Abstract
Hayek’s Constitution of Liberty is justly regarded as making a comprehensive case for the protection of individual liberty against excessive government intrusion. But even as its ends are correct, its analysis of key conceptions of equality, coercion and monopoly is incomplete because of Hayek’s refusal to adopt a consistent theoretical framework that accounts for the difference between formal and substantive forms of regulation, on the one hand, and why the refusal to deal is critical in competitive markets but subject to regulation in monopolistic ones. His deep skepticism about central planning rests upon an overbroad account of collective ignorance that unwisely understates the dangers of self-interest in collective deliberations. That weakness then leads him to exhibit an excessive skepticism toward written constitutions on both matters of structure and individual rights, which in turn leads him toward undue deference to economic regulation of the economy.
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Notes
Hayek, FA (2011 [1960]) The Constitution of Liberty: The Definitive Edition, reissued in 2011, in a definitive edition done with exceptional care by the late Ronald Hamowy (1937–2012), to whose memory this essay is dedicated. All page references are to this edition.
For discussion, see Epstein, R (2006) How Progressives Rewrote the Constitution. Cato Institute, Washington. See also, infra, at Part Two for a brief discussion of the economic liberty point.
See, for example, the discussion in Humphrey’s Executor v. United States (1935).
For one particularly outspoken version of the point, see Hamburger, P (2014) Is Administrative Law Unlawful? University of Chicago Press, Chicago. For my somewhat more restrained views, see Epstein, R (2011a) Design for Liberty: Private Property, Public Administration, and the Rule of Law. Harvard University Press, Cambridge.
See, for example, United States v. Lopez (1995), in which Justice Kennedy rejected a mechanical test “defining by semantic or formalistic categories those activities that were commerce and those that were not.” Yet that is precisely what is required to make any jurisdictional allocation work. For an extended discussion of linguistic relativism, as related to this case, see Epstein, R (2016) Linguistic Relativism and the Decline of the Rule of Law, Harv J Law & Pub Policy 39:583–630.
For an example of how this can be done in the law of nuisance, see Epstein, R (1979) Nuisance Law: Corrective Justice and it Utilitarian Constraints, J Legal Stud 8:49–102.
See Justice Alito’s dissent in United States v. Alvarez, in which he notes why the difficulties of private enforcement justified public sanctions in stolen valor cases in which people publicly claimed medals and awards that they had not actually received. (2012)
See Loving v. Virginia, which equivocates between the two rationales. (1967)
U.S. Const. Art. I, § 8, cl. 1. For discussion, see Epstein, R (2014) The Classical Liberal Constitution: The Imperfect Question for Limited Government. Harvard University Press, Cambridge.
This review considered Thomas Nixon Carver’s 1921 Principles of National Economy. Hale’s most vocal modern defender is Fried, B (1998) The Progressive Assault on Laissez Faire: Robert Hale and the First Law and Economics Movement. Harvard University Press, Cambridge. For my critique of both Hale and Fried, see Epstein, R (1998) The Assault That Failed: The Progressive Critique of Laissez Faire, Mich L Rev 97:1697–1721 (attacking Fried for insisting that Hale demonstrated that “liberty” and “property” were empty terms, even though he did not use the word “empty” in his article).
For a clear awareness of the distinction, see A.L.A. Schechter Poultry Corp. v. United States (1935):
The Act does not define “fair competition.” “Unfair competition,” as known to the common law, is a limited concept. Primarily, and strictly, it relates to the palming off of one’s goods as those of a rival trader. In recent years, its scope has been extended. It has been held to apply to misappropriation as well as misrepresentation, to the selling of another’s goods as one’s own—to misappropriation of what equitably belongs to a competitor. Unfairness in competition has been predicated of acts which lie outside the ordinary course of business and are tainted by fraud, or coercion, or conduct otherwise prohibited by law.
For an overview of these critiques, see Simons, H (1944) Some Reflections on Syndicalism, J. Pol. Econ. 52: 1–25, Hutt, W (1930) The Theory of Collective Bargaining: A History, Analysis, and Criticism of the Principal Theories Which Have Sought to Explain the Effects of Trade Unions and Employers Associations Upon the Distribution on the Product of Industry. The Free Press, Glencoe IL.
I critique this view in Epstein R (1999) Hayekian Socialism, 58 Md L Rev 271, 274–78.
To see how this works in the constitutional framework, see Epstein R (1993) Bargaining with the State, Princeton University Press, Princeton, NJ.
The Latin version comes from Hobbes, De Cive (of the citizen).
[…] ostendo primo conditionem hominum extra societatem civilem, quam conditionem appellare liceat statum naturæ, aliam non esse quam bellum omnium contra omnes; atque in eo bello jus esse omnibus in omnia.
I demonstrate, in the first place, that the state of men without civil society (which state we may properly call the state of nature) is nothing else but a mere war of all against all; and in that war all men have equal right unto all things.
For the formulation, see Gaius Institutes 1.1.
See for the full Latin translation, etc. Digest 18.1.1 pr.
