Property Rights Systems and the Rule of Law, page 7 rule of law, the degree to which rules must be fixed or the command that all govern- ment actions be bound in advance by rules. But Hayek's essential point is correct-that the rule of law directs government to provide fair notice of what rules it will apply, that the rules must allow individuals to plan their affairs with a reasonable understanding of the rules that set the bounds to lawful behavior The classical rule-of-law conception propounded by Hayek and others contains four elemental components. These are rule fidelity(law appliers'engagement in apply ing law), principled predictability(foreseeability of rules'application and meaning), rule validity(the derivation of rules from valid legal authority ) and external authority(accep tance of someone other than the rule applier as the source of the rule to be applied) None of these four elements is completely obvious, and each of these elements can be problematic in some settings Meeting these elements- coming within the classical definition of the rule of law assures that law is not the whim of an individual, that law is not administered in ways that dramatically empower government officials at the expense of private citizens, that the law's strictures are not unduly difficult to anticipate. These elements of the rule of law cohere with a system of legal governance, of law-boundedness, that allows substan- tial scope to individual judgment(and, thus, to varied individual values) in charting the course of ordinary affairs. Because these elements of the rule of law produce the sort of predictability Hayek sought, they allow individuals to adapt to legal rules in ways most likely to improve social welfare(at least as assessed by a measure of summed individual values)or, put in less positive terms, in ways most likely to minimize social cost. Fur- ther, because the rule of law thus defined militates against the sort of whimsical, biased,Property Rights Systems and the Rule of Law, page 7 ________________________________________________________________________ the rule of law, the degree to which rules must be fixed or the command that all govern￾ment actions be bound in advance by rules. But Hayek’s essential point is correct – that the rule of law directs government to provide fair notice of what rules it will apply, that the rules must allow individuals to plan their affairs with a reasonable understanding of the rules that set the bounds to lawful behavior. The classical rule-of-law conception propounded by Hayek and others contains four elemental components.21 These are rule fidelity (law appliers’ engagement in apply￾ing law), principled predictability (foreseeability of rules’ application and meaning), rule validity (the derivation of rules from valid legal authority), and external authority (accep￾tance of someone other than the rule applier as the source of the rule to be applied). None of these four elements is completely obvious, and each of these elements can be problematic in some settings. Meeting these elements – coming within the classical definition of the rule of law – assures that law is not the whim of an individual, that law is not administered in ways that dramatically empower government officials at the expense of private citizens, that the law’s strictures are not unduly difficult to anticipate. These elements of the rule of law cohere with a system of legal governance, of law-boundedness, that allows substan￾tial scope to individual judgment (and, thus, to varied individual values) in charting the course of ordinary affairs.22 Because these elements of the rule of law produce the sort of predictability Hayek sought, they allow individuals to adapt to legal rules in ways most likely to improve social welfare (at least as assessed by a measure of summed individual values) or, put in less positive terms, in ways most likely to minimize social cost. Fur￾ther, because the rule of law thus defined militates against the sort of whimsical, biased