Two Ideals of Constitution

For every Hayekian is a hard task to explain to his critics why the political process described in The Road to Serfdom did not finally lead to a totalitarian state, as book had warned it would happen if economic dirigism kept on growing in the United Kingdom, for example. To many of its critics, The Road to Serfdom states a failed prediction. In this post, I will try to formulate some sort of "hypothesis ad hoc" to rehabilitate "the road to serfdom" as a prediction.

As we had noted in a previous post, the core of Hayek's book is not related to the assertion "every economic intervention means limitations to individual liberty that lead to further economic intervention and so on to a totalitarian state". That is a misled conclusion to Hayek's idea. What Hayek tried to convey was that economic dirigism distorts the relative prices of the economy, what causes an economic crisis, and that the urgency to solve that crisis demands solutions on the basis of expediency. In those situations, it is easy to fall in the mistake to consider constitutional procedures as burdens to be lightened in order to overcome the crisis. Then, the process could be summarise as follows: "An economic intervention distorts relative prices, which generates a crisis. The urgency to solve the crisis authorises exceptions to constitutional procedures in order to apply new economic interventions. Those new measures cause new crises, which demand further expedient solutions -and the subsequent erosion of the rule of law".

My proposal is related to the late Hayek and his investigations on the role of unwritten law in the defence of individual liberty. In this regard, Hayek noted that individual liberties flourished in countries where the law was formed mainly by judiciary precedents and that statutory law could empower legislatures to enlarge the political intervention into every side of individual life (see "Law, Legislation and Liberty"). Besides now this is a very contemporary discussion -the clash between democracy and human rights-, it inspired me a different approach to the question. We can note that countries with high respect to individual freedom have short or unwritten constitutions, and countries with poor records in respect to individual rights have extensive and sophisticated written constitutions.

What I would like to state is that, along the 20th democracies, we could find two different ideals of political constitution. In countries with a tradition of individual liberties, the political constitution is considered as a limit by the rule of law to the political power. In countries where individual freedom was threaten or attacked, political constitutions are considered as instruments of political power. Notwithstanding to have written procedures to exercise political powers is a limit to the latter and it is better than not to have any legal procedure at all, we can see that this concept of constitution is more exposed to follow the pattern stated by Hayek in his book "The Road to Serfdom".

I think we have here a contention subject to empirical test: we have to identity countries with political constitutions regarded as limits to the political power imposed by the law and countries with political constitutions considered as attributions bestowed by the law upon political powers. Then, we have to verify the correlation between each of those countries and the degree of respect to individual liberties fulfilled in them. Since the identification of the ideals of constitution -limitation to political powers by the law vs. attribution of legality to political power- is the most difficult task, we could take the extension or sophistication of the constitution as an indicator of each type.

 

The concept of “dispersed knowledge” should be a commonplace!

I dare to state that the world would be a better place to live in if the concept of “dispersed knowledge” were a commonplace. Perhaps it is an elusive idea and that is why every now and then political intervention regards itself as the saviour from the “chaos of the market”.

But what most people are used to call “chaos” is, in fact, “complexity”. Every single rational agent is an administrator of the bits of information gathered by him from the limited range of his experience, using devices of perception, such as senses, social values, norms, and technologies. The said devices are mostly common to other agents and thus contribute to make the compatibility of several individual plans, the most of them unknown to each other, possible –and the stability of the social order rests on the degree of such compatibility.

As we said, social spontaneous conventions as language, monetary economy, trade, morals, and law systems –along with many others- are devices used by the these agents to cope with the complexity of an order of things built on a framework of plans of multiple individuals, most of them yet undiscovered. It is a complex order of facts, but it is an order still: spontaneous conventions make of the multiple bits of information from the different individual plans a coordinated set of resources applied to carry out the most of them. It is a complex system of coordination of knowledge, with gaps and perturbations, but it is a system that can deal with a higher amount of information than any individual or committee would be able to do.

Since our concept of rationality is mostly instrumental, regarding as “rational” a set of resources deliberately applied to attain a known aim, it is easy to consider the complex order resulting from spontaneous coordination of individual plans as “irrational” -and this charaterisation gains strength with every new crisis. At this point, what we have to notice is that the net benefits rendered by the extended society –i.e.: the spontaneous coordination of the dispersed knowledge from multiple individual plans and institutions- are higher than what any other alternative system of organization of human beings could bring about. The consequence of the argument is that dispersed knowledge is both a burden to central planning and lever to the open society.

We know that almost the whole work of F. A. Hayek is devoted to this quest, but if I had to choose a single paper that keeps the kernel of this philosophy I would choose “The Use of Knowledge in Society”. This would be a good starting point to make the idea of “dispersed knowledge” part of our cultural background, like heliocentrism or Gödel’s theorem.

