Abstract
James M. Buchanan (1919–2013) was notable for his contributions to different fields of Economics, being awarded with the Nobel Memorial Prize in this area in 1986. His methodology is characterized by three fundamental aspects: methodological individualism, a constitutional approach, and a contractarian political philosophy. In this paper, we explore the development of these features in Buchanan’s works and contrast them with alternative classifications in these categories by scholars in other areas of knowledge. We show that Buchanan’s individualism uses a concept of homo economicus that differs from most of his peers in economics. His constitutionalism follows a specific strand that differs from other constitutionalists of political science and law, and leads to his contractarianism, which also has its particularities within political philosophy and ethics.
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Notes
In his M.A. thesis, defended at the University of Tennessee, Buchanan (1941) studies a public finance problem: how to share a gasoline tax among Tennessee counties. In his conclusion, he advocates for centralizing revenue and spending. That approach differs from the one he begins to use after his Ph.D. at the University of Chicago. For a discussion about how James Buchanan chose public finance as field of study and his experience at the University of Tennessee, see Marciano (2019a) and about the contribution of the University of Chicago to his methodology, see Buchanan ([1986] 1999a) and Johnson (2014).
Despite Buchanan (2007, p. 213) pointing out Friedrich Hayek as one of his ten major influences, he considers that Hayek “was not seminal” for his own early development. This is because he claims that he did not know Hayek’s works until the 1960s. Regarding Buchanan’s opinion about Hayek’s work, Boettke (2018, p. 187) understands that Buchanan found Hayek’s positions about the diffusion of knowledge and the market process very plausible, but that at the same time, it allowed no room for any action of a political economist.
Vaughn (1988) also recognizes that a homo economicus model, such as that used by Buchanan, did not necessarily have to ignore the role of moral rules and ideological commitments in the actions of political agents. The same idea is followed by Congleton (2018), who creates a model of human thought and action consistent with Buchanan’s view of human nature and ethics that correspond to recent advances in psychology, biology, and philosophy. Congleton’s analysis of Buchanan’s homo economicus starts with the idea of sensory order, as expressed by Hayek (1952), that information about the external world is a subjective interpretation of the data collected by the individual’s senses, which is not perfect and often includes some mistakes. He argues that an individual’s system of relatively stable internalized rules determines each person’s understanding of the world. This implies that an individual’s internal system of rules determines how and what to choose. Congleton (2018) calls this rule-based alternative “Homo Constitutionalus,” being a more general model of man than just a utility maximizer, comprehending man as a rule follower.
Vanberg (2018) also writes about this feature in Buchanan’s individualism and its relationship to normative precepts. He notes that a common perception, mainly expressed by Kenneth Arrow, is that economics uses methodological individualism, and political economy adopts normative individualism as a standard of judgement. Vanberg (2018) demonstrates that Buchanan’s view of individualism differs from Arrow’s description in that Buchanan’s methodological individualism links methodological and normative individualism. He notes that Buchanan’s constitutional political economy involves both positive and normative elements, and in using the constitutional and contractarian approaches, with his emphasis on voluntary agreements, Buchanan provides not only a consistent individualism, but also a consistent liberalism.
Buchanan describes this book’s focus as “(…) the individual’s choice among alternative rules for reaching political decisions, rules to which he, along with others, would be subject in subsequent periods of operation” (Buchanan, [1986] 1999, p. 22).
Some important milestones in the evolution of constitutional political economy happened during 1975–1990. Among the main events of that period are: the publication of The Limits of Liberty (Buchanan, [1975] 2000) and The Power to Tax: Analytical Foundations of a Fiscal Constitution (Brennan and Buchanan, [1980] 2000); coinage of the term “constitutional economics,” which Buchanan (1990, p.1) attributes to Richard B. McKenzie in 1982; publication of The Reason of Rules: Constitutional political economy (Brennan and Buchanan, 1985); and the first issue of the journal Constitutional Political Economy in 1990.
