful economic action – especially successful economic innovation – is deeply dependent upon decisions that draw upon such radically dispersed information. This information is even more inaccessible to central planners than the information that would be conveyed by market prices.

We should note that the Misesian-Hayekian argument provides the third of three types of criticisms of socialism, none of which appeal directly to high moral principles. The first is the interest critique. Socialism provides too little incentive to individuals for productive activity and too much incentive for slacking off. The second is the power critique. Socialist regimes dangerously centralize and expand state power which is likely to be captured by the most politically ambitious and ruthless people. The third is the knowledge critique. Socialist planning requires more knowledge than the planners could possibly have. To be clear, the knowledge that planners will lack is knowledge of factual particulars, for example, knowledge of the existence of this or that particular material resource or some unrecognized consumer preference. The mind of the central planner lacks a synoptic grasp of such factual matters. This ignorance of current facts radically undercuts the central planner’s capacity to predict the particular future effects of current actions.

It is one thing to show that central planning will not yield a rational allocation of economic resources and another thing to show that an economic regime centering on private property and market interactions will yield such an allocation.¹⁵ Still, the rational allocation case for private property/free market regimes is pretty much the mirror image of the Misesian-Hayekian case against central planning. The crucial move is the recognition that decentralizing (i.e., de-politicizing) economic decision-making brings dispersed, local information into play. Private holders of economic resources – raw materials, special skills and know­how, information, and capital goods – seek to reap the greatest return from these resources. They do so by themselves employing those resources in the ways that they perceive will maximize their respective returns – including their rental or sale of their resources to yet other agents who perceive high-return uses for those resources. Guided by prices and alert to changes in them, owners of economic resources seeking higher returns discover or create opportunities to move relatively lower valued resources to higher valued uses. Individuals with information about their own prospects as bakers – including a sense of their own talents and of what standard or yet to be introduced baked goods brewers and butchers will value – turn to baking; and likewise for potential brewers and butchers.

The adjustments of individuals who are free to choose how and in coordination with whom they will employ their own resources will be systemically more rational in terms of efficient allocation than those that would be ordered by any central planner because they are guided both by the price information generated by markets and the local information those individuals will have.—

In civilized society it is indeed not so much the greater knowledge that the individual can acquire, as the greater benefit he receives from the knowledge possessed by others, which is the cause of his ability to pursue an infinitely wider range of ends than merely the satisfaction of his most pressing physical needs. (1973: 14)

The results of these adjustments are typically remarkably complex and complexly interrelated chains of cooperative interaction involving people who are barely known or are utterly unknown to one another and which as a whole are unplanned. As Hayek puts it in his highly influential 1944 essay, “The Use of Knowledge in Society,”

The whole acts as one market, not because any of its members survey the whole field, but because their limited individual fields of vision sufficiently overlap so that through many intermediaries the relevant information is communicated to all. (1948 [1945]: 86)

Adam Smith pointed out that no one plans the enormously complex network of cooperative interactions that leads from the miner who mines the ore that becomes the shepherd’s shears to the shepherd to the wool cloth manufacturer to the urban worker’s wool coat (1981: 22-3). Nor does anyone plan the network of production, exchange, and distribution that brings every sort of footwear that anyone in your city might want to wear to some outlet in (or virtually in) your city. Such chains of coordination arise through a multitude of individually planned actions; but the chains as a whole and the larger yet networks of such chains are not intended by, and could not be successfully planned by, anyone.

This is not at all to say that people are moved only by the prospect of economic gain. Indeed, it is not at all to say that pecuniary gain is among anyone’s ultimate ends. “There are, in the last resort, no economic ends” (Hayek 1976: 113). Furthermore, the benefits that arise among people when they are free to seek cooperative solutions to their problems on the basis of their own understanding of their circumstances and purposes are hardly limited to pecuniary gains. As imperfect as people’s choices are about who they will marry or how they will arrange their family vacations or what sort of religious affiliation (if any) they will enter into, people are at least very likely to do better being free to make these arrangements on their own than by obeying the commands of the central planning boards for marriage, vacations, and religious affiliation.

