James Buchanan

D. Reisman

• Éditeur: Palgrave Macmillan
• Année: 2015
• ISBN:
  9781137427182
• Sujet: Economia
• Sous-sujet: Econometria

James Buchanan (1919-2013), economist and philosopher, was awarded the Nobel Prize in Economics in 1986 for his original theory of political democracy as market exchange. Buchanan believed economics should be concerned with liberty, individualism and equity.

1

Introduction

In summary, it is like this. The good society must be built up from the revealed preferences of unique individuals who feel a need to register their choices. God has been dead for a century. Truth is tested by agreement. Efficiency is tested by agreement. Justice is consensus. Fairness is the rational calculus of the loss-averting one-off when situated behind a thick veil of fog.

Entrepreneurial imagination weaves unanticipated skeins out of uncertain unknowables. The market is a disequilibrium process of exploration and discovery. Procedures alone and never endstates may be said to be economic. Social interaction is collective choice. Unanimity is the sole test of optimality. Utility like opportunity cost is all in the mind.

Human nature is nasty and brutish. Anarchy is the jungle. Leviathan is the Gulag. In between there are the rules. Formal and informal constitutions ensure that the rational and the self-seeking will strike bargains and not one another. Politicians and bureaucrats, neither omniscient nor beneficent, are as short-horizoned as any other merchants. Choices in the public sector are made not by the State qua State but by individuals qua individuals. Politics must be constrained by multi-period rules lest the nasty and the brutish bribe their voters with quantitative easing and deficit finance.

This book is about the autonomous and the impartial, market valuation and methodological individualism. It is also about student activists, itinerant pragmatists, discretionary Keynesians, arrogant interventionists, the wasteland of mathematical economics and the special pleading of vested interests. It is about the economic and social philosophy of James Buchanan. Buchanan was a serious-minded moralist. He recognised that things had gone wrong. He made it his mission to put them right again.

This book is about James Buchanan. Divided into 16 chapters, it is the story of individuals, agreements, equity, evolution, operational rules, constitutional rules, moral decay, moral regeneration, Keynesian economics, history-to-come and free market exchange. Buchanan was awarded the Nobel Prize for Economics in 1986. It was an unconventional choice. Buchanan was an ascetic and a puritan who had little time for disciplinary boundaries and even less for purposeless toys. His economic and social theories are best understood as the soul-searching of a secular preacher from the hell-fire Bible Belt who believed that he had a duty to put things right.

James McGill Buchanan was born on 3 October 1919 in Murfreesboro, Tennessee. He grew up on the family farm where he milked the cows before leaving for school. He was always close to the land. One of his few hobbies in later life was his own 400-acre farm in Montgomery County, Virginia. He had a soft spot for Grand Ole Opry.

His grandfather, John P. Buchanan, had been Governor of Tennessee from 1891 to 1893. John P. Buchanan had been the candidate of the populist Farmers’ Alliance that had broken away from the ruling (southern) Democrats to speak for what it termed the ‘hayseeds’ against the unequal power of concentrated capital. In spite of that, the family was not privileged. Like Veblen or Galbraith, there were few luxuries, especially in the Depression years. Experience shapes outlook. Buchanan might have had a different window on the world if he had grown up in good times, been socialised into a European social democracy or lived in a culture where Marxism was regarded as a respectable subject of debate.

Buchanan studied mathematics, English and social sciences at the Middle Tennessee State Teachers’ College. Social sciences included economics. Economics underpinned with mathematics would have made him a respectable neoclassical. English was the tiger in the path. Buchanan liked books and ideas. His wide and eclectic reading began early. Moral and political philosophy can warp an economist for life. In spite of that, in 1941 he obtained his master of arts degree in Economics from the University of Tennessee.

