PRC Forum: James Buchanan (U1026) – Full Video

PRC Forum: James Buchanan (U1026) – Full Video

Music Reality Captured in user friendly symbols and processed for understanding. Music The Idea Channel I’m Jim Buchanan. I appreciate this opportunity to talk to you awhile about my ideas generally. And I should stress at the outset that I am a man who deals in ideas. That’s my line of country, so to speak. You don’t find me out riding on a white horse proposing this or that policy in any direct political action sense. I like to work at the level of fundamental ideas about our social order and the structure of our society. And although I was awarded the Nobel Prize in economic science I really consider myself more of a political philosopher nowadays than I do an economist. I start from a set, of course, of fundamental value presuppositions in which individual liberty is extremely important to me and it’s important to me how people do organize their social lives. And I like to think that the ideas that we have developed in public choice, which is the research area with which I have been associated, or really a version of old-fashioned political economy, how this has, perhaps, modified people’s attitude toward politics and economics and other aspects of their living together over a period of the last three decades. So, essentially, that’s where I’m coming from and perhaps it’s good to tell you that at the outset. Well, Jim, does that mean that your primary interest is in process and not the outcome? Oh very much so. I’m strictly oriented toward the processes by which we govern ourselves or by which we interact one with another in our social organization. I think economics, in particular, has gotten itself off on the wrong track methodologically by concentrating on outcomes or results, allocations of resources, the distributions of income and so forth. Whereas what’s far more critical- and really the only thing we can change anyway- is the process by which these outcomes emerge that hence my emphasis has always been on sort of rules, structures, organizational aspects of economics and politics rather than on particularized results. Well you’re not indifferent to the outcomes? You’re simply saying that as a professional you choose not to deal in that area. But personally, I assume, you certainly are not indifferent to outcomes. Well that’s a complex question and let me try to go through a little bit of how I might answer that question. Obviously we’re interested in particular outcomes, but how do we judge an outcome to be desirable or undesirable which might attract our interest either positively or negatively? The way we do that is how we arrive at that outcome. I’m not interested, for example, in observing someone to be trading apples and oranges; and worried about the particular outcome or the particular allocation of apples and oranges that will emerge once they are allowed to trade. My evaluation of that process is basically on the process itself. If I observe the two of you going out and trading apples and oranges, and if I don’t observe fraud on the part of either party, and I observe that you’re respecting the initial endowments of each other and that you’re trading- then whatever emerges is desirable. We say an outcome is desirable because that outcome was reached by a process which we evaluate. We evaluate the process rather than the outcome. That’s the distinction- it’s sometimes a subtle a distinction to make- but I think it’s a critically important distinction. But you did indicate a commitment personally to liberty… now you therefore- liberty in that sense is not an outcome, it’s an existing state. Is that the distinction? Well you start- liberty becomes important because you start with the acting units…namely individuals. I start with both a position of methodological individualism and non-individualism. That is, individuals exist as units of consciousness and that’s where we start. That’s the fundamental starting point. There is nothing other than individuals in my lexicon of values. Values find their sources in individuals. We don’t get our values from some transcendent ideal that is independent of individuals. There is no good, the true, and the beautiful out there in the sky or from God or from reason or from the Greeks or anything else. These come from us as individuals; and we start as individuals; and they are the basic units of consciousness; and that’s the only way to start in my view. Now I agree that’s different from classical, political philosophy in many respects. But fundamentally, if you take an individualist position it does seem to me that you were led more or less directly, if you think about it, toward evaluating all of the interactions of one individual with another in terms of the processes by which individuals operate and of course liberty, individual liberty, almost is a necessary starting point in that approach. I want to take you back in time quite a ways; and when Jim Buchanan was in high school. Was he at that point in time in any way sensitive to the concept of individualism? Was that something that you grasped that early in life? Well I think I was always a very strong individualist in the nominative sense. I was a socialist at that time during my high school and college days…more or less a populist. I didn’t understand- had no understanding at all- of how the economy works or how the market works. I’ve often referred to myself during that period as a libertarian socialist. Now that may seem like a contradiction in terms, but I don’t think it