Monday, November 28, 2011

Joseph Raz against Friedrich Hayek on the rule of law

 This is the first of three articles on the criticism that Joseph Raz directed against Hayek’s defense of the rule of law. 
It is strange to see an economist (Hayek) stressing the value of the rule of law, and a law professor (Raz) contradicting him. I think that Raz made three mistakes, and they will be the subjects of the three articles. I will sum up their content:
1st. article:  Raz fails to understand Hayek’s main points.
2d. article: Raz strips from the notion of the rule of law  most of the content that belongs to it according to history and to common understanding; and he adds things that do not belong to it.
3d. article: Raz tries to show that the rule of law might be of no value in authoritarian non-Western nations. That doesn’t prove that the rule of law has little value for free Western nations (which are included in Raz’s low estimation of the rule of law). But in fact, Raz’s argument is also wrong concerning non-Western nations.
I have added another article, where I try to explain what I think is the main misunderstanding about Hayek's concept of the rule of law

An economist revives the interest in the rule of law
     A person not acquainted with the ideological map of the XXth century would find it surprising that it was Friedrich Hayek, an economist, who first revived the interest in the notion of the rule of law. He dedicated chapter V of his book The Road to Serfdom (link to a condensed version) to the analysis of the relations between planning and the rule of law. Hayek’s concern about that issue appears again in his other books.
     The notion of the rule of law had been neglected during most part of the XXth century –not without horrible consequences. Hayek rediscovered it and tried to put it back on the ideological map. That was odd enough and tells a lot about that map.
     But it was more surprising still, and more revealing, that it was a prominent law scholar at Oxford, Joseph Raz, who criticized Hayek’s efforts, and also –with just a few derogatory remarks– the great British thinkers that had taught the notion of the rule of law to generations of lawyers and politicians.

Hayek's ideas
     Hayek showed that there is a conflict between planning and the rule of law. He explained why it was possible to reach an agreement about rules, but not about planning at a national scale. When planning is confined to a single industry there may be agreement among capitalists and workers that it would be a fine thing to impose a ban on foreign products. But when the choices are whether to increase the salaries of nurses or of agricultural workers, have better schools or more generators in power plants, “nothing short of a complete system of values in which every want of every person or group has a definite place is necessary to provide an answer” (p. 86). The Soviets and the Nazis tried to impose that system of values.
     Hayek traced the ideas of national-socialism back to the time when they still had not been united by a hyphen. He reviewed the intellectual atmosphere that prevailed before Hitler gained supreme power over Germany. In The Road to Serfdom he showed how socialist thinkers had removed the obstacles for Hitler by sneering at the notion of the rule of law. He provided names and dates. In particular, he analyzed the ideas of Werner Sombart, a Marxist economist that became one of intellectual props of the Nazis. In the Germany of the 30s, the fight between communists and national-socialists was the inevitable and savage struggle for power between different collectivistic parties. However, both had a common enemy, says Hayek, in the bourgeois morality and its respect for limits and principles. Both Communists and Nazis derided laissez-faire as anachronistic
     Certainly Nazism wasn’t a return to the rule of law and free markets. For its millions of supporters, it was an improvement on socialism. It was still planning backed with the full force of the State, but better. Four year plans instead of the Stalinist five year plan. One of the improvements of the Nazis was the result of a lesson they learned from the experiments of the Soviets. Lenin himself had taken notice of the havoc created by the complete collectivization of all enterprises. That is why he provided some room for private ownership in his NEP (New Economic Policy). Lenin vaguely understood that you don’t have to own the shop in order to run it. It is enough (and better) if you just give orders to the owners (the miserable people they still called “owners”). One of the many advantages of that scheme is that when your orders lead to chaos and poverty, you can blame the owners.
     The Nazis extended Lenin’s NEP. They retained nominal owners for industries and shops, but all became executors of the State’s plans. Those capitalists who still clang to the notion that they directed their own enterprises found themselves in jail. For instance, Hugo Junkers, the inventor and entrepreneur that introduced new materials and techniques for the production of aircraft, was forced to give his patent rights to the government, his company was expropriated, and he was arrested. You are the owner, yes, but you must follow the orders, or you will quickly find that ownership has lost all substance. You are there to satisfy the bosses –and to take the blame for their mistakes.
     The Road to Serfdom includes a chapter entitled “Why the worst get on top” that shows how government enforced planning gives authority to people fond of exercising discretionary powers. Hayek shows why they must be discretionary and not subject to permanent rules. The chapter would sound very familiar to anyone who has worked under officials, judges, or bureaucrats who don’t recognize moral limits to their powers –only the power of those above them.
     One of the key distinctions we learn from Hayek is that between rules and orders (or in other words: between laws and commands). He says that rules are like traffic signs that show possible routes, forbid some turns, but don’t tell anyone where to go. In contrast, orders tell you where you have to go today, and tomorrow a new order may tell you to go to some order place. Orders are ad-hoc, they are dictated and replaced “on the merits”, that is: according to the evaluation that some leader or some board makes of individual circumstances.
     Hayek showed that orders were the basis of the command economy of the Soviets and Nazis, and to some extent of the interventionist policies of many Western governments. Still today, many people do not recognize any regulation other than that based on commands. For them, an economy based on general and permanent rules simply lacks order.
     The Road to Serfdom was first published in 1944. It was reprinted many times, and Hayek added new prefaces in 1956 and 1976.

