This thesis examines the implications of Friedrich Hayek's assertion of liberty as the supreme value. The definition of individual liberty and coercion represents a crucial determinant of his social theory. Society exists as a spontaneous order, where knowledge is disseminated and utilised through the market. The participants in the market process are an association of free individuals, regulated by a body of abstract and universally applicable laws. Each individual must be guaranteed the maximum degree of freedom that is equal to and compatible with all other individuals. The benefits of individual freedom are intended to encourage individual responsibility and allow for the greatest possible amount of discoveries for the improvement of society. The emergence of new processes and technologies ls a result of the spontaneous order of free individuals. Hayek's assertion of the connection between individual freedom and invention is correct, although totalitarian societies are still capable of progress. However Hayek's theory has serious flaws and inconsistencies. His definition of freedom, as an absence of arbitrary coercion, is inadequate for the requirements of individual self-determination. The reliance on universal laws as a guarantee against coercion is misplaced. Alternately he is inconsistent with his claim of the coercive powers of the state and trade unions as intolerable while the coercive nature of the market is acceptable. Monopolies and cartels created by the market are incompatible with liberty. Hayek's reliance on competition will not always secure freedom for those individuals who do not have the opportunities to pursue their particular ends.