“Civilization advances by extending the number of important operations which we can perform without thinking about them. Operations of thought are like cavalry charges in a battle – they are strictly limited in number, they require fresh horses, and must only be made at decisive moments.” Alfred North Whitehead
Rules obviously hold an important place in the structure of civilization and, at least in Hayek’s discussion, they emerge out of a process of individual interaction and they change when the benefit of breaking the rule is greater than the cost of doing so to the individual.
More recently, James Buchanan (2011) argues that the process of rule formation cannot be judged based on an efficiency criterion because good rules themselves are public goods. There is therefore no such thing as market processes of rule creation in which entrepreneurs, lured by private profit, can be relied on to continually discover new and better rules.
While Buchanan is clearly arguing that there is no such thing as a market process for the discovery of rules, his argument does not preclude the possibility of analyzing the process of rule formation more systematically. Different social and institutional environments have different systematic effects on the types of rules we might expect to emerge. Take Buchanan’s own distinction between constitutional and post-constitutional rules, for example. They are distinct in the sense that rule creation in the constitutional sphere requires unanimous consent by all participants while rule creation in the post-constitutional sphere does not. If we draw on Hayek to distinguish between good rules and bad rules, we can suggest that good rules will be those that apply to every individual equally and are not designed with attention to specific circumstances but instead hold independent of the situation that an individual might find himself in (generality norm). It is clear that from behind the veil of ignorance, individuals will tend to consent to rules that have all of the characteristics just described. Since they do not have any information about their post-constitutional position in society, they will want to implement rules that benefit all. In addition, because unanimous consent is required, rules that benefit some at the expense of others would not pass even if individuals had knowledge about their specific situation in the post-constitutional position. On the post-constitutional level, however, individuals will be more likely to design rules that take into consideration their specific circumstances and benefit them directly at the expense of others. Because unanimity is no longer required, a majority can pass rules that allow it to extract resources from a dissenting minority. Such rules, by definition, have to violate the requirements of the generality norm.
Taking a more pragmatic perspective, good rules will emerge in environments in which all parties involved can veto the creation of a new rules. Bad rules will emerge in environments in which some are precluded from such a veto. If we weaken Buchanan's claim about the absence of an entrepreneurial process for a moment and assume that entrepreneurial alertness (at least) is omnipresent, we can use the idea of the entrepreneur to distinguish between different processes of rule creation. More specifically, we can say that institutional entrepreneurs in an environment in which they have to secure the support of a large majority of the population will be precluded from bringing about bad rule changes. The problem with the entrepreneurial perspective in this case is that most good rules will only provide small amounts of private benefits to the entrepreneur who discovers the new rule, because they are good rules that do not create rents (which is what Buchanan 2011 points out). In an environment where an institutional entrepreneur only needs the support of a relatively small part of the population, on the other hand, he will be much more likely to extract relatively greater private benefits for himself and his supporters. You can probably tell that this is getting close to the argument about concentrated benefits and diffused cost. As long as there are a minority that can bear the bulk of the cost of a rule and a majority that will reap the bulk of the benefits of the rule, post-constitutional rules will emerge that do not fulfill the requirements of the generality norm.
If you accept then, that good rules usually conform to the generality norm and that general rules rarely emerge in the absence of a unanimity requirement, you will have to agree that the post-constitutional process of rule formation will rarely produce good rules.
