An Institution to Reconcile Self-interests: Hayek on the Notion of the Economic Agent and the Establishment of Appropriate Rules

It is commonly accepted that Hayek’s economic philosophy is based on the concept of social prosperity resulting from the selfish behaviour of individuals (a kind of consequentialism). However, he did not simply praise individual egoism or advocate laissez-faire based on it. Although the subjective motivations of individuals can include a variety of things, they do not directly create a society. Instead, society emerges as ‘unintended consequences’ of the interaction of subjective behaviours (‘spontaneous order’). In this sense, Hayek’s economic philosophy is unique in that it presupposes a variety of individual motives that are different from simple utility maximisation behaviour, while at the same time criticising reductionist social construction, including utilitarianism. On the other hand, it should be noted that Hayek harshly criticised the phenomenon in which individual optimisation actions that deviate from appropriate rules often become a political collective interest that distort the market framework. In particular, he has always warned that the motivations of individuals to defend their vested rights tend to collude in the name of ‘social justice’ and transform into ‘group selfishness’, thus distorting the framework of market and social order. Therefore, this chapter clarifies Hayek’s advocacy of his own institutional design as a preventive measure. Hayek’s theory of rules is designed to protect the diverse interests and freedoms of individuals from the threat of collective and uniform interests.