really is. I always place a very high value on individual liberty, but I didn’t understand how the market operated and so I thought somebody had to make economic decisions for us, and it was probably made by an establishment in Wall Street; and therefore I thought it might be better if we had democratic decision-making for the economy. And once I came to understand how the economy worked I flipped over very quickly from being a libertarian socialist to being a strong advocate of the market, allow the market to work, but the libertarian or liberty aspects of my thinking has been consistent throughout. You were raised in Tennessee? Yes. Is it correct to say you were a Tennessee farm boy? Very much so. I understand the Buchanan name has some political history in Tennessee. Well it has political history in a fairly limited sense. My grandfather was elected governor of the state of Tennessee in 1891. He served a two-year term, but he was elected as the nominee of the Farmer’s Alliance Party. The only time the populists ever had won a governorship in the state and they only won it for two years and then they were kicked out by the democrats. You see it was an interesting period, historically. In 1891, I think there were six states that elected populist governors. Now these populists were called different things in different states. In Tennessee it was called the Farmer’s Alliance Party. In some states it was called the Populist Party. In other states it was called the Grange. But six different states elected governors that year and this was an off-shoot of the regular Democratic Party establishment. Within two years the regular Democratic Party had got its house in order and the populists no longer were dominant. But so my grandfather did establish sort of a political aspect of my own background and I grew up in the shadow of his having been governor. I grew up in the old house that he operated from when he was governor and so forth. Buchanan is Gaelic. Do you have any particular feeling of affinity toward the Irish and Scots? Well yes. The whole racial or ethnic background, my own, is strictly what they call Scots-Irish. I’ve traced it back or people have traced it back for me. It originated in Scotland. The Buchanan clan is a relatively small clan that comes from near Loch Lomond, north of Glasgow. And apparently my forebears left Scotland and went for about a hundred years in northern Ireland and then made the big migration- along with so many others- from northern Ireland to the United States in the mid-eighteenth century and my own ancestors came around and were among the first settlers in middle Tennessee, settled a place called Buchanan Station on the Cumberland River near Nashville. Some of the same group, same family settled in Pennsylvania and there are three or four generations down the road- President Buchanan out of that group. And another part settled in Virginia and, of course, you find Buchanan as a common name around Virginia. So I do have some sympathy for the Scottish aspects and certainly my values generally lead me to be very strong in favor of the Scottish Enlightenment philosophers. That’s why I was going to say that your work certainly pays a high respect to fellow Scotsman Adam Smith. And David Hume. Yes and David Hume. When did you first encounter Smith and Hume in your intellectual endeavors? I’m not sure of that question. I did take a course, I believe, in the history of the economic thought in my master’s program, but it didn’t have much effect on me. But Frank Knight, who influenced me so much along with everything else, did teach a course in the history of economic thought at the University of Chicago in ’47… I guess it was. And he spent all the time on Adam Smith, and I guess it was really Frank Knight again who introduced me to Adam Smith. The deer and the beaver, Adam Smith’s deer and the beaver, the simple exchange models were very important in Knight’s teaching and that had a big influence on me. How much of your career would you credit to chance occurrences as opposed to well-planned out steps? Oh, I think a great deal. I could think of many, many particularized events. For example, I’m an economist by strictly fortuitous circumstance. At this little undergraduate college I went to, Middle Tennessee State Teacher’s College then, I accumulated three majors: a major in mathematics, a major in English literature, and a major in social science. They didn’t have enough courses to call it a major in economics and then given the employment opportunities at that time in 1940, the best deal I could get was a fellowship. And the fellowship happened to be in economics. And I went off to the University of Tennessee to become an economist strictly because that’s where our fellowship money was. Had it been a fellowship in mathematics or in English literature I surely would’ve gone in that direction. And further in my college career itself, I only was introduced to physics in my last year in college, but I was very excited about theoretical physics; and had I started earlier in physics, I don’t doubt that physics would’ve been my interest because that was just fascinating to me. There’s a certain sense in which that reflects or demonstrates some of the principles you’re very interested in. Isn’t it a fact that the marketplace works in some ways that are very difficult to discern in advance? I’m not sure. I’ve never thought about that connection. That’s possibly that, that does play a role. I’ve always been willing to be very skeptical of detailed plans that work