A Spontaneous Order for Europe? Why Hayek's Libertarianism is Not the Right Way Forward for European Private Law

Abstract

It has been suggested recently by several scholars that the ideas of Friedrich von Hayek should play a prominent role in shaping the future of European private law. This paper examines what we can learn from Hayek for the further development of European contract law. Hayek rightly underlines that law is a contingent phenomenon, historically grown in response to needs of a specific society. This means that we should be suspicious of universalism and strong functionalism (related to strong pragmatism). Whatever the future of European contract law should look like, it would be wrong to think that we could start designing it with a clean slate. Therefore, the drafters of the CFR have been rightly inspired by the existing national, European and international traditions. One of the most fundamental insights from Hayek's work (already centrally present in The Road to Serfdom) is that of our incurable ignorance and its implications for the limits of central planning. This insight certainly also affects private law although not necessarily in the ways suggested by some of his contemporary followers. Also, Hayek's warnings against nationalism are still most relevant today. Finally, he rightly reminds us that we should not be unduly impressed by the scientism of the economic analysis of law that is based on the illusion that welfare consequences for individuals of legal rules, including those of the consumer acquis or the CFR, can be measured and compared. What we should certainly reject, however, is Hayek's totalitarianism. His all or nothing approach has no empirical basis; it is completely detached from reality. The implication is dramatic. If the only argument for a spontaneous order is that it will save us from totalitarianism then there is little reason to adopt Hayek's spontaneous order. A mixed economy of the kind that we are familiar with in Europe is much more attractive. However, as Posner has pointed out, on the crucial question of what would be the right mix Hayek had hardly anything to say, and he also uttered precious little on the kind of contract law (how much freedom?) such an economy would need. Therefore, a democratically designed contract law drawn up by a legislator inspired by the private laws in Europe as they have grown organically, but making its own choices on the issues that it deems socially most important, seems to be a much better way forward for Europe than a spontaneous order.