Law and legislation

Hayek clearly recognized that ‘the spontaneous process of growth may lead into an impasse from which it cannot extricate itself by its own forces’ (ibid., p. 88). It is therefore acknowledged that ‘grown’ law may require correction by legislation.

The insight that spontaneous growth will not necessarily operate to gener­ate efficient results is corroborated by the game-theoretic analysis of invisible hand processes. The institutions that develop may be suboptimal in nature and they need not be efficient to persist. For example, in impure coordination games, the players may get stuck in a self-enforcing Nash equilibrium that is not Pareto efficient and thus suboptimal self-sustaining conventions may evolve (Van den Hauwe, 1998, p. 111).