Hayek, Leoni, and Law as the Fifth Factor of Production

Atlantic Economic Journal vol. 42, no. 2 (2014): 123-131.

9 Pages Posted: 12 Feb 2014 Last revised: 21 Apr 2018

See all articles by Peter J. Boettke

Peter J. Boettke

George Mason University - Department of Economics

Rosolino Candela

Mercatus Center at George Mason University

Date Written: February 11, 2014

Abstract

This paper discusses the nature of law as the fifth factor of production, or more fundamentally as the institutional framework within which the production process takes place. Unlike land, labor, capital and entrepreneurship, whose coordination is an outcome of institutional arrangements, the law itself is the institutional embodiment of the voluntary exchange processes evolving from the decisions, but not the design, of judges that form the reliable expectations about who 'plans' the coordination of the other four factors of production. The legal theory of Hayek and Leoni lends itself to this dual nature of spontaneous order analysis and also the basis of the burgeoning literature on analytical anarchism. Although Hayek and Leoni were not legal centralists, their conception of law as part of a larger spontaneous order was open-ended to competition and experimentation on the constitutional level of rules just as that experienced on the post-constitutional level of the market itself.

Keywords: Legal Institutions, Developmental State, Comparative economic systems

JEL Classification: K4, O12, P51

Suggested Citation

Boettke, Peter J. and Candela, Rosolino, Hayek, Leoni, and Law as the Fifth Factor of Production (February 11, 2014). Atlantic Economic Journal vol. 42, no. 2 (2014): 123-131. . Available at SSRN: https://ssrn.com/abstract=2394097

Peter J. Boettke

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

Rosolino Candela (Contact Author)

Mercatus Center at George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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