When Pearl Harbor was bombed and America entered the Second World War Buchanan was trained to be an officer in the Navy. He was profoundly insulted when his ship was not allowed to sail until blue-blood commanders bred to lead had been mustered on board. Throughout his life Buchanan returned again and again to his personal exposure to second-rate citizenship. He had been passed over in favour of Establishment Old Money exclusively because he was a poor white, a hayseed, a farm-boy from the Upper South who knew more about milking cows than he did about fine wines: ‘Along with many others, I was subjected to overt discrimination based on favoritism for products of the eastern-establishment universities. This sobering experience made me forever sympathetic to those who suffer discriminatory treatment’ (CW I, 14). Buchanan always had a chip on his shoulder. While he was not involved in the civil rights movement, he did become a market economist. Profit, he probably believed, is colour-blind. Capitalism knows no class but success. Even a hayseed can rise to the top.

Released from war service, Buchanan entered the University of Chicago in 1946 to do a PhD in Economics. His field was public finance. It was an unusual choice for a radical individualist. He received his PhD in 1948 for a thesis on ‘Fiscal Equity in a Federal State’. He did not know in 1946 that Chicago had a bias towards private exchange and against the State. At the same time, self-reliance, individual autonomy and equality of respect were already a part of his personal value system:

When I reached the University of Chicago, I was what I now best describe as a libertarian socialist. I had always been anti-state, anti-government, anti-establishment. But this included the establishment that controlled the United States economy. I had grown up on a reading diet from my grandfather’s attic piled high with the radical pamphlets of the 1890’s. The robber barons were very real to me. (CW I, 14)

Even before he reached the University of Chicago, Buchanan had been groping towards the dispersion and devolution of power: ‘For me, government has always been something to be protected from rather than to be the provider of assistance to. Perhaps this attribute is located in my southernness’ (letter to the author, 13 June 1988). The South valued the individual. It also had a folk-memory of carpetbaggers from the North who had come in after the Civil War to manage other people’s affairs. Ivy League elitists who told ordinary people that their wants were not their needs were their modern-day descendants. The occupation of the defeated Confederacy in the time of his grandparents still alive was a reason to be deeply suspicious of central national government: ‘At the very least, there could have been, for me, no sense of membership in a genuine national community. Hegelian actualization in the United States would have remained beyond my consciousness, regardless of the career path chosen’ (BAM, 15).

At the University of Chicago, Buchanan was influenced by teachers such as Henry Simons, Jacob Viner, Lloyd Mints, Aaron Director and the young Milton Friedman. None of them could be described as an empiricist. Individualists as well as scientists, they impressed on their young candidate, then in his 28th year, that ‘the basics of economics were those of price theory, not formal mathematics, and price theory applied to real-world issues’ (CW XIX, 40).

Most of all there was Frank Knight. Buchanan describes him as ‘my role model’, ‘the intellectual influence during my years at the University of Chicago’ (CW I, 15). Knight, like Buchanan, came from a poor farming background and had studied in Tennessee. He had reached the academic apex through his own hard work and path-breaking insights. In Risk, Uncertainty and Profit he had said that capitalism is search because knowledge is imperfect. In The Ethics of Competition he had said that moral values are the precondition for the market order. Laws are not enough. Internalised norms such as the work ethic are the sine qua non. Knight held liberalism responsible for the decay in religion and morals. His principle of ‘relatively absolute absolutes’, which Buchanan invokes so frequently, was the attempt of a lapsed evangelical to find an anchor for his vessel in a sea of doubt.

Chicago spontaneity appealed strongly to Buchanan. Mainstream economics in the 1940s was dominated by Pigovian paternalism and Keynesian macro-aggregates. Economics students were more familiar with market failure than with market success. Microeconomic search and negotiation were hardly covered at all: ‘Micro-economics probably remained largely unknown to many of the post-1950s economists who were trained in the post-war years. They may have been compelled to take micro-economics courses, but both they and their instructors thought of this analysis as some rather tedious bit of the history of the discipline, more or less like Latin’ (AP, 88).

In Tennessee, the economics Buchanan had studied was mainly descriptive. Chicago was exceptional in that it refused to treat the endless groping of the homeless decision-maker as an embarrassing obiter dictum. Within only six weeks he had become ‘a zealous advocate of the market order’ (CW I, 15). The market order that attracted him was not routine maximisation constrained by Hessians, integers and Lagrange but the thrill of decentralisation and the excitement of the search.

