Knowledge, Economics, and Coordination: Understanding Hayek's Legal Theory

Legal scholars and economists alike have heavily criticized F.A. Hayek's legal theory. According to Richard Posner, Hayek's legal theory is "formalist" and serves as a useless guide for legal scholars and judges. Ebenstein argues that Hayek's arguments in technical economics fail and therefore his research program in economic science should be abandoned, but that his broader social philosophy and theory are worthy of attention by serious scholars. In this working paper, Beaulier, Boettke and Coyne argue that these criticisms are misplaced. They contend that Hayek's legal theory cannot be separated from his economic theory. To establish this point, the authors trace the evolution of Hayek's thought from his earlier writings in technical economics to his later writings on legal theory. Both Posner and Ebenstein fail to appreciate the subtlety of Hayek's legal theory because they understand Hayek's work in law in isolation from his work in economics.