themselves out. I think you have to leave a lot for sort of an order that kind of emerges or disorder or whatever emerges. I guess it is true that I’m influenced a good deal more by happenstance, by accident. Maybe that’s the reason that Frank Knight and I shared a love for Thomas Harding’s poetry. One of the many aspects that had nothing to do with economics that Frank Knight and I have found so congenial when we talked to each other. Well you’ve mentioned on a couple of occasions now…and you did your graduate work at the University of Chicago…I want to ask you a real tough question. Do you have any sense as to why the graduates from the University of Chicago have been so influential in economics? Well, let me say something about the University of Chicago in general first. I did not go to Chicago for graduate work after the war because I knew anything about the economics department…given my socialist’s leanings, had I known, I probably would not have gone. I went to the University of Chicago because an undergraduate political science professor of mine- who had recently taken his Ph.D. at Chicago in the 30s- conveyed to me the sense of intellectual excitement of that university… and so I chose to go there. It turned out to be the best decision I ever made because I still argue that there is no place in the world that even is remotely comparable to the University of Chicago in the sense of the intensity of its intellectual interest, intellectual curiosity. And this cuts across the departments. It applies to the whole university. It is a university that is unique in the sense that people respect and search for ideas. And whether it was economics, whether it was philosophy or whatever it might be, Chicago just conveys something. Maybe it’s because it is situated in a situation where it is not a very healthy, very pleasant climate or it’s not a very pleasant city to be in, in some respects. It may be that, but the intellectual activity at Chicago is just intense. So anybody who goes to Chicago sort of comes away with the impact is you work on ideas and ideas are the things that matter. And I don’t think you find that in any other place in the world. I think there are too many other distracting elements in most places. Chicago, by comparison, was say the eastern establishment university. Harvard is much more interested at a level of fundamental ideas. It is not interested in going to Washington and saving the world quite so directly. The notion is that ideas matter by comparison of the California universities for example- there are not nearly so many distracting elements that keep you away from working on ideas. And it has a brashness about it. It is still a revolutionary idea, intellectually, at Chicago. It’s a young university relatively speaking. You don’t have all the crusted traditions of an Oxford or a Cambridge. So, all those things really helped to make Chicago a kind of an intellectual ferment that simply doesn’t exist anywhere else. Now to get to the question about economists, I think, again I go back…it might be fortuitous. There might be just accidental circumstance that they had brought together a very exciting set of people commencing in the 1930s with a particularized conception of the way the economy works. And again I attribute the dominant, intellectual influence in that period to Frank Knight. Although with Frank Knight you had men like Henry Simons, Aaron Director, Lloyd Mints and then later, of course, Milton Friedman. But the really original people in the so-called Chicago school were Frank Knight and Simons and Mints and Director. And they put an impact on the way a lot of generations of graduate students who went through there thought about the economy and equality worked. And, of course, those students- students of those people: Friedman, Stigler, Buchanan also have had an impact on a few hundred other students and that ferment continues. You’re suggesting that anyone today looking for intense, no-nonsense, intellectual exploration…the University of Chicago is the place to go. I would say that’s true generally. That’s true generally across not only economics but in general; if you’re really are interested in ideas- you go to the University of Chicago. I think some of us who went through the University of Chicago earlier on have sort of deplored some changes that have happened at the University of Chicago. It has become more like other places, maybe necessarily so, but I still think it does convey an intellectual ferment that simply doesn’t exist elsewhere. As an individualist, Jim Buchanan constantly must confront the desire on the part of the media and the part of other people for labels. And the labels that are constantly thrown out are conservative and liberal. When you’re asked the question where do you put yourself, how do you relate to conservative and liberal as an individualist? Well that’s always a difficult question. I appreciated Hayek’s piece that he wrote a good many years ago why he was not a conservative. I sort of shared with him that position. I don’t like the conservative label, where most of us who take kind of what would be called an anti-government or anti-state view are put alongside the conservatives for that reason alone. But certainly we don’t share the sort of most aspects of the conservative tradition. I’m happy with the classical liberal tradition. I’m closer in the American context to a libertarian than I would be to a conservative. Certainly I’m a long distance away from the American liberal position which is really a socialist