Except for an early flirtation with intervention (mainly to break up the concentrated power of the robber barons) and ‘flaming socialism’ (WIT, 59) (but never Marxism), such as was not uncommon among intellectuals with a strong moral sense when confronted with the economic wasteland of the hungry 1930s, Buchanan never deviated from the pro-capitalist stance of the Chicago free-marketeers. At the same time his ideology was nuanced and idiosyncratic. He was never associated with a political party and he was opposed to the inter-generational transmission of wealth. He and his wife Anne had no children.

It was at Chicago that he first read Finanztheoretische Untersuchungen. Buchanan, having learned German and not sure how better to spend the summer of 1948 than in the Harper Library, stumbled ‘by sheer chance’ (CW I, 15) upon a little-read book with a not instantaneously arresting title. In less than a hundred pages of Wicksell’s monograph, published in German in 1896 and not then available in translation, Buchanan found what he was looking for. It was the benchmark of unanimity. In the economic market both parties to an exchange agree before they contract. Exchange is ‘a sort of moral equality’ (WIT, 104). In the political market the ideal ought to be precisely the same. The revelation was ‘dramatic’: ‘Wicksell’, Buchanan later declared, was ‘the primary precursor of modern public choice theory’ (CW XIII, 20).

Free markets are free. That is their greatest attraction to a moralist who believes in human dignity. Economically, ‘the choices in the market are not arbitrary’: ‘There are narrow limits on the potential for exploitation of man by man’ (CW XIX, 168). Politically, ‘markets tend to maximize freedom of persons from political control’: ‘Liberty ... is best preserved in a regime that allows markets a major role’ (CW XIX, 168). The gains from trade come second. The basic value is Kant-like respect.

Buchanan at Chicago came to associate the price mechanism with ethical absolutes. Market logic was his window on the world throughout the troubled half-century from the Depression and the New Deal through the arms race, the Cold War, the Vietnam wilderness, the student militants, the ‘obscenities of Camelot’ (CW XIX, 185), Marxian economics, the Watergate tapes to the Berlin Wall, privatisation, monetarism, Reaganomics, Thatcherism, insider trading and sub-prime securitisation. Through good times and bad, Buchanan never questioned the primacy of individualism, atomism and the human right to exchange.

Yet there is something more. Buchanan had learned from the earlier institutionalists that the human right to exchange could easily degenerate into Hobbesian war culminating in Hobbesian tyranny so long as economic freedom was not reinforced by the democratic State and embedded in social values. A multidisciplinary perspective would be required if real-world phenomena were to be grasped in their entirety: ‘I don’t care whether I am acting as an economist or a political scientist or a sociologist, or what it might be if the problem seems interesting’ (BAM, 54).

Politics and sociology are essential since the human condition is mixed. Sociology identifies the internalised patterns that give the participants in a cultural community a shared normative language. Politics investigates the protective and the productive State. Buchanan is sensitive to the liberation through constraint that is the core message both of sociological economics and of political economy. Of the two, however, his focus has more often been politics.

Buchanan situates himself at once in the tradition of Smith’s Wealth of Nations and Moral Sentiments and of Spencer’s Man versus the State and Principles of Sociology. He states that ‘by profession, I am an economist; by interest, I am a social philosopher’ (CW XIX, 173). In seeking to build bridges, he is standing on the shoulders of giants such as Adam Smith, ‘a philosopher who was also our patron saint in economics’ (CW XIX, 173). Yet there is something more than filial piety that has focused his attention on the State. Buchanan sees the State not just as the indispensable guarantor of law and order but itself as a lurking menace to peaceable negotiation. He is attracted to political economy at least in part because it is Janus-faced.

