Peter Bernholz – 2. Economic Conference
Dr. Peter Bernholz
In a free society discretionary measures and interventions of government, bureaucracy and independent public agencies should be as limited as possible to
1. allow each individual as much freedom as is compatible with those of others;
2. to prevent the possible misuse of power by minorities and shifting majorities;
3. to promote justice and efficiency and to allow the formation of stable expectations by a reliable and stable legal system;
4. to allow the innovative and creative activity of many decentralized private agents relying on and motivated by stable property rights, enforcement of contracts and the ru1e of law.
A constitution limiting the rights and determining the duties of citizens, but also the discretionary powers of government is a precondition for the existence and maintenance of a free society (Hayek 1960; Buchanan 1974; Bernholz and Faber 1986).
All these problems have been widely discussed in the literature. Less attention has been addressed to the problem of how the wanted constitution of a free society can be reached in a situation in which wide discretionary powers of the government exist, or, in which outright oligarchies or dictatorship dominate. For can rules limiting the power and influence of government, bureaucracy and the interest groups influencing them be introduced, if the people benefiting from such a governmental system are opposed to constitutional reform? It is obvious that it is nearly as important to answer this question than the question what an adequate constitution of a free society should look like.