position. In terms of a more careful classification, I call myself a constitutionalist, then I call myself a contractarian, a sort of constitutionalist contractarian position would be more precise. But if you want to stick to a sort of more general, more generally recognized labels I would say a classical liberalist is perfectly appropriate. In your work you describe yourself as profoundly individualistic in a methodological sense. Would you give us some idea of what that means? How do you approach economic problems then? Well I approach, as I said earlier, I go back and start with- individuals are the basic units of consciousness, biological individuals. We start with individuals and that’s the only source of evaluation. We don’t have something that’s an organic entity called society or community or the economy or the polity. Those things are simply associations or organizations of individuals. Individuals organize themselves for purposes of achieving certain things. Now you fudge that a little bit when you say, well maybe the family is really the unit rather than the individual and we do have a sense that we really belong to a family. But in part progress has been made by us becoming more individuals as autonomous beings. That had to be invented. I don’t think many people recognized that, but that had to be invented. The notion of the individual has separate and apart from the group to which he belongs. And that is a major invention in the history of our free society I think that we owe in part to Spinosa and to Thomas Hobbes. Of course, the idea of the individual existed before that, but somehow has an autonomous source of evaluation, not necessarily a part of an organic unit. So if you start with an individual then how do you start talking about economics? You start talking about individuals. You start talking about what they have as an initial set of endowments and a set of preferences; and you start talking about trade. How they might mutually gain. The simple starting point of economics is individual traders as the Austrian economist Bohm-Bawerk emphasized. You start with traders. You don’t start- and this is a very important distinction here- you don’t start with allocating resources amongst uses, you start with two traders with different goods, different preferences and you talk about how they might mutually gain from trade. Where you start economics and the way you start economics is thinking about apples and oranges and A & B trading…or Crusoe and Fry trading…you don’t start with Robinson Crusoe alone allocating his time between getting coconuts and getting fish. Now that very simple difference in starting point has profound implications from the way you approach the whole subject matter of economics. You don’t build up and get more and more complex into more and more fancy mathematics in which you talk about maximizing the value that you get from an allocation of resources in a whole economy. You don’t get a mathematics of maximization. What you get is a mathematics- if you go more and more technical- a mathematics which is the mathematics of the interaction of traders or of players. I’ve often argued that if you are going into complex mathematics…and complex mathematics can be great help…it’s basically game theory. It’s the mathematics of game theory is the appropriate mathematics for economics not the mathematics of maximum and minimum. So in a layman’s sense you want to bring human beings back into economics. Is that a fair statement? Well I don’t think they’ve necessarily got out of it all that much, but certainly that would be appropriate. I don’t object to that statement. Well, in this sense, you are not happy with macroeconomics. You feel that’s misdirected. Oh yeah, I don’t think it has any meaning. The fundamental building blocks of mathematics are meaningless. There’s a word on the blackboard behind you, I believe it’s pronounced “catallactics” and as I understand it that has something to do with this point that you’re making. Yeah, catallactics was defined by someone early on as the science of exchange or I would extend that a little and say the science of exchange and contract. It seems to me that’s what economics ought to be… or that’s what our subject matter ought to be. Admittedly etymologically, economics as a word comes from the Greek which does mean household management which does suggest the maximizing type of- or allocating type of emphasis. But it seems to me what our approach ought to be, it ought to be a study of how men and individuals from very simple to very complex patterns of organization, how they enter into voluntary exchanges one with another. How they make contracts. How they reach agreements. Hayek has called this “catallaxy.” He argues that, that’s somewhat more appropriate etymologically than catallactics. Some of the early proponents of this view in the 19th century called it catallactics, but certainly it’s a nice way of thinking about what ought to be our primary subject matter, namely an emphasis on the exchange process. And it’s very simple all the way up to its very, very complex organizational structure, not only in the private economy but also I extend that to politics and conceive politics basically as complex exchange, in which you all enter into organizations to try to exchange with each other to get what we want, and commonly share in terms of the benefits of political order. And, of course, this meshes and merges directly into the contractarian tradition in political philosophy. So I think economists who can take this