5 A socialist spontaneous order Theodore Burczak Introduction Hayek describes spontaneous orders as social institutions that are the result of an undirected, evolutionary process, rather than the product of human design.1 Social order can emerge spontaneously when people stumble upon rules and institutions that create a common set of beliefs and expectations that guide indi- viduals to act in a co-operative fashion. Spontaneous social orders crystallize out of the evolved regularities of human action and interaction, even though these actions may not be motivated by a desire to produce any kind of order. Thus, rule following need not be instrumental, since people can follow rules that induce social co- ordination without knowing that their actions will produce this or any other particular outcome. But the potential for the spontaneous emergence of social order does not imply that consciously designed public policy cannot successfully shape the contours of that order. Hayek argued that properly executed public policy can establish the conditions for spontaneous social orders to emerge, much as scientists can induce the formation of crystals by creating the proper environment (Hayek 1973: 39–40). He believed that the guiding prin- ciple for public policy to follow in order to induce the emergence of a spontane- ous market order is implementation of the rule of law. In The Road to Serfdom, Hayek argued that the pursuit of national economic planning to achieve socialist objectives would lead a country down a path to political tyranny and poverty. According to Hayek, advocates of economic plan- ning did not recognize the benefits that flowed from a spontaneous market order and did not understand that the improvement of human well-being would be impaired by attempting to control economic outcomes. Hayek’s long-running attempt to rehabilitate classical liberalism against twentieth- century socialism had two components. First, he insisted that attempts to create rational plans for social orders were bound to fail, primarily because central planners cannot gain access to the necessarily dispersed, subjectively held knowledge of production possibilities and resource scarcities that exists in individual minds. Second, Hayek sought to update Adam Smith’s claim that the voluntary exchange of private property governed by the rule of law could spontaneously generate wealth without the need for conscious design. A socialist spontaneous order 131 Given Hayek’s understanding of the centrality of the rule of law to the formation of a spontaneous social order, is it possible to defend what might be called a socialist spontaneous order? Can there be socialism with the rule of law? Much would depend on what one understands the concept of socialism to entail. I will follow Marx and maintain that socialist society would have at least two fundamental characteristics. First, socialism would abolish the wages system, thereby ending the exploitation of labor (Marx 1965). Second, under socialism the distribution of the fruits of production would take place, to some extent, according to need and not just according to the vagaries of income dis- tribution that result from market processes (Marx 1978). To achieve these objectives, a socialist economy has traditionally been understood to require large amounts of national economic planning and social ownership of produc- tive property, particularly “the commanding heights.” National economic planning, though, concentrates political and economic power in such a manner that it is perhaps impossible for planners to follow the principles of neutrality and universality that the rule of law requires. The goal of this chapter is to show that socialist goals might be achievable, not through national economic planning or the conscious design of outcomes, but by adopting rules and policies consistent with the notion of the rule of law that underlies Hayek’s theory of spontaneous market order. The result will be something that could be called free market socialism, unplanned socialism, or a socialist spontaneous order. Spontaneous order and the rule of law Hayek makes a distinction derived from ancient Greek thought between two types of order: taxis and cosmos. A taxis is a constructed order, designed and directed to achieve particular goals. Hayek’s examples include families, corpora- tions, and government (Hayek 1973: 46). A cosmos is an evolved, emergent, or “grown” order. A cosmos does not result from human design but materializes as the unintended consequence of regularities in the behavior of its elements (Hayek 1978: 74). According to Hayek, one of the fatal conceits of socialist thought is the tendency to treat the cosmos of human society as if it were a taxis, which leads to various projects of social engineering, whereby governments attempt to control economic activity for some specified ends. This is the running theme of The Road to Serfdom (Hayek 2007). Hayek argues that people overesti- mate the power of human reason and underestimate the tacit, unarticulated knowledge that is embodied in evolved institutions when they think that it is appropriate for government to direct society according to some predefined goal or that social outcomes should follow a specified pattern. In his interpretation of history, social conflict and discontent generally occur when people believe that the cosmos of human society should be planned to yield a certain result or should be judged as legitimate only if its outcomes, like the distribution of income, wealth, and status, satisfy some supposedly objective standard, like equality, merit, or desert.2 132 T. Burczak For Hayek, governments should not engage in planning to achieve specific outcomes but should plan to promote the spontaneous emergence of social co- operation and self- organizing economic processes. In the Road to Serfdom, he called this “planning for competition” (Hayek 2007: 90). Hayek uses an agricul- tural metaphor to make the point: good government is more like farming than designing bridges. The conduct of public policy should be similar to “the sense in which the farmer or gardener cultivates his plants, where he knows and can control only some of the determining circumstances” (Hayek 1967: 19). Govern- ment needs “to cultivate rather than . control the forces of the social process” (1967: 19). It does this by discovering and enforcing rules that have demon- strated their ability to promote social co- operation by their survival through a long evolutionary process. Hayek believes that the development of the English common law best exemplifies a socially advantageous evolution of legal conven- tions. Importantly, he also asserts that democratic government can create new rules when the existing legal system can be shown to serve special interests rather than the general interest. Much, then, hinges on how we understand the general interest. Hayek maintains that the nature of the general interest is procedural: rules and institutions should not favor one person or group over another, and they should allow people to use their knowledge for their own purposes (Hayek 1973: 55–6). He argues that these characteristics are best satisfied if government constrains itself to enforcing rules and following policies consistent with the principle of the rule of law. The rule of law limits government action to the creation and enforcement of laws and policies that are universally applicable, general or end- independent, and well publicized (1960: 205–10). Laws and policy directives must apply equally to all persons, to the governed as well as the governors, and be impartially enforced, not favoring particular classes or groups. Policy actions must also be general in the sense that they are intended to apply to all similar situations in the future, and not just to achieve particular ends in a specific case. Finally, government enforcement of rules and policy actions should be predicta- ble – no secret trials or clandestine support for special interests – so that people can form reliable expectations about the government’s deployment of power and the future legal rulings of courts. This is an especially important attribute of the rule of law for Hayek, because legal predictability and the certainty of govern- ment (in)action enables individuals to have a good sense of what they are allowed to do and when the government enforcement apparatus will be called into play. Legal predictability also enables individuals to know the range of other people’s permissible actions. The ability to predict the actions of public officials and private citizens facilitates the formation of relatively accurate individual expectations in a manner that tends to produce overall social co- ordination and co- operation. Hayek argues that the rule of law helps promote the existence and stability of private property and the freedom of exchange. End-independent, universally applicable, impartially enforced, and predictable rules serve to carve out domains in which individuals bear the costs and reap the benefits of their actions. These A socialist spontaneous order 133 rules create a sphere where individuals are responsible for their actions and define acceptable characteristics of action within it (i.e., no fraud, deception, or use of violence). Hayek maintains that private property and its constituent laws of contract, tort, and acceptable use have survived because they yield security of possession and commonly accepted rules of exchange, i.e., stable markets. A system of market exchange harnesses individual initiative and the self- interested use of personal knowledge to benefit human society to a degree unprecedented in human history. The possibility of exchanging and accumulating private prop- erty gives self- interested people the incentive to serve the public good, as if directed by an invisible hand. Hayek contends that the creation, protection, free exchange, and competitive market valuation of private property helps to co- ordinate individual action and generate wealth better than any other type of institutional structure that has yet appeared. The linchpin of his argument is human ignorance, the ignorance of each individual about most dimensions of day-to-day provisioning.