calculate because the government is bound by rules laid down in advance, of
which individuals have knowledge. According to Hayek:
[U]nder the rule of law the government is prevented from stultifying individual
efforts by ad hoc action.Within the known rules of the game the individual is free
to pursue his personal ends and desires, certain that powers of government will
not be used deliberately to frustrate his efforts.36
Hayek insists that the rule of law requires particular kinds of rules that would
allow individuals to calculate and predict their interactions with other individuals
and the state but also that would keep the government at bay from
making decisions of production and exchange in the market. He draws a
distinction between these formal rules and rules that depend on particular
circumstances at a given moment and evaluate the interests of various
persons and groups. In the second kind of rules, the government decides
whose interest is more important, coercively imposing a new distinction of
rank upon people. Thus, the most important criterion of formal rules, according
to Hayek, is that we do not know their concrete effects, the ends they will
pursue,or the people they will assist. In this sense, formal rules “do not involve
a choice between particular ends or particular people” because we are ignorant
of who will use them and for what purposes. For Hayek, not knowing the
particular effects of the state’s measures is in fact the rationale of the “great
liberal principle of the Rule of Law.”37
The unpredictability of the particular effects is what Hayek holds to be the
distinguishing feature of formal laws of the liberal system. This criterion is
the yardstick with which to measure individual freedom under state action.
For Hayek, the Rule of Law is “the legal embodiment of freedom.” As such,
it is not concerned with whether government actions are legal in a juridical
sense. These actions may be legal but inconsistent with the Rule of Law. If the
law gives the government powers to act arbitrarily, or more precisely, if the
government’s use of its coercive power is not limited by pre-established rules
then the Rule of Law does not prevail.38 Hayek stresses that:
[U]nder the rule of law the private citizen and his property are not an object of
administration by the government, not a means to be used for its Purpose. It is
only when the administration interferes with the private sphere of the citizen
that the problem of discretion becomes relevant to us; and the principle of the
rule of law, in effect, means that the administrative authorities should have no
discretionary powers in this respect.39
In order to preclude this discretion, an independent court must be able to
review the substance of administrative actions. In limiting the discretion of