A law professor says Hayek overvalued the rule of law
     In 1977, Joseph Raz, a professor at Oxford specialized in the philosophy of law, wrote and article in which he tried to show that the renewal of interest in the concept of the rule of law was largely unjustified and based on a fallacy. His article was later included in one of Joseph Raz’s books (The Authority of Law. Essays on Law and Morality, published in 1979 and reprinted in 2002. When I cite pages in Raz’s article, I refer to this book).
     Raz’s article was entitled The Rule of Law and its Virtue. The title was somewhat misleading and could have better sum up Raz’s main conclusion by saying: “The Rule of Law and its little Virtue”.
     Raz’s didn’t dispute Hayek’s conceptual and historical account of the notion of the rule of law. On the contrary, he started his article saying that “F.A. Hayek has provided one of the clearest and most powerful formulations of the rule of law” (p. 210). Raz’s line of attack was different: he asserted that there was not much value in the rule of law, and he finished his article saying that “Sacrificing too many social goals on the altar of the rule of law may make the law barren and empty” (p. 229). From the beginning of his article he said that Hayek’s conclusion was a fallacy. That fallacy was in Raz’s opinion “the assumption of its [the rule of law] overriding importance”. He announced that his purpose was to show that Hayek’s conclusions about the value of the rule of law were mistaken (p. 210).

Raz failed to understand Hayek’s book
     Certainly, Hayek never said that adherence to the rule of law overrides in importance any other value. Rather, he said that the attempts of planners (be they do-gooders, tyrants, or a combination of the two) that neglected the rule of law led to poverty and serfdom. Hayek never said that respect for the rule of law was more important than values like freedom and progress. Rather, he said that they come together, and in fact came together in history. The first chapter of The Road to Serfdom is entitled The abandoned roadRespect for the rule of law was a road. A road leading where? To the spectacular advances that Western nations achieved in the XIX century, and to those still in the future. So it is highly misleading to say that Hayek thought that the rule of law overrides any other value. It was the road to them. He never suggested that liberty and progress should be sacrificed on the altar of the rule of law. By abandoning it, one followed The Road to Serfdom. That was plainly clear in the book.

Hayek shows why planners cannot tie themselves to general and permanent rules
     Let’s see how Hayek described the conflict between the rule of law and planning (I will have to cite Hayek at some length in order to show later that Raz misunderstands him): “The planning authority cannot confine itself to providing opportunities for unknown people to make whatever use of them they like. It cannot tie itself down in advance to general and formal rules which prevent arbitrariness. It must provide for the actual needs of people as they arise and then choose deliberately between them. It must constantly decide questions which cannot be answered by formal principles only, and, in making these decisions, it must set up distinctions of merit between the needs of different people as they arise and then choose deliberately between them. It must constantly decide questions which cannot be answered by formal principles only, and, in making these decisions, it must set up distinctions of merit between the needs of different people. When the government has to decide how many pigs are to be raised or how many busses are to be run, which coal mines are to operate, or at what prices shoes are to be sold, these decisions cannot be deduced from formal principles or settled for long periods in advance. They depend inevitably on the circumstances of the moment, and, in making such decisions, it will always be necessary to balance one against the other the interests of various persons and groups. In the end somebody’s views will have to decide whose interests are more important and these views must become part of the law of the land, a new distinction of rank which the coercive apparatus of government imposes upon the people” (page 82, Fiftieth Anniversary Edition).