catallactics perspective, once they start thinking about politics a little, automatically become sort of contractarians in a sense. Well the uniqueness of your work as I understand it is in: one- in advocating that exchange rather than allocation be the focus of economic endeavor, but primarily the application of these concepts to government, is that correct that you are in a sense the person who introduced that discipline, if you would, to economics? Well, in a sense, that’s true. It’s extending the economist’s approach to political process. Now as I said earlier, the contractarians basically were doing that. John Locke was doing that to some extent. Hume, although not normally called a contractarian, did that to some extent. Clearly Spinosa did that. Hobbes did that to some extent. So this was implicit in a lot of the classical contractarian works in political philosophy. But then we shifted away from that and we got this rather categorical and unfortunate separation between the economy and the political sector. And there was an attempt in the last part of the last century amongst European scholars to try to extend economics. They got very excited about the developments in economics after 1870. And so they tried to extend this to apply to the public sector, the governmental sector. But that had practically no influence in English language economics; and English language economics dominated economics especially through the influence of Alfred Marshall in Britain and then, of course, the dominance was taken over by the United States in the middle part of this century. Now my own particular contribution, really, was stimulated in a large part and it goes back to earlier question about how much is fortuitous, how much is accidental… It goes back to my rediscovery and promulgation of the ideas of this great Swedish economist Wicksell, who was one of the ones in the European tradition- and by far the best one- who made this attempt to extend economics to apply to political process, or to apply to individual choices as they make political decisions. He wrote a book in 1896 which is really his dissertation- that I just by pure chance discovered in the stacks at the University of Chicago library in 1948- that no one had ever mentioned the book. It has not been translated. It was written in very difficult German. I just happened to find the book purely by accident, picked it up, started reading it and as I said in a little autobiographically essay it was as if the scales fell off my eyes, because here was a man who was saying very clearly things that I had sort of developing in my consciousness, but could not have articulated or would not have dared articulated in the mindsets of that time had I not had a man like Wicksell saying it for me in a way; and immediately got excited about translating and promulgating these ideas. And so I think Wicksell who did try to do this really and unsuccessfully, really was a dominate influence on my own thinking. And starting with that, my first piece that I published in 1949 was really a call upon my fellow economists- who tried to specify at least what model of politics they were using before they started talking about economics as applied to policy. And that, of course, starts my own work in this area of public choice or the sort of a shift of the methodology and approach of the economists, especially the economists who concentrate on exchange over to try to see what we can say about political process. Why is exchange so important in a study of government? Well, ultimately, if you start with, this goes back to the individualistic position, if you start with individuals there is no such thing as a collective. There’s no such thing as a government independent of individuals who make up the government. So if you really try to factor a government down, you really try to factor politics down. What is it? It’s simply the institutions or the agencies that we, as individuals, somehow invent, we design, we lay on for the purposes of getting for ourselves things that we cannot get efficiently through a private sector. In a sense, government precedes the market in a sense that as Adam Smith quite properly emphasized. We must have laws and institutions which protect our property as Hobbes emphasized. You need somebody to say what is mine, what is mine before we can start trading. And so we basically have government as prior to the market. Now what is government? It is an institution which is to help us to get what we want and how can we give that government or that political structure in a legitimacy. The only legitimacy that it has is found in some ultimate kind of agreement that we agree to establish such an institution otherwise there’s no legitimacy for the whole political structure. It doesn’t exist independently of individuals. So in a contractarian sense, government is derivative from the agreement of individuals and so it’s analogous to exchange. We agree to turn over to some individual which might be selected through some processes the power of government and power to make decisions for us and so basically it all goes back to an exchange, a starting point. And from a constitutional contractarian point of view your concern is the rules of the game? The institutions of government are, of course, defined by the rules. I like to think of the game analogy. It fails in certain respects, but I don’t know anything better that we describe the institutions in terms of the rules under which individuals behaving as agents under those institutions operate. And the