For Hayek, what emerges from the Socialist Calculation debate is an understanding that there are two alternative conceptions of social order and, correspondingly, two alternative conceptions of law that make order possible. There is designed, top­down order, in which the particular elements within that order are arranged in accordance with an organizer’s plan and top-down law that consists of directives issued by the organizer. In contrast, there is spontaneous order – ground-up order that emerges through the interaction and mutual adjustment of the elements that make up the resulting order and ground­up law that consists of evolved constraints on conduct that protect individuals in their chosen actions and mutual adjustments.

As an example of a designed social order, consider an army engaged in a large-scale military campaign. The central command surveys all the human and material resources at its disposal and all the (salient) combinations of ways that those resources may be used to defeat the enemy. The central command then draws up a campaign plan that specifies which military units are to carry out which actions with which weaponry and stocks of ammunition (and clothing and supplies of food) and with which logistical support (which itself will be supplied in specified ways). The central command will then issue orders to its military personnel, full obedience to which will add up to carrying out the campaign plan. The officers in command of particular units may well not understand why they have been ordered to capture and hold the bridge at Arnhem – because they will not have the central command’s Big Picture. Hence, the actions of particular military units can be successfully coordinated only if their officers get those units to perform their centrally assigned tasks.— Within designed social orders, the /aw that makes that order possible is a body of more or less specific commands to individuals that direct them in their assigned tasks within the designed order (1973: 49).

As an example of spontaneous natural order, consider an ecological order. At one time, it was thought that the extreme, intricate, and subtle connections between the elements of an ecological order must be evidence for its intelligent design and construction. It was thought that ecological order must be designed order. However, most people now understand ecological orders to be the continually evolving products of the interactions between and the mutual adaptions of their (surviving) component elements. The laws that make such a natural spontaneous order possible are not the commands of any ecological magistrate but, rather, the empirical biological and chemical laws that determine the consequences of particular factual situations within that order (as it evolves).

As one would expect, for Hayek, the most salient example of a spontaneous social order is the order of a private property/ free market economy.— Crucially, such an economy functions only to the degree that widespread compliance with certain norms of conduct is expected. Whereas a planned economy is supposed to work through people’s compliance with the particular and distinct instructions issued to them by the central planner, private property/free market economies work through people’s compliance with general constraining norms of the sort articulated by Hume. Don’t dispossess first possessors. Don’t dispossess people of holdings acquired through freely contracted trade (or donation). Don’t welch on contractual agreements. The expectation of general compliance with these norms provides people with incentives to identify resources worth possessing, to take possession of them, to invest in possessions, and to produce for and engage in trade and for increasingly elaborate contractual transactions. And those very economic activities generate the market prices that better inform those activities. The law that makes this economic order possible is the body of enforceable rules that codifies in more detail the basic Humean constraints on how individuals may pursue their own discrete ends when others may be affected. In LLL, Hayek calls this body of norms the “rules of just conduct.” For Hayek, each individual’s freedom is a matter of others’ compliance with these rules of just conduct.— So, a “free society” is a society with a high degree of compliance with these principles of justice.

Hayek’s complaint is against the “constructive rationalist” belief that “human institutions will serve human purposes only if they have been deliberately designed for these purposes … [and] that we owe all beneficial institutions to design, and that only such design has made or can make them useful for our purposes” (1973: 8-9). He does not claim that all social orders – or even all desirable social orders – are spontaneous orders. Armies and planned military campaigns exist. The Salvation Army exists. Firms, orchestras, prisons, and monasteries exist. Top-down organization makes sense and is desirable when a significant number of people share a single end or hierarchy of ends and when there is a leader who is well-informed about how to marshal the energy and talents of these people toward the achievement of their common goal. “The two kinds of order will regularly co-exist in every society of any degree of complexity.” However,

What… we find in all free societies is that, although groups will join in organizations for the achievement of some particular ends, the co-ordination of the activities of all these separate organizations, as well as of the separate individuals, is brought about by the forces making for a spontaneous order. (1973: 46)

All sorts of organizations composed of people who share or who have committed themselves to a common purpose will exist within a society that is structured by general compliance with the rules of just conduct rather than organizational commands. It is precisely the freedom associated with general respect for these structuring norms that enables individuals to seek, create, and selectively subscribe to the diverse social and economic organizations that arise in such a spontaneous society. (Essentially the same claim is developed in Nozick’s discussion of the framework for utopia in the last chapter of ASU.)

For Hayek the core social scientific error that has undermined the cause of liberty is the belief that desirable social and economic order must ultimately be designed and imposed by legal commands.

