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

Author

Listed:
  • Christopher S. Martin

    (Hillsdale College)

  • Nikolai G. Wenzel

    (Fayetteville State University)

Abstract

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.

Suggested Citation

  • Christopher S. Martin & Nikolai G. Wenzel, 2020. "Generality and knowledge: Hayek's constitutional theory of the liberal state," Constitutional Political Economy, Springer, vol. 31(2), pages 145-168, June.
    • Handle: RePEc:kap:copoec:v:31:y:2020:i:2:d:10.1007_s10602-019-09299-x
    DOI: 10.1007/s10602-019-09299-x
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    References listed on IDEAS

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    1. Buchanan,James M. & Congleton,Roger D., 2006. "Politics by Principle, Not Interest," Cambridge Books, Cambridge University Press, number 9780521031325.
    2. Hayek, F. A. & Caldwell, Bruce, 2007. "The Road to Serfdom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320557 edited by Caldwell, Bruce, September.
    3. Hayek, F. A. & Caldwell, Bruce, 2007. "The Road to Serfdom," University of Chicago Press Economics Books, University of Chicago Press, number 9780226320540 edited by Caldwell, Bruce, Febrero.
    4. Roger Congleton, 2007. "On the Feasibility of a Liberal Welfare State: Agency and Exit Costs in Income Security Clubs," Constitutional Political Economy, Springer, vol. 18(3), pages 145-159, September.
    5. Stringham, Edward Peter, 2015. "Private Governance: Creating Order in Economic and Social Life," OUP Catalogue, Oxford University Press, number 9780199365166.
    6. Christopher S. Martin & Nikolai G. Wenzel, 2018. "Misjudging the character of the welfare state: Hayek, generality, and the knowledge problem," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 31(3), pages 301-314, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Hayek; Constitutional theory; Liberal state; Generality; Knowledge problem;
    All these keywords.

    JEL classification:

    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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