There are several definitions of constitutional political economy, but most of them are very similar. Wagner (2017, p. 58) defines it as follows: “Constitutional political economy entails Buchanan’s many efforts to explain how the framework of rules by which a governing regime is constituted influences a regime’s properties.” Boettke and Lemke (2018, p. 51) consider “the entire field of constitutional political economy is based on an intellectual commitment to viewing the rules by which good government is defined as the product of reflection and choice rather than accident and force.”.
Buchanan (2005) defines conservatives as people who defend maintaining the social order, assume that there is a natural hierarchy among individuals, and are inclined to accept paternalism.
In contrast, he argues “utilitarians act [or claim to act] on behalf of others.” Utilitarians are “other-regarding,” while contractarians are “self-seeking” (Hardin, 2006, pp. 292–293).
Buchanan (2003, p. V), Kliemt (2008, p. 224) and Wagner (2013, p. 65; 2017, p.2–3) confirm that John Rawls participated in the second meeting of the “Committee on Non-Market Decision Making” in 1964, a forerunner of the Public Choice Society. Buchanan and Wagner were present at that meeting. Buchanan and Rawls also kept in contact through correspondence. Some of these letters were published in Peart and Levy (2008) and Levy and Peart (2020).
In this, Ashford and Mulgan follow Scanlon (1988), who discusses the authority of moral standards based on “mutual recognition,” which is used to characterize rightness and wrongness. Acts that are wrong are those that cannot be rationally justified in this way. Ashford and Mulgan (2018) suggest that “Contractualism supports the Kantian insight that we should never treat persons as mere means but always as ends in themselves. It interprets this Kantian claim as requiring that individuals be treated according to principles which they could not reasonably reject.”.
Johnson (2015) points out that the importance of voluntary exchange between individuals and the public sector was also recognized by the European continental tradition of public finance and plays an important role in Buchanan’s Public Choice theory.
Brennan and Buchanan ([1980] 2000, p.7), for example, declare: “The perspective that has become characteristic of the so-called ‘Virginia school,’ however, involves a blend of this Hobbesian view with the notion of social contract.”.
For Kliemt ( [1988] 1990), Buchanan’s (1987) book Economics Between Predictive Science and Moral Philosophy is very close to a Kantian’s intuition when he argues that human beings are part of two worlds: a noumenal, rooted in reason, and a phenomenal, rooted in nature. Kliemt (2005) says that Buchanan’s interest in designing institutions with desirable outcomes, even with a selfish and opportunistic homo economicus, is a shareable feature of Immanuel Kant and David Hume. In Kliemt (2011), he argues that Buchanan’s emphasis on using game theory to explain interactive decision-making is essentially Kantian. Additionally, Brennan and Kliemt (2019, p. 797) explain that, for Kantians, an individual imposes consequences on others through his or her actions only if they consent, or if his or her behavior is accepted as a general rule. Meanwhile for Hobbesians, individuals will ask for consent only as a means of reaching their own aims, acting in a generalized way only to the extent that it conforms with their own goals. In this sense, Buchanan’s defense of an unanimity rule would be supported by Kantian morality.
For Congleton (2014, p.45), what led Buchanan to become a contractarian is the joint combination of three principles: acceptance of the benefit principle, methodological individualism, and subjectivism.
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This study was financed in part by the Coordenação de Aperfeiçoamento de Pessoal de Ensino Superior—Brasil (Capes)—Finance Code 001.
We are thankful to Felipe Almeida, Lucas Casonato, Marco Cavalieri, Pedro Garcia Duarte, Peter Boettke, Rafael Galvão de Almeida, Roger D. Congleton, and Vinicius Klein for their valuable comments. Any mistakes or omissions are our responsibility.
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Mourão, G.N., Angeli, E. A classification of the methodology of James M. Buchanan from a multidisciplinary perspective. Const Polit Econ 33, 413–432 (2022). https://doi.org/10.1007/s10602-021-09359-1
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DOI: https://doi.org/10.1007/s10602-021-09359-1
Keywords
- James M. Buchanan
- Individualism
- Constitutionalism
- Contractarianism
- Constitutional Political Economy
- Buchanan’s Methodology