The enemies of liberty have always based their argument on the contention that order in human affairs requires that some should give orders and others obey. Much of the opposition to a system of freedom under general laws arises from the inability to conceive of an effective co­ordination of human activities without deliberate organization by a commanding intelligence. (1960: 159)

Still, according to Hayek, one of the organizations that is likely to exist within any large-scale spontaneous society is government, the proper primary purpose of which is the refinement and enforcement of the rules of conduct that provide the framework for bottom-up social and economic coordination. “In a free society the state does not administer the affairs of men. It administers justice among men who conduct their own affairs.”—

It is important to distinguish here between spontaneous orders that are composed of particular concrete facts and spontaneous orders that are composed of abstract rules. The vast array of particular economic states of affairs that would show up on a wide- angle snapshot of a free market economy, for example Jones’ possession of this shovel and Smith having a particular contractual relationship with Brown, constitute a concrete spontaneous order. In contrast, the set of rules, general compliance with which makes this sort of concrete spontaneous order possible, is itself an abstract order. As another example, the set of abstract rules of a given language that makes possible the concrete spontaneous order that consists of all the linguistic interchanges among those employing that language, is itself an unplanned, evolved order. While Hayek notes that it is possible that such an abstract order of rules be the product of human design (1973: 46), it is highly unlikely that any genius (or committee of geniuses) sat around and thought up the rules, general compliance with which would facilitate the unintended production of the incredibly intricate and extensive concrete spontaneous order that constitutes a large- scale free market economy. It is similarly unlikely that the rules of any genuinely useful language were thought up by some brilliant linguistic engineer. Rather, the orders of rules through which concrete spontaneous orders emerge are themselves apt to be spontaneous orders, the unintended results of a process of cultural evolution.

These rules of conduct have thus not developed as the recognized conditions for the achievement of a known purpose, but have evolved because the groups who practiced them were more successful and displaced others. (1973: 18)

Although such rules come to be generally accepted because their observation produces certain consequences, they are not observed with the intention of producing those consequences – consequences which the acting person neednot know. (1973: 19)

These evolved rules themselves embody information, not about current levels of scarcity and demand but rather about what patterns of interaction among human beings tend to lead to successful outcomes. According to Hayek, the evolution of individuals as agents disposed to abide by rules goes hand in hand with the evolution of social and economic orders that depend upon (and bestow the benefits of) rule compliance. For, a society’s fitness for selection depends upon the degree to which its members are disposed to be rule compliant. This explains why “Man is as much a rule-following animal as a purpose­seeking one” (1973: 11).

Once we understand how such rules function to facilitate interaction among individuals to mutual social and economic advantage, we may investigate ways of deliberately improving these rules so that they become even more conducive to cooperation among individuals who “are allowed to use their knowledge for their purposes, restrained only by rules of just conduct of universal application” (1973: 55). However, we must always guard against the impulse to transgress such rules in particular cases for the sake of advancing some specific party’s ends. We must always remind ourselves that we often are mistaken in our predictions of the consequences of particular interventions, that thwarting the utilization of local knowledge will on the whole be less beneficial than allowing such utilization (1960: 30-1), and that such transgressions undermine the systemic benefits that arise from the expectation of general compliance with the rules of just conduct.

In LLL, Hayek places special emphasis on the need not to undermine the general expectation that the rules of just conduct will be obeyed.

The rules which have been adopted because of their beneficial effects in the majority of cases will have these beneficial effects only if they are applied to all cases to which they refer, irrespective of whether it is known, or even true, that they will have a beneficial effect in the particular case. (1976: 16)

He then cites Hume’s “classical exposition of the rationale for rules of justice.”

However single acts of justice may be contrary, either to public or private interest, it is certain that the whole plan or scheme is highly conducive, or indeed, absolutely requisite, both to the support of society, and to the well-being of every individual. (1976: 155)

Any transgression of the norms that provide the framework for individual agents to utilize their particular knowledge to coordinate with one another to advance their respective purposes will undermine reliance upon that framework and, in diffuse ways that cannot be specifically predicted, will diminish the gains from such coordination. Moreover, even if there are particular cases in which transgressing the coordination-enhancing rules will be more beneficial than harmful, we do not have the factual information needed to identify those cases and limit our deviation from the generally beneficial rules to those cases. Worse yet,