The relevant Statute of Frauds is found at 29 Car. 2, c.3 (1677). Some variation of this statute is found in virtually every jurisdiction today, and is of especial relevance for transfers of real estate and guarantees, and in the creation of will substitutes.
See, supra, at Part II.
For one discussion of the variations, see Colombatto E (2007) Hayek and Economic Policy. In: Marciano A, Josselin J (eds) Democracy, Freedom and Coercion: A Law and Economics Approach. Elgar, Cheltenham, UK.
For some sense on how this works, see Brough W (1990) Liability Salvage—By Private Ordering, 19 J Legal Stud 95.
The phrase “affected with the public interest” had been first articulated by Sir Matthew Hale (1670) in his treatise De Portibus Maribus, written in the late seventeenth century but published only later.
For a nice summary of the relative advantages of the various systems, see Duquesne Light Co. v. Barasch (1989).
For discussion, see Epstein R (2013) The History of Public Utility Regulation in the United States Supreme Court: Of Reasonable and Nondiscriminatory Rates, J Supreme Court History 38:345–368.
See, for the exhaustive history, Bernstein D (2011) Reconstructing Lochner: Defending Individual Rights against Progressive Reform. University of Chicago Press, Chicago.
This decision struck down a federal law under the Fifth Amendment.
This decision invalidated a Kansas law under the Fourteenth Amendment.
For the classic statement, see Ely J (1981) Democracy and Distrust: A Theory of Judicial Review. Harvard University Press, Cambridge.
In dealing with many of these issues, Hayek is not alone. At one time, the dominant trope among judicial conservatives was a form of judicial restraint that follows in Hayek’s footsteps. Earlier in his career, Antonin Scalia was an explicit champion of that approach. See Epstein R (1985) The Active Virtues, Regulation 9:14.
For the more extended critique, see Epstein R (1999) Hayekian Socialism, Md L Rev 58:271–299.
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Cases
A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935).
Adair v. United States, 208 U.S. 161 (1908).
Allnut v. Inglis, 104 Eng. Rep. 206 (K.B. 1810).
Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922).
Chicago, Milwaukee & St. Paul Railway Company v. Minnesota, 134 U.S. 418 (1890).
Coppage v. Kansas, 236 U.S. 1 (1915).
Dartmouth College v. Woodward, 17 U.S. 518 (1819).
Dean Milk v. Madison, 340 U.S. 349 (1951).
Duquesne Light Co. v. Barasch, 488 U.S. 299 (1989).
In re Furman Street, 17 Wend. 649 (N.Y. Sup. Ct. 1836).
Gibbons v. Ogden, 22 U.S. 1 (1824).
Hammer v. Dagenhart, 247 U.S. 251 (1918).
Humphrey’s Executor v. United States, 295 U.S. 602 (1935).
Lochner v. New York, 198 U.S. 45, 75 (1905).
Louisville & Nashville Railroad Co. v. Barber Asphalt Pav. Co., 197 U.S. 430 (1905).
Loving v. Virginia, 388 U.S. 1 (1967).
Munn v. Illinois, 94 U.S. 113 (1876).
National Broadcasting Co., Inc. v United States 319 U.S. 190 (1943).
National Labor Relations Board v. Jones & Laughlin Steel, 301 U.S. 1 (1937).
Ploof v. Putnam, 71 A. 188 (Vt. 1908).
Post v. Jones, 60 U.S. 150 (1856).
Union Pac. R.R. Co. v. Pub. Serv. Comm’n of Mo., 248 U.S. 67, 70 (1918).
United States v. Alvarez, 132 S.Ct. 2537, 2557 (2012). (Alito, J. dissenting).
United States v. Darby, 312 U.S. 100 (1941).
United States v. Lopez, 513 U.S. 549 (1995).
Vincent v. Lake Erie Transportation Co., 124 N.W. 221 (Minn. 1910).
Wickard v. Filburn, 317 U.S. 111 (1942).
Statutes
A Standard State Zoning Enabling Act, 1926.
Civil Aeronautics Act of 1938, 49 U.S.C. § 401, et seq.
Clayton Antitrust Act of 1914, 15 U.S.C. § 12–27.
Communications Act of 1934, 47 U.S.C. § 151, et seq.
English Trade Disputes Act of 1906, 6 Edw. 7 c. 47
Fair Labor Standards Act of 1938, 29 U.S.C. § 201–219
Motor Vehicle Act of 1935, 49 Stat. 543.
National Labor Relations Act of 1935, 29 U.S.C. § 151, et seq. Norris-LaGuardia Act of 1932, 29 U.S.C. § 101, et seq.
Radio Act of 1927, 47 U.S.C § 4.
Sherman Act, 15 U.S.C. § 1–7.
Statute of Frauds, 29 Car. 2, c.3 (1677).
The Agriculture Adjustment Acts (1933–1938). Pub. L. No. 73–10, 48 Stat. 31; Pub. L. No. 75–430, 52 Stat. 31.
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Epstein, R. Hayek’s Constitution of Liberty—a guarded retrospective. Rev Austrian Econ 30, 415–446 (2017). https://doi.org/10.1007/s11138-016-0367-7
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DOI: https://doi.org/10.1007/s11138-016-0367-7