whole emphasis is upon the rules- which, of course, brings me back to the constitutionalist aspect of my position. Can you give us an example of a change that you feel might be beneficial? You mean in the current — In the current context, in the contemporary — Well yes I, as I said earlier I do not get myself into positions out-front advocating this or that policy change within the context of the existing rules. My emphasis is on the rules by which ordinary politics operates; and if we’re going to get reform we need to get reform in the rules. I learned that from Wicksell. Wicksell concentrated on this. He said if you’re going to get improvement, don’t look for improvement in electing this or that better politician who, after all, are going to be directed by the interests of their constituents. You get better results if you look at the process and change the rules and incentive structure for the elected politicians. So my emphasis has always been constitutional in that respect. And I can point to a direct aspect of current policy interests in the 80s. That seems to me a fairly direct implication of my position and this is, of course, what the media has picked up since my award of the Nobel Prize almost exclusively. And that is my support for and advocacy of a constitutional change, a constitutional amendment if you will, to require that the federal government balance its budget. It seems to me that we have a very seriously flawed procedure. We have an absence of a rule that requires our political decision-makers, our legislatures, our congress, to pay for what it is willing to spend; and it seems to me this is a procedural question that the congress for ordinary goods and services to be supplied by government should be required to finance through taxation what it is going to spend. Now classical, political economy did allow for the issue of public debt or deficits to finance wars or to finance genuine capital outlay, but through two hundred years there was hammered out these principles of public debt issue. Nobody would’ve with accountants spending for ordinary publically-supplied goods and services by issuing debt. And as you know, we’ve been running a regime of permanent and accelerating deficit financing now for a long time. And clearly it seems to me that’s a structural change, procedural change, constitutional change, if you will that is needed and needed very badly right now. There’s another example of your interest and focus…the question of the division of power within government and the concerns that we’re seeing expressed now relative to whether congress should be in foreign policy…what’s the range of the president’s authority…are those the kinds of questions at a constitutional level that you feel should be dealt with? Perhaps some of those are political rather than economic. Yeah, that’s correct. I’m not an expert in some of those, but those are certainly the types of issues that do concern me and which attract my interest. I think that we are unique in this country and that we do have a set of documents which reflect, studied by men who were good political philosophers in their own right and influenced a great deal by the classical, political philosophers. You find the influence of Locke and Montesquieu and Hume and others are more or less explicit in our constitutional documents. And we have got away from that to some extent although I think the American history and American tradition still embody elements of that that need reinforcement and need continued reinforcement. I think there are several aspects that are very important. You mentioned division of power, separation of power, checks and balances. There are two aspects of that that are categorically different. One aspect of that that I had worked on in which motivated me a lot in the early part of my career in particular- is the division of power between the central government and the state governments. That has been lost to our thinking. We now almost go to the central government for everything. I suppose since we fought the Civil War that was more or less the necessary outcome that the federal government was going to be dominant. Although, I think, the courts have simply gone out of bounds in assuring central government dominance; essentially a judicial history of judicial interpretation that cannot be justified on any ground. Right now as you suggest, the whole problem of division of power between the executive and the legislature with respect to foreign policy has emerged as a very important issue. And I’m not an expert on that, but on the other hand, I do think we need to get away and be sure we don’t be trapped by this sort of idea that comes across to us from regimes of parliamentary democracy where the legislative branch is necessarily the supreme branch. I think the tendency on the part of many political scientists in particular- and certainly understandably so- people who defend the congress is to try to somehow make the legislative branch supreme, but our government is a division of powers between the three branches and to the extent that we’re going to remain a viable political entity I think we have to keep that in mind. Isn’t government primarily a coercive activity? Necessarily a coercive activity. I think if we start from…we must keep that in mind…let me be careful here. We must keep in mind that, that part of our lives that are organized through government is necessarily a restriction on what we can do. As I argued in my presidential address to the Mont Pelerin Society last year, which I call “Man and the State” every extension of the state’s reach over us amounts to enslaving us, because we are slaves to the state to the extent that the state does things that coerce us. We must, in fact, live by what the state dictates are. And that, of course, has the normative implication for me, anyway, that we should try to minimize those outreaches of the state over our lives. Now that’s not, however, to go all the way with the anarchists. In a certain sense I am a philosophical anarchist as I’ve often argued. But it’s not to say that the coercive activity of the state is not necessary in many cases. It seems to me that there is an absolute minimal essential program of governmental activity that must be carried out and must be coercive. I don’t agree with Murray Rothbard and the libertarian anarchists that the market will take care of all governmental functions; it certainly would not in my view. The government must provide the order regime in which we live. Now we can argue about how far beyond that sort of minimal state or protective state or night watchman state. We might argue as to whether or not there is an appropriate role for other aspects of government beyond that. But it’s because it’s coercive that we want to minimize it. On the other hand, because it’s coercive it does not in and of itself mean that there may not be a role for that. But the key here is to try to derive a legitimacy of the coercive extent of this state from some kind of basic consensus or agreement amongst all those who are coerced. You’ve offered what I think is an interesting division of labor between the political scientist and the economist and one that kind of surprised me, because I always thought of the economist as an outside critic of government. And you’re suggesting, it seems to me, a different division of focus that the exchange function should be looked upon within government and it seems to me you’ve suggested political science devote themselves to the coercive aspects of government. Well that’s been the way I like to think of it. You see if you start the way I did and I’ve already suggested that you can extend this kind of exchange notion conceptually. To politics as well as to the economy there’s really no dividing line. It’s the voluntary exchange aspects whereas political science might perhaps be- there’s also power aspects and this applies to the economy as well as the polity. In almost every relationship there are two elements. There’s an element of exchange and there’s an element of power or in other words…there are cooperative and conflict. Even in an ordinary trade there are aspects of cooperation in that trade, but there are aspects of conflict too in the sense of who gets what…how do we divide up the spoils? So the conceptual dividing line should be sort of between the conflict elements and the cooperative elements. The catallactics approach or the approach I take, the exchange approach, contractarian approach, sort of emphasizes the cooperative aspect whereas there is room–call it political science–call it what you want–for the concentration on the conflict aspect. One of the problems is the question of majority/minority, is it not? In other words, in the sense of a contract between individuals and the government to provide service, the coercive element comes in regarding those in the minority who do not agree to have government perform that function. Yeah, and that gets back to the fundamental constitutional limits. It’s critically important, I think, to have the range and scope of political activity clearly defined in the Constitution. Now there may be activities that, in which- where we must allow for simple purposes of getting decisions made- in which we must allow majorities to decide for us; majorities in legislative assemblies to decide on this or that policy. But if we don’t put any limits or don’t put the appropriate limits on what majorities can do, then you’re likely to get a situation like we have now in which we observe, namely in which majorities in the congress can simply impose cost on various sorts of minorities all the way across the board without much apparent limits. We come close to being now in what my friend, Tony de Jasay, in his fascinating book published in ’85 called The State. He classifies different stages of development and he calls the stage of development the “churning state.” What he means by the churning state is where different majorities simply pass legislation which take funds away from the general taxpayer and give it to particularized groups. So one majority will join up to tax us to finance this program and another majority will organize- another majority coalition will organize to finance that program and you get everything going just churning about. Nobody will gain from all this redistributive activity, this transfer of state activity that’s going on. Everybody loses, but yet it continues. And in one sense, that’s because we have not properly kept the government within bounds. We have not kept legislative activity within the constitutional limits. And of course, if you’re rewriting the Constitution, we ought to go back and really restrict, and restrict very severely, the range and scope for the activities of legislative majorities. Do you associate your views in a general sense with the efforts of the Founding Fathers? Was their effort in forming the Constitution in line with what you feel should be the emphasis of economic concerns in government? Oh I think I’m very closely associated with what I like to think was the Founding