Any such restriction, any coercion other than the enforcement of general rules, will aim at the achievement of some foreseeable particular result, but what is prevented by it will usually not be known … 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 … If the choice between freedom and coercion is thus treated as a matter of expediency, freedom is bound to be sacrificed in almost every instance. … freedom can be preserved only if it is treated as a supreme principle which must not be sacrificed for particular advantages. (1973:57)

Individuals can treat freedom – the condition that obtains for all when there is general compliance with the rules of just conduct – as a supreme principle because we are as much rule-following animals as purpose-seeking ones. We must treat freedom as an ultimate value that need not be justified on a case-by-case basis if we are to reap the systematic benefits of assured reciprocal compliance with the rules of just conduct. The consequentialist argument on behalf of respect for freedom requires consequentialism’s own transcendence.—

There is a further important element in Hayek’s critique of central economic and societal planning. The standard conclusion of the Socialist Calculation argument is that, even assuming that the central planners know what to plan for, they will not be able to allocate resources rationally to achieve the plan’s final goal. Hayek, however, also maintains that the central planners will not know what to plan for. For, they will not possess knowledge of the relative importance of all the different sorts of ends that they would have to weigh against one another to determine which overall social outcome should be promoted.

Economic planning always involves the sacrifice of some ends in favour of others, a balancing of costs and results, a choice between alternative possibilities; and the decision always presupposes that all the different ends are ranged in a definite order according to their importance, an order which assigns to each objective a quantitative importance which tells us what sacrifices of other ends it is still worth pursuing and what price would be too high. (1997 [1939]: 210)

A planned or directed economic system,

… presupposes, in fact, the existence of something that does not exist and has never existed; a complete moral code in which the relative values of all human ends, the relative importance of all the needs of all the different people, are assigned a definite place and a definite quantitative significance. (1997 [1939]: 201-2)

The problem does not apply merely to economic planning. It applies to any justification for social policies – especially state-imposed social policies – on the grounds that the ends attained justify the sacrifice of the ends foregone. Constructivist rationalists are under the “illusion” that reason can “tell us what we ought to do” in the sense of revealing “common ends” that “all reasonable men ought to be able to join in the endeavor to pursue” (1973: 32). However, phrases like “social welfare,” the “general interest,” and “the common good” are empty formulas that provide no real guidance for any social choice of one concatenation of human ends over some other concatenation.

The plurality of ultimate ends to which distinct individuals are devoted cannot be transcended by attributing to these ends “a measureable common attribute for which either the term pleasure or the term utility was employed” (1976: 18). For, according to Hayek, we lack knowledge of any such measurable common attribute.

It is as much because we lack the knowledge of a common hierarchy of the importance of the particular ends of different individuals as because we lack the knowledge of particular facts, that the order of the Great Society must be brought about by the observance of abstract and end-independent rules. (1976: 39)

Thus, there is a further reason why a society composed (to revert to Rawls’ language) of a “plurality of distinct persons with separate systems of ends” cannot be a centrally planned society. A rationally planned society needs to have a rationally identifiable shared substantive end or hierarchy of ends that is to be advanced by its plan. However, there is no such rationally detectible common end or weighted set of ends.

In fact, it is a great, albeit surprising, virtue of a free society that it has no unifying purpose toward the promotion of which its members are to march in step.

The cosmos of the market neither is nor could be governed by such a single scale of ends; it serves the multiplicity of separate and incommensurable ends of all its separate members. (1976: 108)

A Great Society has nothing to do with, and is in fact irreconcilable with “solidarity” in the true sense of unitedness in the pursuit of known common ends. (1976: 111)

In LLL, Hayek is quite clear that the incommensurability of the value of people’s individual ends rules out both act and rule versions of utilitarianism. For even the latter is committed to justifying the rules that it endorses on the basis of the particular outcomes that are expected to arise from compliance with those rules having a higher net score along some scale of ends than the particular outcomes of compliance with any other set of rules (1976:3).

