Posner, Hayek & the Economic Analysis of Law

This Essay examines Richard Posner's critique of F.A. Hayek's legal theory and contrasts the two thinkers' very different views of the nature of law, knowledge, and the rule of law. Posner conceives of law as a series of disparate rules and as purposive. He believes that a judge should examine an individual rule and come to a conclusion about whether the rule is the most efficient available. Hayek, on the other hand, conceives of law as a purpose-independent set of legal rules bound within a larger social order. Further, Posner, as a legal positivist, views law as an order consciously made through the efforts of judges and legislators. Hayek, however, views law as a spontaneous order that arises out of human action but not from human design. For Hayek, law as a spontaneous order - of which the best example is the common law - contains and transmits knowledge that no one person or committee could ever know, and thus regulates society better than a person or committee could. This limits the success of judges in consciously creating legal rules because a judge will be limited in the forethought necessary to connect a rule to other legal and non-legal rules and what Hayek termed the knowledge of particular circumstances of time and place. This Essay also explores Posner's argument that Hayek misunderstood the rule of law as the rule of good law. Contrary to Posner, in the view Hayek came to espouse in his later work, the common law embodies the rule of law in a way that positivist creations of law do not. When judges consciously make law it is those human actors, not the law as such, that rule. When law arises out of a spontaneous order, however, it is the law that rules. Judges merely articulate it. Posner does not distinguish between these two processes, and therefore sees a difference between the rule of law and the rule of good law which Hayek does not. This is because for Hayek the rule of law is only meaningful in a liberal society where law arises out of a spontaneous order