Generality and knowledge: Hayek's constitutional theory of the liberal state

Originally published in Constitutional Political Economy

This paper examines Hayek's constitutional theory of the liberal state. Hayek argued powerfully that no central planner has sufficient knowledge to run an economy, and that no one has sufficient knowledge to determine ends for others. Pushed to their logical conclusion, these arguments would seem to prescribe the smallest possible state in both scope and size, or perhaps even no state at all. Elsewhere in his writings, however, Hayek explicitly endorsed government activity that goes far beyond a “night watchman” state (to include public works such as infrastructure, roads and bridge, as well as social insurance, conscription, a minimum safety net, and even countercyclical investment)—as long as state action was carefully constrained by a generality principle. After thoroughly setting forth Hayek's worries about knowledge and his proposals for acceptable station action, the paper synthesizes the two into a Hayekian constitutional theory of the liberal state, then closes with a brief discussion of some tensions in Hayek's work.

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