The rejection of a common societal purpose does not, of course, mean that the members of that society lack rational ends of their own. And it does not mean that the structure of a free society will not serve the purposes of its members. Rather, in a society structured by general compliance with the rules of just conduct (and other evolved and refined orders of rules), this abstract framework will be an instrument for each individual advancing her own purposes – often through freely chosen association with like-minded others. Nevertheless,

Among the members of a Great Society, who mostly do not know each other, there will exist no agreement on the relative importance of their respective ends. There would exist not harmony but open conflict of interests if agreement were necessary as to which particular interests should be given preference over others. What makes agreement and peace in such a society possible is that the individuals are not required to agree on ends but only on means which are capable of serving a great variety of purposes and which each hopes will assist him in the pursuit of his own purposes. (1976: 3)

The Great Society arose through the discovery that men can live together in peace and mutually benefiting each other without agreeing on the particular aims which they severally pursue. (1976: 109)

Given the plurality of distinct persons with their own systems of ends and our lack of knowledge about how to weigh people’s diverse ultimate ends against one another, fundamental societal principles must take the form of distinguishing between the ways of advancing one’s ends that are acceptable and the ways that are unacceptable. More specifically, conduct in accordance with norms that are conducive to peace and cooperation to mutual advantage – such as the rules of just conduct – are acceptable, while violations of those norms are unacceptable. Reciprocal compliance with such norms is each person’s all-purpose means of advancing her own ends. This means will be available to each agent only if all are steadfast in their compliance (or are steadfastly punished for non-compliance). And all will be steadfast in their compliance (or steadfastly punished for non-compliance) only if these norms are treated as ultimate values. Respect for those values will be the “true common interest of the members of a Great Society, who do not pursue any particular common purpose” (1973: 121).

Still, why should one endorse reciprocal compliance with norms like the rules of just conduct even if it is granted that such an endorsement is “the indispensable foundation of all our civilization?” Why is it a “great tragedy” (1973: 7) when social scientific error undermines belief in strict compliance with such norms? The answer that is strongly suggested by Hayek’s whole account of the function of such norms is that reciprocal compliance with such norms is apt to enhance the value of each participant’s life from the perspective of her own distinct system of ends. The great virtue of the market order – indeed, the whole social order that arises from individual choices made within a framework of rules of just conduct – is that it “serves the multiplicity of separate and incommensurable ends of all its separate members” (1976: 108).

Three qualifications should be mentioned in connection with my conclusion that ultimately Hayek endorses a mutual advantage justification for compliance with the rules of just conduct. The first is that, while he does offer this justification, he also continues to be reluctant to acknowledge that he is doing so. This reluctance stems from his ongoing belief that to offer such a justification is to be guilty of overrating the power of human reason. The second qualification is that in LLL, Hayek construes the ultimate end that is served by compliance with the rules of just conduct in a slightly different way. In LLL, Hayek seems to think that, if he is to offer any sort of consequentialist justification for principles of action, he needs to point to some sort of outcome that is more societal than mutual benefit for each member of society. However, for reasons that we have discussed, that societal outcome cannot be the totality of particular concrete consequences of compliance with those principles. What Hayek comes up with is the idea that compliance with the rules of just conduct (and other coordinating norms) will always yield some particular instantiation of an “order of actions” in which individuals will live together in peace and mutually supportive interaction. While we cannot predict which particular instantiation of such an order will result from our compliance with the rules of just conduct, we can predict that some instantiation of a peaceful and mutually advantageous kind will emerge. So, if one needs to point to some sort of a societal end as the touchstone for rational policy, one should adopt this abstract end. “[R]ational policy” does not have access to and does not require “a common scale of concrete ends;” rather “policy … may be directed toward the securing of an abstract overall order.” Indeed, this abstract order is “a timeless purpose which will continue to assist … individuals in the pursuit of their temporary and still unknown aims” (1976: 117,14).²²

The third qualification of my claim that Hayek ultimately appeals to mutual advantage is that Hayek will occasionally slip into more Kantian (and, hence, Nozickian) language. For instance, within CL, in which Hayek advances the consequentialist argument that we make the best use of one another by not coercing one another, he also declares that, “Coercion is evil [a term he rarely uses] precisely because it thus eliminates an individual as a thinking and valuing person and makes him a bare tool in the achievements of the ends of another.” Hayek adds that justifiable coercion is coercion that suppresses initiated coercion and, hence, “becomes an instrument assisting individuals [who do not initiate coercion] in the pursuit of their own ends and not a means to be used [against individuals] for the ends of others” (1960: 21). This non- consequentialist rejection of coercion is, of course, a prelude to Hayek’s insistence in LLL that freedom must be respected for its own sake if we are to reap the mutual gains that freedom promises.

---