Hence general welfare is achieved not via the

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Hence, general welfare is achieved, not via the realisation of allocatively efficient states as put forward by neoclassical thought, but through a process of market discovery based on competition. On this basis, Austrian economists, as a rule, are opposed to normative prescriptions since they are likely to impede the process of economic co-ordination. This happens because, as Austrians emphasise, social institutions, among them markets, are the result of human action rather than of human design. Thus, regulatory failures, in the view of the Austrians, are the result of using law for specific instrumental purposes, when this, in the words of H AYEK , is merely a sypnotic delusion , that is the fiction that all the relevant facts are known to some one mind, and that it is possible to construct from this knowledge of the particulars a desirable social order. (H AYEK , 1973-79: Vol. 1, 14). Hence, as O GUS points out, the centralized pool of information on which rulers must rely for regulatory measures could never replicate the widely dispersed fragments of knowledge which individuals use in pursuance of their own ends and therefore could never be adequate to anticipate all the variety of circumstances to which specific regulations must be applied. (O GUS , 1994: 57). Let us examine in more detail the relation between the law and the economy under the work of Professor Friedrich Hayek, the leader of this school of thought. 1.1.4.1. Hayek s theory of market order The market or catallaxy , in Hayek s language, is a type of order in the sense of being a state of affairs in which a multiplicity of elements of various kinds are so related to each other that we may learn from our acquaintance with some spatial or temporal part of the whole to form correct expectations concerning the rest, or at least expectations which have a good chance of proving correct. (H AYEK , 1973-79: vol. 1, 36).
190 P UBLICATION THEORIES OF REGULATION More specifically, the market is a special kind of spontaneous order , or cosmos , as opposed to a made or imposed order, taxis. As a spontaneous order, the market is an endogenous order, a self-generating order, whose equilibrium is set from within; it is an order that consists of a system of abstract relations between elements which are also defined only by abstract properties, and for this reason will not be intuitively perceivable and not recognizable except on the basis of a theory accounting for [its] character. (ibid.: vol. 1, 39). It is also an order not made by humans, though a product of the action of many agents; not being made, the market order cannot legitimately be said to have a particular purpose. By contrast, taxis is an exogenous order, artificially established, often concrete, in the sense that it can be perceived by inspection, and having been deliberately made, it invariably serves a purpose of the maker 29 .

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