Hayek, The Road to Serfdom - 18th session

Tuesday, November 10, 2020, 18th session

The Road to Serfdom Reading Discussion, 18th Online Meeting:

Rok

Sha, Kangyoung, Mori, Damjae

What we read today strongly feels like an extension of Bastiat’s ideas. Maybe that is because I started reading a book by Bastiat yesterday.

Earlier, we read about how collectivism, which seeks to lead the world through central planning, gains power by using democracy and then goes on to destroy democracy.

Now, in Chapter 6, it discusses why law should exist, how a planned society undermines the rule of law, and how law must be structured to prevent this.

Chapter 6. Planning and the Rule of Law p.123

The Rule of Law

A government that makes and carries out plans has no choice but to make improvised judgments depending on the circumstances of the moment. The detailed standards by which it governs the world cannot help but change. The planning authorities cannot help but become arbitrary.

The rule of law, which helps individuals predict and plan their own futures, cannot help but collapse.

Formal Law and Substantial Rules

“The distinction we have just used between formal law of justice and substantial rules is very important and at the same time most difficult to draw precisely in practice.”

The translation of “formal law” and “substantial rules” often causes considerable confusion.

“Formal law” sounds as if it means a law that is useless and merely superficial, while “substantial rules” sounds as if it means law that functions properly.

But if you look at the English expressions, they are “formal law” and “substantial rules.”

You can think of it as the difference between a firm, unchanging frame and a code of conduct packed with detailed instructions telling people exactly what to do.

Still, on reflection, the translation “formal law” and “substantial law” may in some ways be quite suitable for awakening our minds. We often forget the existence of traffic lights and think we were helped only when we looked at a directional sign.

But we must not forget that on a road where the traffic lights are broken, no one can confidently drive out at will.

The Logical Basis of the Rule of Law

Once the state begins making plans to do something, it must keep revising legal provisions accordingly. In the end, situations frequently arise in which judgments about specific circumstances must be left to the discretion of judges or the relevant authorities. As this continues, the content and standards of law and the judiciary keep changing, and disregard for law and the courts grows more severe. Then the rule of law declines, and a law-governed state disappears. It becomes a totalitarian state that has delegated power to a dictatorial force.

A planned society in which the state sets out to do things is the root of all these problems. If the state fills law with implementing rules—substantial rules—in order to do something, and thereby turns it into substantial law, the rule of law ultimately collapses.

The rule of law can be maintained only if law stops at the role of a solid traffic light that does not determine direction.

But in the context of the Constitution of the Republic of Korea, which includes signposts by defining the state’s role in terms of obligations such as the right to work, the promotion of welfare, and environmental rights, what should we do to protect individual freedom?

Should we focus on establishing local autonomy, where the influence of individuals can have a greater impact, however slight, on government power?

I do not know the immediate answer. But one thing is clear: both constitutional reform and the establishment of local autonomy become possible only when individuals’ changed ways of thinking come together.

The Conflict Between Formal Equality and Substantive Equality

To create substantive equality—that is, a situation in which everyone is equal in outcome—we must create unequal rules that offset differences among individuals. And those rules must be constantly changed to fit the outcomes. In the end, this will make every participant give up on the game.

Participants can engage with energy only when fair rules are made and applied, rules whose outcomes cannot be predicted.

But does such a law actually exist in the world—a law under which it is impossible to predict at all who will benefit and who will lose?

“The important question is whether the individual can foresee the action of the state, and whether he can make use of this knowledge as a datum in forming his own plans.”

There was discussion about cases in which North Korean defectors are unable to become independent during the settlement process.

For example, not understanding the liberal rule that one must take responsibility for one’s own survival, they borrow every bit of money they can to buy the car they had dreamed of and then go bankrupt, or they spend their time chasing only government support.

But those experiences of trial and error will accumulate as predictable information.

Whether the government provides support is not the real issue. If support simply continues in a consistent and unchanging form, the predictability for each North Korean defector rises. Then each individual can make thorough plans for defection and settlement within that framework.

The harm welfare causes does not primarily come from the amount or form of welfare. The bigger problem is that it can be reduced or changed at any time. The worst thing is that it interferes with individuals’ ability to predict.

If you would like to join the online reading group every Monday evening, we invite you to the open chat room at the link below.

https://open.kakao.com/o/gX3OIqtb

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Original title: 하이에크 <노예의 길>-18차

Author: Jayujuui Ipmun Dokseo Toron Moim

Date: 2020-11-10

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=reading01&pn=7&idx=23231