Hayek 8: Safeguards of individual liberty

April 21, 2008

(An accolade to the Atlas Economic Research Foundation on its 8th Liberty Forum, April 25-27, 2008, Atlanta, Georgia, USA)

Friedrich Hayek’s The Constitution of Liberty, Chap. 14, is entitled “The Safeguards of Individual Liberty”. After defining in earlier chapters the concepts of liberty, equality, rule of law and what constitutes them, it is apt to discuss what will safeguard them. Hence, the importance of this chapter.

Hayek wrote that the law of liberty possesses certain attributes:

“First, the rule of law means that government must never coerce an individual except the enforcement of a known rule. The rule of law is more than constitutionalism: it requires that all laws conform to certain principles… The rule of law restricts government only in its coercive activities.… The chief means of coercion at the disposal of government is punishment.”

To better understand this and the succeeding quotes from Hayek, let us review how the man defined the following concepts:

Liberty means absence of coercion.
Freedom is inseparable from responsibility; fear of responsibility is fear of freedom itself.
Equality before the law; equal treatment of the law to unequal people.
Rule of law means no exception.

Governments usually create thousands of rules, from laws against murder and stealing to laws against left-turn and U-turn on certain streets, laws on what days and hours one can drive his/her car, rules and guidelines how to repair one’s house or how to treat dogs and cats. Plus rules on how much taxes to pay for this and that income, taxes and fees for ownership of a house, lot and car; fees to get a business permit, marriage and birth/death certificate, police clearance, driver’s license, passport, and so on.

When there are 10,000 or 149,000 different rules and regulations, and if governments are to strictly follow a rule of law where there is not a single exception, where both governors and the governed should follow all those rules, society can be paralyzed, it can decay and only those who have the political and armed muscles will be free to do what they want.

It is to be assumed therefore, that when governments, through their multilateral, national and local legislative bodies, create 10,000 or 149,000 different rules, many of these laws are meant to be disregarded by those who have the power and authority to exempt themselves from many or all of those laws – the government officials, bureaucrats, their families and friends – and the laws are to be implemented only to those who do not belong to the former. This is because it is impossible for ordinary citizens to know and understand even five percent of those tens of thousands of laws and the corresponding fines and penalties for their violation.

This observation is consistent with Hayek’s definition of the limit of legislative action. He wrote,

“Not every enactment of the legislative authority is a law…only a very small proportion are substantive laws regulating the relations between private persons or between such persons and the state. The great majority of the so-called laws are rather instructions issued by the state to its servants.”

For rule of law to be safeguarded, based on Hayek’s first attribute of liberty mentioned above, one precondition is that the number of laws that governments through their respective legislative bodies should make and implement should be as few as possible, and for these very few rules to be known to as many people as possible. Because the state will be prohibited from coercing any individual in obeying certain rules that the individual does not even know exists. The state can only enforce laws that are so general and easily understandable to everyone to make the rule of law effective and individual liberty safely guarded.

The second chief attribute of true law, according to Hayek, is that the “the laws are known and certain… the certainty of the law must be judged by the disputes which do not lead to litigation because the outcome is practically certain as soon as the legal position is examined.”

When there is rule of law – the existence of very few laws that apply to everyone, no exception – citizen obedience is expected. When there is fear that punishment is certain once one is caught to be violating those very few rules – like laws against murder and stealing – people will feel safe, they become productive, and there will be little or no necessity to short-cut or break laws, say to improve one’s material and economic well-being.

There will be little need for lawyers too, and courts and judges. Society’s energy will be channeled from many unproductive activities and services, towards building and creating many things that people need or still being dreamed of as “futuristic” if not impossible.

The third requirement of true law, according to Hayek, is equality.

“That any law should apply equally to all. General and equal laws provide the most effective protection against infringement of individual liberty. It is this fact that all rules apply equally to all, including those who govern, which makes it improbable that any oppressive rules will be adopted.”