     The difference between enacting permanent formal rules and taking decisions “on the merits” of ever changing situations can be compared to that “between providing signposts and commanding people which road to take”. Formal rules such as those that describe the requisites of contracts or the consequences of failing to fulfill one’s promises “refer to typical situations into which anyone may agree and in which the existence of such rules will be useful to a great variety of individual purposes. The knowledge that in such situations the state will act in a definite way, or require people to behave in a certain manner, is provided as a means for people to use in making their own plans. Formal rules are thus merely instrumental in the sense that they are expected to be useful to yet unknown people, for purposes for which these people will decide to use them, and in circumstances which cannot be foreseen in detail. In fact, that we do not know their concrete effect, that we do not know what particular ends these rules will further, or which particular people they will assist, that they are merely given the form most likely on the whole to benefit all the people affected by them, is the most important criterion of formal rules in the sense in which we here use this term. They do not involve a choice between particular ends or particular people, because we just cannot know beforehand by whom and in what way they will be used.” (p. 83, I have added emphasis in bold letters for reasons that will be clear later).
     Hayek continues: “In our age, with its passion for conscious control of everything, it may appear paradoxical to claim as a virtue that under one system we shall know less about the particular effect of the measure the state takes…Yet this consideration is in fact the rationale of the great liberal principle of the Rule of Law”. That Raz failed to understand the paradox will be clear later.
     Hayek provides two arguments for the superiority of formal rules. One is economic: “the state should confine itself to establishing rules applying to general types of situations and should allow the individuals freedom In everything which depends on the circumstances of time and place, because only the individuals concerned in each instance can fully know these circumstances and adapt their actions to them. If the individuals are to be able to use their knowledge effectively in making plans, they must be able to predict actions of the state which may affect these plans. But if the actions of the state are to be predictable, they must be determined by rules fixed independently of the concrete circumstances which can be neither foreseen nor taken into account beforehand” (p. 84). That explains why government enforced planning is less productive than free enterprise.
     Hayek presents also a moral and political argument in favor of formal rules. “If the state can exactly foresee the incidence of its actions, it means that it can leave those affected no choice…General rules, genuine laws as distinguished from specific orders, must therefore be intended to operate in circumstances which cannot be foreseen in detail, and, therefore, their effect on particular ends or particular people cannot be known beforehand. It is in this sense alone that it is at all possible for the legislator to be impartial. To be impartial means to have no answer to certain questions –to the kind of questions which, if we have to decide them, we decide by tossing a coin” (pages 84-85)Who is to benefit more from a contract over futures? What industry can make better use of iron? Formal rules have no answers for these questions. And that is both efficient and impartial.
     But in planning the government “must, of necessity, take sides, impose its valuations upon people and, instead of assisting them in the advancement of their own ends, choose the ends for them…the state ceases to be a piece of utilitarian machinery intended to help individuals in the fullest development of their individual personality and becomes a ‘moral’ institution –where ‘moral’ is not used in contrast to immoral but describes an institution which imposes on its members its views on all moral questions whether these views be moral o highly immoral. In this sense the Nazi or any other collectivist state is ‘moral’, while the liberal state is not” (p. 85, emphasis added for reasons that will be clear later).
     Again on the moral argument for formal rules, Hayek says “equality before the law is in conflict, and in fact incompatible, with any activity of the government deliberately aiming at material or substantive equality of different people, and that any policy aiming directly at a substantive ideal of distributive justice must lead to the destruction of the Rule of Law. To produce the same result for different people, it is necessary to treat them differently. To give the same objective opportunities in not to give them the same subjective chance”. That is the different between equality under the law and equality of outcome.
     Hayek admits that “It cannot be denied that the Rule of Law produces economic inequality –all that can be claimed is that this inequality is not designed to affect particular people in a particular way. It is very significant and characteristic that socialists (and Nazis) have always protested against ‘merely’ formal justice, that they have always objected to a law which had no views on how well off particular people ought to be, and that they have always demanded ‘a socialization of the law’”. He says that the legal theorist of National Socialism, Carl Schmitt, was not altogether false when he opposed the liberal Rechstaat (i.e. the Rule of Law) and the ideal of the gerechte Staat (i.e. the just State). Where I live, Argentina, you can fill many libraries with books and articles that still today repeat Carl Schmidt’s words.

Raz's objetion: the same made by Socialists and Nazis
     We must assume that Raz read The Road to Serfdom. But then it is clear that he failed to understand what he read. Let’s see what Raz says against Hayek’s arguments. Raz writes that the rule of law “is not a moral virtue has such” (p. 226). It has only a negative value, it prevents arbitrariness, but adds no positive good. Raz admits that conformity to the rule of law is essential for securing whatever purposes the law is designed to achieve but it “also enables the law to serve bad purposes” (p. 225). It has only the virtue of an instrument; Raz compares it with a sharp knife, which can serve good or bad purposes. What counts are social goals, and they may justify departures from the rule of law. Raz concludes his article saying that we must not “make the law barren and empty” (p. 229).
     Raz repeats the objections of the socialists and Nazis, to which Hayek had already answered, with the difference that Raz uses the language of analytical philosophy instead of Socialist or Nazi rhetoric. He does not even mention Hayek's argument about the impossibility of agreement about plans, says nothing about the conflict with democracy, no reference to Hayek's historical analysis, no comment about Hayek's account of the erosion of the rule of law by socialist thinkers, no observation about Marx, Sombart, Schmidt, Laski,...nobody. Raz approaches the problem as if it had no history and no characters. He just repeats the objection to the rule of law made by socialists and Nazis and thinks that he has found a decisive argument.
     The socialists complained that bourgeois law had only formal value; Raz says that it has only a negative value. Carl Schmitt praised the advantages of the just State over the Rule of Law; Raz tell us not to sacrifice social goals on the altar of the rule of law. The Nazis fought to make the law a tool that would serve the material and moral needs of the Fatherland; Raz says that there is no moral value in the instrument as such, only in the goals it serves.

