social and economic action, and on a clear recognition of their
implications.

There is, on the one side, co-ordination by central direction.
This is the co-ordination principle of the prehistoric group and the
tribal society, the formations in which, for the most part of hu-
man history, social life has taken place. Also, this principle appeals
to the deep-seated general belief that only tight collective control
over the means guarantees the successful realization of social ends.
Socialism is for Hayek the most influential among the various
collectivist political doctrines subscribing to central planning and
direction in the economy. Yet, Hayek claims, planned economies
invariably fail. They are inefficient, and their collapse can be pre-
vented only at the cost of massive coercion. In this way, socialism
inevitably degenerates into political totalitarianism.

But, Hayek says, there is a second method of ordering social
and economic life. This is the self-co-ordination at work in markets
and market societies. Social theoretic expression it finds in the idea
of a 'spontaneous order'. Our knowledge of spontaneous orders,
he thinks, we owe to a genuine 'discovery'. Nobody could have
anticipated that such a seemingly chaotic method would work.
Yet only spontaneous order can secure efficient co-ordination and
production and at the same time preserve liberty because only the
self-co-ordination in the market fully utilizes people's knowledge
and skills and still leaves them free to pursue their own projects
and plans. Thus, only a socio-economic system based on spon-
taneous order achieves what an acceptable system must achieve:
human survival, general prosperity, and social peace. That is why
for Hayek the idea of a spontaneous order is central for any
defence of a liberal institutional framework. Indeed, the very
possibility of liberalism 'derives' from the recognition that there
can be unplanned order.

Though the idea of a spontaneous order is its principal concept,
liberalism is, according to Hayek, founded also in a theory of cul-
tural evolution and in the appreciation of the restricted scope of
our intelligence. True liberalism, he explains, is also 'based on an
evolutionary interpretation of all phenomena of culture and mind
and on an insight into the limits of the powers of the human rea-
son' ( 1967: 161). Against what he regards as the pretensions of in-
stitutional constructivism and the rationalistic overestimation of
the human intellect Hayek maintains that our mastery of the world
depends on traditional rules, practices, and institutions which we

-2-