Even the highest traffic or police officials of a country or city will not support rules on “no left turn” or “no U-turn” on certain streets if they know that the left-turn or U-turn slots ahead are always congested and they cannot take a short-cut and must endure the traffic congestion themselves. The solution to such congestion and the temptation to violate said traffic rules is the construction of elevated or underground left-turn and U-turn slots, or other engineering solutions, for smooth and seamless traffic flow.

One big and never-ending problem in many developing countries is corruption and large-scale robbery in government. The selective application of the law against stealing causes this malady. The probability of being caught and imprisoned for stealing is very low while the benefits of stealing and plunder is very high.

Corruption involves not only stealing and plunder of tax money. It also involves creating many laws and prohibitions that are meant to be broken in exchange for bribes. Hence, the more prohibitions to be enacted, the more bribes and special favors to be expected. There is no stealing of tax money in violation of laws against illegal drugs, prostitution and human trafficking. But these crimes continue both in poor and rich countries because the implementers look the other way once bribes and favors, material or non-material, are given. That is why the existence of too many laws and prohibitions makes a mockery of the rule of law and the perverse institutionalization of rule of men is hereby created. And these are the conditions by which abuse and disrespect of individual freedom is sown and grown.

Where now lies the protection of private property and citizen privacy and how should they be safeguarded? Hayek wrote,

“Under the rule of law the private citizen and his property are not an object of administration by the government, not a means to be used for its purposes. It is only when the administration interferes with the private sphere of the citizen that the problem of discretion becomes relevant to us…. “What distinguishes a free from an unfree society is that in the former each individual has a recognized private sphere clearly distinct from the public sphere, and the private individual cannot be ordered about but is expected to obey the rules which are equally applicable to all.”

This would somehow explain why poverty remains widespread in many societies. Disrespect for social outcome where there is prosperity for the hard workers and misery for the lazy, by forcing social equality or attempting to “narrow the gap” between the rich and poor through various income redistribution schemes has often resulted in more personal irresponsibility. When there is irresponsibility, there is poverty.

One policy by some governments that discourage economic efficiency is land or agrarian reform, where some big and medium-sized landholdings are being forcibly taken by the state, then subdivided and distributed to farm workers. For societies with high entrepreneurial spirit among the people, this policy has worked well. For countries with weak entrepreneurial spirit among their people, the result is bad. Some efficient corporate farms with economies of scale and employ scientific and modern technologies in farming and post-harvest processes are either being discouraged to enter the agri-business sector, or already there but discouraged to pour in additional investments due to the constant threat of land parceling and redistribution by the state. And many farm workers who became beneficiaries of land redistribution were either too poor to invest in modern farming that drastically improves farm output and productivity, or sometimes too rich to splurge in big parties after selling the land that was just handed over to them.

The treatment by the state that all lands, even those privately-titled lands, are its own and it can interfere into the ownership and utilization of those lands, especially by landowners who are deemed “not friendly” to the politicians and officials of the incumbent government, shows the absence of freedom by some citizens. It betrays the exproprietory tendency or character of the state.

And speaking of expropriation, Hayek has this observation:

“The principle of ‘no expropriation without just compensation’ has always been recognized wherever the rule of law has prevailed. It is, however, not recognized that this is an integral and indispensable element of the principle of the supremacy of the law…. Compensation should be fixed as high as possible without opening the door to outright abuse. This means the public gain must clearly and substantially exceed the loss if an exception to the normal rule is to be allowed.”

Land expropriation practices by the state, whether for land reform or to build a new expressway or expand an existing one, or any other infrastructure or administrative projects should indeed be tempered by “compensation as high as possible” principle. This is because land valuation by the state is often very arbitrary and tend to undervalue the real price of the land, and on the premise that the landowner is open to selling the land to the state. Valuation by private buyers who are competing with each other on the other hand, tend to reflect the market value of the land.

The sphere of the individual should be as wide as possible, and the sphere of the state to intervene should be as limited and narrow as possible. The narrowness of the public sphere is clearly delineated by the rule of law principle: the state should enact and enforce only few and general rules that apply equally to everyone, state leaders and administrators included.