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In his Introduction Professor Hayek argues that political thought is still restricted by the use of outdated terms which reflect subjective explanations of social institutions.
Order enables us to explain the world about us, but not all social order is the product of deliberate action. Some orders are spontaneous by-products of human activity. Professor Hayek suggests that the term ‘cosmos’ be adopted to describe them. The term ‘taxis’ is to be reserved for orders or arrangements intended to
serve specific human purposes.
A cosmos cannot be claimed to have a purpose because it is not deliberately created by men; it is self-regulating. A taxis has an organiser and is therefore more limited than a spontaneous cosmos that utilises the knowledge of all its individual elements. For the same reason the outcome of a cosmos will always be unpredictable. A taxis is more efficient than a cosmos when the purpose to be served reflects a given hierarchy of ends.
Two types of rules or norms correspond to the two social orders and modern European languages do not conveniently reflect the distinction between them. Professor Hayek proposes adopting ‘nomos’ to describe the universal rules of just conduct which will regulate a cosmos. In contrast he describes a rule applicable to particular people, or serving the ends of the rulers in a taxis as a ‘thesis’. A nomos has the advantage of not obliging individuals to perform particular actions; they can use for their own purposes knowledge not possessed by the rulers. The distinction between nomos and thesis roughly corresponds to that between private and public law. The mistaken belief in the pre-eminence of public law results from its deliberate creation for particular purposes. Private case law is universally applicable and independent of specific ends, but there is no comparable limitation to the norms established by legislation. Public law is in this way transforming the social order from the nomos into a taxis.
Men may know how to act without being able to express the rule governing their conduct. Conclusions derived from artificial rules will therefore not be tolerated by society if they conflict with the conclusions to which unarticulated rules lead.
The substitution of the term ‘will’ for the older term ‘opinion’ has proved unfortunate. The order of an open society depends largely on opinions which have been effective long before men could explain why they held them. Successful action depends as much on knowing what to do as on understanding consequences. Taboos or inhibitions are therefore a necessary basis for successful life. Civilised order requires the observance of general rules rather than rules prescribing conduct. All moral problems arise from a conflict between values (i.e. rules which tell us some kinds of actions must be avoided) and knowledge that particular desirable results can be achieved in a given way. It is our ignorance which makes it necessary for us to accept limits. The actions of a person guided only by calculable results would soon prove unsuccessful. The members of an open society cannot agree on specific ends. They can only hold values in common.
Professor Michael Oakeshott’s nomocracy corresponds to Professor Hayek’s cosmos, and teleocracy to his taxis.
The word ‘economy’ is unfortunately used to describe both types of order. A market economy ought not to be judged by its ability to serve a hierarchy of ends. It is a spontaneous cosmos which can be described as a catallaxy in distinction to an economy (e.g. household) which serves individual purposes. Competition tends to minimise the cost of production. Individual incomes are determined partly by skill and partly by luck in order that total output can be as large as possible. A competitive market does not preclude government action from outside the market to help people who cannot earn a given minimum. But attempts to make the market itself serve some ideal of distributive justice will reduce the total wealth in which all can share.
Democracy meant that whatever ultimate power there was should be in the hands of the people. But the term implied nothing about the extent of that power, and certainly not that it should be unlimited. An elected legislature that does not confine itself to establishing universal rules of just conduct will soon be driven by vested interests to serve particular private ends. A court of justice is needed that can say whether the acts of a representative assembly do or do not possess the formal properties necessary for valid law. Though the assembly’s power would be supreme it would not be unlimited. Members of the law-making assembly (as distinguished from the governmental assembly) would be elected for long periods, each generation electing once in their lives, say, in their fortieth year. The law-making assembly would therefore consist of people between 40 and 55. The creation of such a body would make possible the separation of powers which has never existed anywhere in practice. The word ‘democracy’ is now indissolubly associated with the conception of the unlimited power of the majority. A new word is needed to stand for what ‘democracy’ originally expressed. ‘Demarchy’ describes such a limited government.