Friedrich A. Hayek's economic theory of jurisprudence was developed over three decades. That development is contained in three volumes Law, Legislation and Liberty. It is presented in a condensed form is New Studies in Philosophy, Politics, Economics and the History of IdeaNew Studies in Philosophy, Politics, Economics and the History of Ideas.
The perspective which governs Hayek's analysis is aptly expressed in the title of the enlarged work; a common thread links law to legislation and liberty. Just as law is prior to legislation in Hayek's conceptual schema, there is a necessary a priori to law which ensures liberty; that is his cosmic principle, evolutionism in its Darwinian sense. This, in general, he describes as purposeless spontaneity or spontaneous purposelessness. His intention is to show that not all human action is the result of conscious design; and from his perspective the most important results, in order to achieve his goal, liberty, belong to this class of actions.
With this in mind he presents Adam Smith's message in today's language, because the abstraction invoked by Adam Smith, the "invisible hand", is most clearly indicative of the new, subsequently discovered, cosmic principle, because under the discovery procedure of competition, a selfish intention is unconsciously converted into its opposite result, the public or common interest. Furthermore, this competition, in a laissez faire society, spontaneously ensures the one known rule of social justice which is to distribute to each what is his real equivalent contribution to production; equal in return for equal, unequal in return for unequal. Furthermore, competition ensures that this is everywhere the "optimum" which each receives. This discovery procedure he calls "catallaxy" to distinguish it from "economy". The latter applies to those Keynesian and socialist economies in which the central authority misguidedly endeavours to bring about by design what can only be achieved unconsciously.
In the same way law, according to the cosmic principle, cannot be consciously designed to bring about a just result. Jurisprudence must follow catallaxy and legislators must function no further than allowing the framework in which catallaxy spontaneously develops to achieve its own and only rule of social justice. Lawyers and legislators act as unwitting tools or banausics to oil the machinery of catallaxy. By articulating the entity and presuppositions on which Hayek's economic theory of jurisprudence or law is based, namely modern formal or paraconsistent logic, the theory's claim that rationality is consistent with irrationality is revealed.