ce, sell, and buy anything that may be produced or sold at all. One must assume that he is referring to anything that is producible within the law of the land. The entry into the many trades need to be open to all on equal terms and the law can not tolerate any individuals or groups who restrict entry. Attempts by any to control prices or quantities deprive competition of its ability of allowing an effective co-ordination of individual efforts. (15) Hayek does point out however that this is not true of production, so long as the restriction affects all producers equally. An example Hayek gives is to prohibit the use of poisonous substances or to require all to use special precautions while in use, to limit working hours or to require sanitary codes. If the advantages gained by such restrictions are greater than the social cost or inconvenience they impose, than intervention of competition is compatible. It is this vain of thought that Hayek stress the importance of a well thought of legal system. The competitive system requires the organization of many institutions like money, markets, and channels of information, but most importantly the existence of a suitable legal system. The legal system must be designed to preserve competition and enable it to operate as efficiently as possible. It is not sufficient that the law only recognize the basic principle of private property and freedom of contract. (16) Much will depend on the precise definition of the right of property applied to many different things. Again Hayek points out the how no legal system can cover all possible circumstances that will arise from the free competitive system. In the perfect case the owner benefits from all that is rendered by his property and suffers all the damages caused to others by it use. Yet, the price competition system will become ineffective when the damage caused by the use of property cannot be effectively charged to the owner. When this...