An instrument to whom?
     Raz misunderstands Hayek in yet another point. Hayek explains that formal rules that recognize general principles in advance can be used for people to make their plans –their own plans. In contrast, when Raz mentions goals and purposes he mostly refers to those of the lawmakers and judges.
     Raz does not deny that stable laws “provide a safe basis for individual planning” (p. 220). But then he seems to forget it and writes that “it is of particular importance to remember (?) that the rule of law is essentially a negative value. It is designed to minimize the harm to freedom and dignity which the law may cause in its pursuit of its goals however laudable these may be” (p. 228, emphasis added). Here we see that he assumes that the goals that the law serves are its goals. Hayek writes about the goals of the man who signs a contract to buy a shop with the idea of starting a company; Raz writes about the State’s goal.
     Again he writes that “The rule of law is essentially a negative value. The law inevitably creates a danger of arbitrary power –the rule of law is designed to minimize the danger created by the law itself…Thus the rule of law is a negative virtue in two senses: conformity to it does not cause good except through avoiding evil and the evil which is avoided is evil which could only have been caused by the law itself” (p. 224). According to that, the only purpose of the rule of law is to prevent the bad deeds of public officials in applying the law. But if there were no laws and officials, there would be no room for arbitrariness.
     Raz assumes that no good is ever done by the rule of law (no small company started with the security provided by a contract), only the prevention of harm from public officials. That a new company has started its life does not count as a good that law made possible, easier, or safer because it was an individual’s decision (not the law imposing its puposes on him) and that does not count.
     Raz confirms his notion about whose purposes laws serve when he writes: “We could divide the purposes a law is intended to serve into two kinds: those which are secured by conformity with the law in itself and those further consequences of conformity with the law or of knowledge of its existence which the law is intended to secure. Thus a law prohibiting racial discrimination in government employment has as its direct purpose the establishment of racial equality in the hiring, promotion, and conditions of service of government employees (since discriminatory action is a breach of law). Its indirect purposes may well be to improve race relations in the country in general, prevent a threat of a strike by some trade unions, or halt the decline in popularity of the government. Conformity to the rule of law does not always facilitate realization of the indirect purposes of the law, but it is essential to the realizations of its direct purposes…Therefore, if the direct purposes of the law are not to be frustrated it must be capable of guiding human behaviour, and the more it conforms to the principles of the rule of law the better it can do so” (p. 225). The law has direct and indirect purposes and it must guide people’s behavior so as to reach them. It is plain that Raz is not talking about people’s goals and plans.

No positive value?
     Raz’s focus on the purposes of the State prevents him from realizing that formal rules allow individuals to be truly moral. Whenever he sees no values imposed on people by the coercive apparatus of the State, he concludes that no value is served. Repeating the objections of the Socialists and Nazis, he fails to see that only true laws, those that have no other purpose than to serve the lawful purposes of individuals, allow individuals to be moral. 
     Should I work more in order to earn more? Or should I parade my misery and that of my children? Should I acquire those skills that people consider useful? Or should I ask the government to force others to pay me for what they don’t want? Should I be concerned about the education of my children? Or should I leave their education to community organizers and teenage gangs? All these are practical questions and also moral questions.
     The Nazis boasted that they had introduced morality into barren and empty laws. Point 19 in the Party’s program demanded “substitution of a German common law in place of the Roman law serving a materialistic world-order”. In fact, Weimar laws had already “advanced” a great deal in that direction. As Hayek acknowledges, in a way that boasting of the Socialists and Nazis was not without basis. A law that says that contracts should be interpreted so as to promote the interests of the nation, or of the working-class, has a moral purpose that a XIXth century code typically lacks. But it is that formal character of the rules that allows individuals to assume responsibility for their own lives. That is the paradox that collectivists of left and right failed to understand.
     Many years later, and in spite of the advantage of having Hayek’s books at his disposal, Joseph Raz repeated the mistake.

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