Planning vs. the Rule of Law

Planning vs. the Rule of Law 

FRIEDRICH A. HAYEK 

Nothing distinguishes more clearly a free country from a country 

under arbitrary government than the observance in the former of 

the great principles known as the Rule of Law. Stripped of 

technicalities this means that government in all its actions is bound by 

rules fixed and announced beforehand– rules that make it 

possible to foresee with fair certainty how the authority will use its 

coercive powers in given circumstances and to plan one’s individual 

affairs on the basis of this knowledge. Thus, within the known 

rules of the game, the individual is free to pursue his personal 

ends, certain that the powers of government will not be used 

deliberately to frustrate his efforts. 

Socialist economic planning necessarily involves the very 

opposite of this. The planning authority cannot tie itself down in 

advance to general rules which prevent arbitrariness. 

When the government has to decide how many pigs are to be 

raised or how many buses are to run, which coal-mines are to 

operate, or at what prices shoes are to be sold, these decisions cannot 

be settled for long periods in advance. They depend inevitably on 

the circumstances of the moment, and in making such decisions it 

will always be necessary to balance, one against the other, the 

interests of various persons and groups. 

In the end somebody’s views will have to decide whose interests

 are more important, and these views must become part of the 

law of the land. Hence the familiar fact that the more the state 

‘plans’, the more difficult planning becomes for the individual. 

The difference between the two kinds of rule is important. It is 

the same as that between providing signposts and commanding 

people which road to take. 

Moreover, under central planning the government cannot be 

impartial. The state ceases to be a piece of utilitarian machinery 

intended to help individuals in the fullest development of their 

individual personality and becomes an institution which deliberately 

discriminates between particular needs of different people, and 

allows one man to do what another must be prevented from doing. 

It must lay down by a legal rule how well off particular people shall 

be and what different people are to be allowed to have. 

The Rule of Law, the absence of legal privileges of particular 

people designated by authority, is what safeguards that equality 

before the law which is the opposite of arbitrary government. It is 

significant that socialists (and Nazis) have always protested 

against ‘merely’ formal justice, that they have objected to law 

which had no views on how well off particular people ought to be, 

that they have demanded a ‘socialization of the law’ and attacked 

the independence of judges. 

In a planned society the law must legalize what to all intents 

and purposes remains arbitrary action. If the law says that such a 

board or authority may do what it pleases, anything that board or 

authority does is legal– but its actions are certainly not subject to 

the Rule of Law. By giving the government unlimited powers the 

most arbitrary rule can be made legal; and in this way a democracy 

may set up the most complete despotism imaginable. 

The Rule of Law was consciously evolved only during the lib- 

eral age and is one of its greatest achievements. It is the legal 

embodiment of freedom. As Immanuel Kant put it, ‘Man is free if he 

needs obey no person but solely the laws.’ 

The Road to Serfdom 

FRIEDRICH A. HAYEK 

The condensed version of The Road to Serfdom 

by F. A. Hayek as it appeared in the April 1945 

edition of Reader’s Digest