Richard E. Wagner - James M. Buchanan and Liberal Political Economy: A Rational Reconstruction

James M. Buchanan and
Liberal Political Economy

LEXINGTON BOOKS

Lanham Boulder New York London

Library of Congress Cataloging-in-Publication Data

Library of Congress Control Number: 2017934167

ISBN 9781498539067 (cloth: alk. paper)

ISBN 9781498539074 (electronic)

TM The paper used in this publication meets the minimum requirements of American National Standard for Information Sciences Permanence of Paper for Printed Library Materials, ANSI/NISO Z39.48-1992.

Printed in the United States of America

James M. Buchanan (19192013) was one of the premier economists of the twentieth century, as attested by his being awarded the Nobel Memorial Prize in Economic Science in 1986. His approach to economics, however, was in no way ordinary. His brand of economics made such strong contact with law, ethics, and political science that he could easily have served as a poster-child for the programs in politics, philosophy, and economics which have been gaining momentum in recent years. He spoke for a style of economics that made wide and firm contact with the full range of the humane studies, in contrast to the inward-looking narrowness of orthodox economics.

The life of a thinker can be told largely through his or her ideas. Buchanan is typical of thinkers in this respect. After leaving the Navy in 1945, he devoted his life to thinking and writing about political economy. The topics he thought about are the objects this book addresses. This book, however, is not an intellectual biography. It features neither archival work nor excerpts from correspondence, though I should note that Buchanans archives are currently being assembled for public use at George Mason University under the supervision of Dr. Solomon Stein. This book is my interpretation of the contemporary meaning and significance of Buchanans oeuvre, as filtered through my 50-year association with him as a student, colleague, and coauthor. The book offers my rational reconstruction of Buchanans oeuvre. It is less concerned with Buchanans past contributions per se than it is with the present and potential relevance of his scholarly contributions and insights. I do not seek to describe the steps Buchanan took in arriving at the formulations with which he is associated. Rather, I seek to explain what insight for their work contemporary scholars might acquire by becoming familiar with some of those formulations.

While my presentation of Buchanans thought is cognizant of the chronology of his work, the book proceeds thematically and not chronologically. To proceed chronologically unavoidably reflects an antiquarian quality by locating a scholar in the past. Yet Buchanan had limited antiquarian interests, as illustrated by his repeated reminders that we have no option but to start from where we are. In this respect, Buchanan embraced George Shackles (1961) recognition that the present is but a knife-edge that separates a dead past from a possible future. All scholars unavoidably must incorporate work from the past into their current work, but Buchanans orientation was always on moving forward from the present. In presenting his Adam Smith Lecture before the National Association of Business Economists, Buchanan (1989) noted that I am not an exegetist, and explained that his concern is not what Adam Smith may have said or failed to say. My concern is, instead, with articulating what I think would be a consistent position, for Adam Smith, in the context of the United States political economy in the late 1980s. In line with this orientation, I emphasize those features of Buchanans thinking about philosophy, politics, and economics that seem relevant for contemporary scholarship within the broadly liberal tradition of political economy.

In this effort, I treat Buchanan as participating in what Kenneth Boulding (1971) describes as the extended present in explaining why Adam Smith is still relevant more than two centuries after his death. This book is especially concerned with exploring how Buchanan, as a participant in this extended present, might have carried forward his interests and lines of thought into the near future. While I present the prime contours of Buchanans thought, my purpose in doing so is to probe the contemporary relevance of his thought. Buchanan was a classical political economist who entered the scholarly world during the heyday of the neoclassical period of economics. Consequently, he was often misconstrued as a neoclassical economist with right-wing ideas. That view is wrong; it reflects the common tendency of people to interpret other people and events in terms of the main currents in play at the time. While Buchanan worked during the heyday of the neoclassical period in economics, he was a classical political economist in the style of Frank Knight and not a neoclassical economist of post-war Chicago vintage.

Buchanan stood for the construction of a different type of economics, one that would serve as a contemporary version of the liberal political economy that grew out of the Scottish Enlightenment associated with such scholars as David Hume and Adam Smith. Buchanan, like Friedrich Hayek, was an incipient theorist of social complexity whose theoretical activity preceded development of the computational tools with which ideas about social complexity are now explored. Buchanan was concerned with the borderland between individual liberty and the collective actions that are often necessary for people to live well together. He also recognized that actual life is far richer and more nuanced than any whiteboard can capture, no matter how many equations adorn it. Buchanan recognized the positive value of liberty along with the responsibility that liberty entails, while also acknowledging the need for appropriate collective action to promote the common flourishing that societal living together enables but doesnt guarantee. This setting provided the mental environment inside of which Buchanan constructed his body of scholarship.

Chapter 1 introduces the reader to Buchanan and his thought, and explains what I mean in asserting that Buchanan worked within and extended the tradition of classical political economy, and was not a standard neoclassical economist. Chapters 27 represent a book within the book, so to speak. These chapters offer my rational reconstruction of Buchanans body of work. That oeuvre resembles a large oak tree when viewed some 64 years after it was planted as a sapling in 1949. The several significant lines of thought he created over his life are all traceable to the first article he published in 1949, though he didnt think of his work as reflecting this degree of organization. This book within the book presents this organization as a six-themed rational reconstruction. The book closes with an Appendix that reprints a memorial I published in the