Libertarianism, Hayek and the Market System - Summary

Libertarianismis committed to individual liberty conceived as the right to own property and live free from the interference of others.  The free market is justified as the economic system that best supports individual liberty.  Both utilitarianism and libertarianism support a system of free markets, but when the promotion of utility conflicts with the protection of liberty, libertarians favor unregulated markets that protect liberty, while utilitarians prefer regulation in order to increase utility at the expense of liberty.

Hayek and Classical Liberalism. Friedrich von Hayek’s perceptiveness with respect to what is now called classical liberalism and its implications for understanding the market system was significantly underappreciated during the majority of his lifetime.  As a staunch critic of planned economies, particularly those of totalitarian regimes, he advanced a notion of spontaneous order that conceptualizes the free market as far superior to human planning as regards economic and political systems.  It should be noted that Hayek recognized that all human activity requires some order.  However, the two competitors for ordering economic and political system seem to involve greater control and regulation on the one hand and freer rein given to individual liberty on the other.  Within a broad, general set of principles, spontaneous orderis the notion that the only goals within a system are those set by individuals rather than those set by either governmental or corporate fiat.  Corporate systems, then, are understood to supervene on aggregates of individual agents exercising free and self-interested choices rather than as basic or foundational to economic and political development.  Hayek called spontaneous order “catallaxy.”  Hayek’s view is consistent with the classical sense of Millian liberalism.  Free exercise of individual liberty will produce greater positive effect within a society than any of the alternatives.