On the one hand we need ‘a legal-governmental system that enforces property rights and contracts’ (CW XVII, 243). On the other hand we need to coerce the coercers because the road to 1984 begins, as the omniscient Hayek (1948: 19) had said it did, with 1948: ‘There can be no freedom if the government is not limited’. Big Brother rides free on Attlee’s welfare State and Bevan’s National Health Service. Profoundly disturbed by the possibility that the gains from trade could be dissipated by the war of each against all, Buchanan shares the assessment of Milton Friedman (1962: 34) that ‘the consistent liberal is not an anarchist’ and of Robert Nozick (1974: ix) that the ‘minimal State’ is always and everywhere indispensable. If conflict resolution is not to be at the barrel of a gun, then the consistent libertarian must always be a moderate statist. There is no alternative to the middle ground: ‘I remain, in basic values, an individualist, a constitutionalist, a contractarian, a democrat – terms that mean essentially the same thing to me’ (CW VII, 11).

Buchanan wants laws that constrain the people and laws that constrain the leaders. It is highly symbolic that Buchanan, with Warren Nutter and other colleagues, happened in 1957 to site their Thomas Jefferson Center for Studies in Political Economy and Social Philosophy at the University of Virginia. Although unintended, Virginia was the appropriate setting. The research programme was ‘indigenous’ (CW XIX, 62). Buchanan says it would probably have been ‘out of place’ in California or Massachusetts. Virginia was home. It is the part of the United States that has the closest historical ties with the Founding Fathers and the American Constitution. The successor to the Thomas Jefferson Center, the Center for Study of Public Choice, did not fall far from the tree. It was located first at the Virginia Polytechnic University in Blacksburg (1969–82) and after that in Fairfax, at George Mason University.

George Mason had represented Virginia at the original Constitutional Convention of 1787 in Philadelphia. At the end he had refused to put his name to the document. He had objected that the checks and balances were inadequate, that the separation of powers was not water-tight, that the President without a Constitutional Council would be dependent on ‘minions and favourites’, that the President alone would select his ministers and his kitchen cabinet.

George Mason had also argued for states’ rights within the framework of inter-state commerce to tap the large domestic market. Presciently, he had warned that the five southern states were in a minority. Their interests were different from the eight northern states. The minority would be dragooned by the majority into treaties that favoured commerce over agriculture. Federalism would degenerate into factionalism. In the end the great estates and plantations like George Mason’s own Gunston Hall would be ruined.

George Mason believed that the American Constitution was not enough of a constitution to keep discretionary interventionism at bay. For all that, he felt that the newly independent nation could never make any progress, economic or social, so long as its politics were not governed by a multi-period standard. Mason, together with the other Founding Fathers such as Jefferson, Hamilton, Madison and Jay, had just fought a war of independence for which taxation without representation had been the last straw. The Bostonians who had staged the Tea Party had experienced rule without rules at first hand. The Constitutional Convention was made inevitable by the perceived infractions of an absentee ruler in whose home territory itself no parliament could bind its successor. The 85 essays in the Federalist Papers (29 of them by Madison) set out the ideology of the Founding Fathers. They read like dispatches from the front.

The Federalist Papers argue a strong case for a written constitution and a bill of rights. The essays favour a bicameral legislature where each chamber has the power of veto and where the constituencies are overlapping but not the same. The Papers call for an electoral college and the separation of the mandate: ‘The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few or many ... may justly be pronounced the very definition of tyranny’ (Madison, in Hamilton, M...

Table des matières

• Cover
• Title
• 1  Introduction
• 2  Individuals and Agreements
• 3  Rules without Regulators
• 4  Social Justice: Buchanan and Rawls
• 5  Social Evolution: Buchanan and Hayek
• 6  Acts and Rules
• 7  Constitutional Rules
• 8  Operational Rules
• 9  The Microeconomics of Consent
• 10  Moral Anarchy
• 11  Keynesian Ethics
• 12  Ethics as Unknowledge
• 13  Economics as Unknowledge
• 14  Macroeconomic Policy
• 15  Microeconomic Policy
• 16  Buchanans Legacy
• Bibliography
• Index