On the gist of "The Road to Serfdom"

It is usual to summarise the gist of “The Road to Serfdom” as the thesis of that an increasing level of government intervention in markets inevitably leads to further interventions. A commonplace and an even more common error of interpretation. That thesis is not Friedrich Hayek’s, but Ludwig v. Mises’.


What is pointed out in “The Road to Serfdom” is that dirigisme requires quick and pragmatic solutions to problems arisen by the unintended consequences of its own interventions. In this scenario, the constitutional system of checks and balances appears as an obstacle to achieve an expedient solution to such problems –and this is indeed its proper function.


Thus, the constitutional requirement of passing a law by the Congress or Parliament is considered as too slow a process for dirigisme. In the road to serfdom, disregarding the constitutional proceedings to pass a law, both formal and substantial, the executive branch receives, increasingly, extraordinary faculties to legislate in order to solve the maladies that previous policies had engendered. That is how matters of expedience subdue reasons based on principles.


One could agree or not on the possibility or probability of that process to take place. Notwithstanding, that is the “road to serfdom” as Hayek stated it, not the misleading formulation that we usually find in several discussions related to him.

A Perennial Conflict

Contrary to a warning recently heard, the present importance of “The Road to Serfdom” does not come from any current menace to Western democracy. Actually, the interest of the book emerges from the perennial conflict between rule of law and expediency.

The burden of duties placed on contemporary governments makes them divert from constitutional principles into matters of expedience. Since those legal principles condense a large amount of data concerning human affairs, fed into by different sources, the public policy arisen from matters of expediency, disregarding the whole picture and focused on the poor amount of data at hand for the policy maker, has a higher probability to fail than administration subject to the law.

Afterwards, the disarray thrown into by bad policy will lead to further anomalies and further public policies purely based on expediency, a sort of positive feedback system –and in that process consists the road to serfdom.

On Francis Fukuyama's coda to his article on Hayek in The New York Times

Hayek did not actually criticise Cartesianism in itself, but rather “Cartesian Dualism”. In “Law, Legislation and Liberty”, Chapter I, paragraph “Reason and abstraction”, he explained his position on rationality, abstraction and evolutionism: abstraction is not a conscious operation of the agent upon reality, but it is what constitutes his perceptions of it –and what is subject to blind evolution. So, I do not see such contradiction in Hayek’s thought as Fukuyama does.

Competitive Order

Following the advice of a friend of mine, I have just discovered the value of “ ‘Free’ Enterprise and Competitive Order”, the speech Friedrich Hayek had delivered in occasion of 1947’s Mont Pellerin Society meeting. I found it as a sort of piece of philosophy of public policy, very appropriate for the present years.

In that paper, Hayek states that the “continued movement toward more government control” is mostly due to the lack of “a consistent philosophy of the groups which wish to oppose it”, groups that advocate free enterprise but not a competitive order.

Hayek qualifies “the impression that abandonment of all harmful of unnecessary activity” is “the consummation of all political wisdom” as a “fatal tactical mistake”. In this sense, he calls for assuming that “demands for greater security and greater equality” will “determine action for a long time to come and carefully to consider how far a place can be found for them in a free society”.

Hayek presents the concept of competitive order as the political programme of making competition work, not by mere absence of intervention on free enterprise, but by an active prevention of monopolies. He also points out that the “preconditions of a competitive order” require a monetary and financial policy and some sort of provision to “be made for the unemployed and the unemployable poor”.

To summarize, Hayek claims to “pay deliberate attention to the moral temper of the contemporary man”, trying to canalize his “energies from the harmful policies to which they are now devoted to a new effort on behalf of individual freedom”.

A question open to a far reaching misinterpretation

Most advocates of individual liberty who are fond of Hayek`s work usually show disregard for the value of written bodies of laws and praise the judge-made law systems. In fact, Hayek, at the beginning of chapter 5 of Law, Legislation and Liberty, stated that “the ideal of individual liberty seems to have flourished chiefly among people where, at least for long periods, judge-made law predominated.”

But this citation is moderated by the whole book which it is taken from. What Hayek posited was a matter subject to probability. Laws emerging from judiciary precedent are more likely to be purposeless and oriented to fulfill expectations of what is to be regarded as just conduct. Since the written law is sanctioned by a legislator, the temptation to provide the law with a certain purpose and a social design is hard to be resisted.

Nevertheless, Hayek admitted that the legislation must act in order to prevent judges from obeying certain interests of a particular group or class –in which case a judge-made law would be purpose-oriented and a menace to individual liberty. Furthermore, Hayek stated that it is possible for codified system of law to articulate a set of norms of just conduct so long as they were not orientated themselves towards any particular aim.

As we have said, this is not a problem of essences but of probabilities.