The essential characteristic of the liberal theory of the state is the idea that the authority and power of the state are limited. Milton Friedman has this to say about the role of government in Capitalism and Freedom (Chicago, 1962):

There is no formula that can tell us where to stop. We must put our faith, here as elsewhere, in a consensus reached by imperfect and biased men through free discussion and trial and error.

A government which maintained law and order, defined property rights, served as a means whereby we could modify property to rights and other rules of the economic game, adjudicated disputes about the interpretation of the rules, enforced contracts, promoted competition, provided a monetary frame-work engaged in activities to counter technical monopolies and to overcome neighbourhood effects widely regarded as sufficiently important to justify government intervention, and which supplemented: private charity and the private family in protecting the irresponsible, whether madman or child - such a government would clearly have important functions to perform. The consistent liberal is no anarchist. (p.34) .

James Madison, the most influential of the draftsmen of the American Constitution, identified (in 'The Federalist', no 51) the main problem confronting the draftsmen of a constitution thus:

The great difficulty lies in this: you must first enable the government to control the governed: and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions.

The role of a constitution is to provide scope for good government, while at the same time placing limitations on the powers of the governors.

The doctrine of the separation of powers, involving a system of checks and balances, is basic to liberal constitutionalism. The system of checks and balances begins with the separation through a constitution of judicial, executive and legislative powers. However, it goes much further. It operates also within each branch of the state, in the division of powers between state and federal governments and the distribution of powers between the state, other institutions and individuals in the community. Within the legislative sphere, power is distributed between the component parts of parliament (Senate, House of Representatives and the Governor-General). The power of each House is diffused among its many members. A majority is necessary for the House to act. Each House has a different constituency and/or is elected at periodic intervals and is therefore constrained by the necessity of being responsive to the electorate.

Within the executive sphere ministers, besides having a duty to govern in the interests of the whole nation, are obliged to work with a public service. The impartiality of the public service (undermined in recent years) acts as a brake upon favouritism, corruption, discontinuity, nepotism and inefficiency. On the other hand, executive decision making and policy determination remain in the hands of the ministry. Under the Westminster system the ministry is further constrained by the reserve powers of the Crown and by ministerial responsibility to Parliament.

Within the judiciary, power is distributed amongst a hierarchy of courts in the context of judicial independence. The judiciary is the guardian of the constitution and acts as a check on the abuse of the executive and legislative powers.

Under federal constitutions there is also a division of powers between states and the central government usually involving a divided allocation of subjects of legislative power - which is another check on the extent of power.

The system of checks and balances also operates outside the constitution and the law. Democracy, the electoral system, free expression and criticism the investigative media and the existence s of countless strong and not so strong independent institutions cumulatively operate as a system of checks and balances on those exercising private and public power.

The Role of Law
The role of law and the legal system in the theory and practice of Anglo-American democracies in the pre-interventionist era were underpinned by the following principles:

• The supremacy of law, which means is that all persons (individuals and governments) are subject to the law;

• A conception of justice that emphasises interpersonal adjudication, law based on faults, and the importance of procedures:

• Restrictions on the extent of discretionary power and the manner of its exercise.

•Prospective, not retrospective, legislation;

•An independent judiciary;

•The exercise by Parliament of legislative power and restrictions on the exercise of legislative power by the executive.

Because of limitations of space I propose to focus briefly on only some of these.

Justice
The concept of justice has three facets: interpersonal adjudication, law based on fault, and an emphasis on procedures.

Justice is based on the rights and duties of the individual. The liberal concept of justice is an interpersonal one: resolution of conflict between individuals. Social justice, involving society and social groups, is directly antagonistic to the liberal idea of justice. It is nebulous as a concept and unachievable in practice. Its proponents increase state power in the attempt to realise it, with counterproductive results.

The second facet of liberal justice is that no one should be punished or disadvantaged except for fault (intentional, reckless, or negligent wrongdoing, strict liability applying in exceptional circumstances) . The idea of fault is a golden thread running through the fabric of the legal order. A system of sanctions based on fault presupposes known and pre-existing standards of conduct that bind the community. The abdication of the fault basis of liability leads to ever-expanding government, as in the case of, for example, the Australian industrial relations system and consumer protection laws. In the field of family law, fault has been rendered all but irrelevant in the annulment of marriages, grant of custody, award of maintenance, and the settlement of property. The examples can be multiplied.

The third feature of liberal justice is the emphasis on procedures. The liberal does not believe in the possibility of achieving equality, democracy, justice, the public good and other ideals through legislative and prescriptive action. Such a task is too complex for the human imagination. An emphasis on procedure is one of the foundations of the rule of law. Procedures limit power by providing for wide consultation among interested parties.

