
For a long time in the Classical Liberal tradition, there has been a tension between rationally constructed systems (for example Mises’ a priori epistemology) and the antirational purely spontaneous orders proposed by Hayek. The former stresses the universality of human nature, but does not generally refer to a legal order without the assumption (Hayek would argue it is a poor one) that it can be rationally constructed. The latter emphasizes the limits of human knowledge, the uniqueness of human experience, and the futility of deliberate construction.
Though it is well accepted that the market itself is both spontaneous and desirable – that it is more effective and efficient than any planner could hope to match – applying spontaneity to a legal system has been more difficult. Ultimately most legal theories of spontaneous order devolves into Conservatism – that institutions are valuable simply because they exist, and change in itself is an inherent negative.
This presents problems for market economists, because as has been articulated by many before me, markets are not the only things to evolve and survive. Norman Barry makes this point in his The Tradition of Spontaneous Order, saying “the period of the dominance of the open society, the market economy and minimal government may then be regarded as perhaps a chance mutation in a course of evolution which is proceeding in quite another direction, an evanescent torch in an inexorably darkening world”. Are we to accept institutions merely because they exist? That would be absurd for anyone with normative opinions, especially believers in the free market. Yet it seems as if a universal theory of spontaneous order can only lead there.
It is not in fact necessary, however. There are elements of truth both in constructivistically rational systems such as Mises’, as well as in antirational systems such as Hayek’s, yet as far as I can tell, they have never been cogently and elegantly synthesized before (please point me in the right direction if they have, though). I aim to do that here.
I propose that there are two spheres of design: the structural sphere, and the behavioral sphere. Hayek, despite his apparently universal antirationalist streak, seemed to have been aware of this cleft: he says that “laws must be general, binding on everybody, not be retrospective in application, and should name no individual or group”. Essentially he has separated the structural order from the behavioral order: a rationally constructed set of institutional rules to ensure that behavioral rules do not encumber the spontaneous order. And though it doesn’t seem to be explicitly articulated, much of the perceived schizophrenia of Hayek’s theory comes from the failure to distinguish between these two spheres.
The antirationalism of Hayek is entirely appropriate in the behavioral sphere. It is of course impossible to improve upon market allocation by rational intervention, simply because the knowledge problem is too great. The behavioral sphere deals with unique human experience, and thus may only arise spontaneously for lack of central knowledge.
In the structural sphere however, the universality of human nature allows us to rationally construct institutions appropriate for spontaneous order to appear in the behavioral field. The qualitative difference between the two allows us to critically evaluate existing institutions without abandoning a commitment to spontaneous market order. By separating the two spheres – a strict separation of economy and state, as Rand put it – we can be both epistemologically rigorous and ideologically firm.
But a simple separation of economy and state is not the whole of the two spheres theory – it is much more general than that. The behavioral sphere is always characterized by spontaneous order in the presence of freedom, and by a rationally constructed structural framework to ensure its functioning. The cleft between the spheres may even be taken up a degree so that the structural sphere is a superstructure of states, and the behavioral sphere comes to encompass the behavior of the institutions, as well as that of individuals. As was stated in the Microfederalist Manifesto, a microfederalist superstructure (a rationally constructed one at that), being a degree higher than the institutions that we are used to constructing, allows for spontaneous order in the legal realm. It is only with such a rationally constructed superstructure that spontaneous order can apply to the legal order. For common law, despite Hayek, is not a spontaneous order without such a competitive superstructure, as without that, it is fundamentally no different and no less unconstrained than legislation.