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Abstract

With respect to the work of Friedrich August von Hayek, this article points out the importance of the principle of equality of law for economic performance. The systematic place of equality before the law in Hayek's work is to be found in his differentiation between two fundamental principles of order in society. The theoretical relation between the order of a society and its economic performance is expressed empirically. Countries with a higher realization of the rule of law regularly have a higher income per capita. With respect to transitional countries, it therefore could be stated that the success of transition depends also on the grade of the realization of the principle of equality before the law and of the rule of law in those countries.

JEL Codes: P20, B52, D83

Keywords: Transitional economics, Institutions, Knowledge, Austrian economics

I. Introduction

1. Outline of the Problem

This essay examines the role of the traditional liberal value of equality before the law for the transformation of former socialistic economies from the perspective of Hayekian social theory with reference to the Hayekian epistemology.

First, we will look at the idea of equality before the law. In Section II an outline of the Hayekian epistemology and an explanation of the relation of his epistemology to his social theory will then make clear the role of knowledge in Hayekian thinking, and with such an understanding we can understand the role of order in society. Then we will be able to examine the role of order in society in general as well as the differences between kinds of order in society with respect to the principle of equality before the law in Section III. From the Hayekian and knowledge-oriented point of view, we can show that the specific kind of order that follows the principle of equality before the law possesses economically superior qualities against orders of inequality before the law. In Section IV we can then apply these findings to the transformation of economic systems. Section V tries to support the economic relevance of the theoretical considerations empirically, while the conclusion in Section VI offers a recommendation concerning the success of transitional countries.

2. The Basic Idea of Equality Before the Law

The idea of equality before the...

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