Common Law
In the present context, 'common law' describes the body of legal principles and concepts that were evolved over many centuries by judges in the English courts of law. These principles include such values as honesty, the pursuit of truth, responsibility, fairness in interpersonal relations, concern for one's immediate neighbours, respect for property, loyalty and duty to one's spouse and children, the work ethic and keeping one's word. The emphasis is on the duty and responsibility of the individual, without which no civilisation can endure.

The common law method, as compared to legislative reform, results in gradual change through the determination of individual disputes in which parties present contending arguments regarding just conduct. In settling these disputes the courts draw upon precedents embodying the public morality. These principles, as Charles Francis, QC, put it in an unpublished talk,

'represent the collective legal wisdom distilled over many centuries from the finest legal minds in the English-speaking world for the express purpose of defining, protecting and enforcing human rights and obligations'.

Through the process of disputation, debate and impartial adjudication, the common law reconciles conflicting interests and develops the necessary constraints on the liberty of the subject.

The question may be asked: what makes the courts superior to politicians, bureaucrats and academics as custodians of individual freedom and public interest? Three reasons may be given.- One is the impartiality and competence that is associated with courts functioning in the common law tradition. Despite frequent attacks and attempts to denigrate these qualities, they remain real in the public eye. Opinion surveys show that public confidence in the judicial system (notwithstanding academic and political attacks) surpasses its confidence in political institutions, the bureaucracy, the media and academia. A second factor is that, unlike political institutions, the common law courts have no licence to commit arbitrary acts. Judicial discretions, unlike political ones, are strictly limited to the application or adjustment of established norms and standards. There are thus inbuilt restraints in the judicial method that ensure a greater degree of certainty and fairness. A third factor is that the common law itself is a product of reasoned disputation where individual rights and duties are claimed and evaluated. No comparable process obtains-in the political system in which ideological considerations often prevail and aggressive pressure groups exercise influence without regard to reason, justice or community values.

Legislation
The common law method, like all human creations, is imperfect. It can usefully be supplemented and modernised by legislation. But modernisation is not the same as social engineering. The problem with the modern method is that the common law is being smothered out of existence and legislation has become the primary source of social regulation. Legislators and bureaucrats claiming a superior wisdom indulge in structuring and ordering society in disregard of community consciousness and values. This kind of legislative activism leads to a progressive erosion of human rights under the guise of safeguarding public interests. The common law method, in contrast, assimilates the public morality into legal principles through the direct participation of citizens in the assertion of their individual rights. The restrictions on individual liberty that evolve from this process have a greater relationship to the needs of the people as perceived by the people themselves.

One of the problems of applying the common law method nowadays is that socially dangerous situations can arise suddenly and the common law response (relying as it does on appropriate litigation coming before the courts) may not be sufficiently rapid to avert harm. In such situations legislative safeguards are necessary. But although the common law may not provide an immediate remedy, its basic approach will provide valuable guidance for determining the justifiability and extent of the proposed restrictions. The common law approach gives priority to community perceptions and values (including moral and religious responsibilities) rather than to the views of lobbyists and political activists. What is important in such an approach is objectivity and impartiality. In other words, the modern legislator who contemplates placing a restriction on liberty should approximate his role to that of a judge rather than to that of an ideologue claiming a right based on superior wisdom to effect far-reaching social changes. Only by such means can the perceptions and priorities of the community be ascertained.

An important aspect of the doctrine of the separation of powers is the limitation it places on the delegation of substantive legislative power.

According to Madison, the purpose of legislation was to deal with general principles rather than policy details. Rather than promoting 'various and interfering interests', he thought it should be concerned with determining what Hayek was later to call 'the rules of just conduct'.

Some delegation of the law-making function is inevitable in the modern state. The objectionable features of delegation that have undermined the rule of law include the sheer volume of delegated legislation, the abdication by Parliament of its duty to lay down general principles, and the inordinate extent of uncontrolled discretion that have been conferred on the executive.

Parliamentary control over general principles is important for the functioning of the democratic order. It facilitates electoral control over Parliament and since the executive must act within the confines of the law, it facilitates electoral control over the executive as well

This analysis constitutes a bare outline of the proper role of the law and of the constitution. It is not meant to represent an ideal state of affairs in the modern state. In actual practice the system of the checks and balances, constitutional restraints on (a state power and the liberal conception of law are being undermined) However, the elements of a liberal legal and constitutional order as described here lead, if observed, to a system of limited government.