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Hayek and norms

The latest episode of EconTalk is Mike Munger on cultural norms.

Toward the end of the podcast, I mentioned that I wanted to bring up two more points. I talked about the first point. Forgot to mention the second. Here it is.

In Law, Legislation, and Liberty, Volume 1, Hayek outlines a particular view of what judges should do–they should discover the law. Hayek was making a profound distinction between law and legislation. Law is what emerges from our behavior interacting with each other and it evolves. Legislation overlays that and effects it. But what judges should do when deciding a case is to discover what our expectations were of the behavior of the people we interact with.

To use the example from the podcast, suppose I buy a house from you and you promise in the contract to deliver it in “good condition.” What does that mean exactly? Each of us has an expectation of what that means in America in 2009 and it’s probably different from what it would be in Argentina in 1875. In America, if I buy a house from you and find a lot of your stuff still here because you didn’t have time or didn’t want to bother with clearing it out, you probably have not fulfilled the contract. In another time and place, that might be a feature not a bug.

But the way I understand Hayek is that if I take you to court because I don’t think you lived up to the contract, then the goal of the judge isn’t to figure out what the legislature meant if it mandated a house being turned over in “good condition” but rather what you and I would expect from each other in such a situation.

Expectations are crucial because they allow me to plan with some measure of certainty, using hte information that I have (and that others may or may not). So for Hayek, norms are crucial in helping us to interact and are essentially what he calls law.

Here is the EconTalk episode with Don Boudreaux on the Hayekian distinction between law and legislation.


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