Fathers. I don’t think my position is really very different from James Madison’s position. And I think he comes closer to really representing what was behind the thinking of our Constitution than anybody else. I associate myself very much with that. I think that this tradition has been grossly neglected. I think in a lot of this rhetoric about the bicentennial of the Constitution is rhetoric in reverence for sort of the documents that exist as they have been interpreted rather than going back and really trying to work out what was the notion that Madison really had in mind–and we’ve gotten judicial interpretation. We’ve gotten the history that has gotten away in many respects from that tradition. But I would associate my position very closely with Madison’s. Well why has it taken so long for this approach to be popularized? In a sense it has been given very little attention, at least in this century, until the Center for Public Choice came along. Well I think you need to look at several reasons for this. First of all let me say this; I do interpret public choice- in my own work in it in particular- as being a little more than a rediscovery, an elaboration and articulation extension of the ideas- basically the Madisonian ideas. That’s what Tullock and I thought we were doing when we wrote The Calculus of Consent in ’62…which has turned out to be kind of a classic in this public choice theory. We’ve subtitled that “The Logical Foundations of Constitutional Democracy.” We were spelling out, more or less, what we thought Madison had in mind when he spelled out the Constitution of the United States. Now why did we have this sort of gap in our thinking? I think this dominated the thinking of the Americans generally, United States citizens generally, and then those who were in the intellectual establishment, those who were in politics for at least a century after the foundation of the Constitution. I think you begin to get some erosion in that set of ideas with the progressive era. Some people attribute a great deal of source for much that has happened in this century. Much of the loss is what I like to call the constitutional wisdom. Much of that is dated by many people- especially some of my economist historian friends- to the progressive era around the turn of the century. You got this accentuated and developed further by the developments in the New Deal as a reaction to the Great Depression. We forgot about limits in the Great Depression and partly with some legitimacy, because there was an urgency of a need to do something. We totally neglected constitutional limits. We wanted to throw the Constitution overboard. We changed our whole structure of governments as a result of the New Deal and that has sort of got enshrined into court decisions and so forth. There are also ideas in the academy amongst intellectuals. There was very little attention paid to fundamental, political philosophy for nearly a century. You had the influence of the idealist political philosophers in Britain that was coming along that really dominated this sort of thinking. In economics it was essentially utilitarian ideas. So there was kind of a hiatus in political philosophy intellectually. This, along with the developments of the New Deal and post New Deal… the time was ripe to get back. And so you’ve had this along with public choice, some of the work that I’ve been associated with. You got a rebirth of political philosophy. Jack Rawls wrote The Theory of Justice in ’71. Bob Nozik came on board with Anarchy, State and Utopia in ’74. So there’s been kind of a re-flowering of fundamental political philosophy in the last two or three decades along with the development of public choice. So in one sense it was a natural outgrowth of just getting out of this gap in thinking. Could the United States survive a major constitutional revision? Well a major constitutional revision, perhaps, would never occur in a setting that is ongoing such as we would have. We had major constitutional revision only in 1787 where we were starting up fresh- more or less- even then we weren’t starting up fresh. We had the tradition of the English common law and a lot of tradition that was embedded in our constitution. Whether or not we could really have a major constitutional revision of that sort I think it’s very doubtful. I think the constitution exists, the rules exist; the game is being played. The problem is how do you change the rules while the game is being played? Now I’m not one of those who accept that you can’t really change the rules. That the rules evolve and we can expect and hope that good rules will evolve. I’m not at all of that sort. I think we can continuously re-evaluate. We can continuously look at rules and try to say these are working reasonably well, these are not working so well, let’s try to move, let’s try to change around the edges. I think as I’ve already suggested that right now, we’re critically in need of some fundamental changes in our constitutional structure. We need a constitutional amendment to require that the budget be balanced. We also need something done in our monetary constitution. The Constitution- our established Constitution gives the power to coin money and regulate the value…we have never lived up to that constitutional responsibility. We need to specify our monetary structure much more carefully than we have done. There are other areas that we can work on. It’s not a question of a constitutional revolution that is needed so much; it’s a revolution in our thinking about the constitution that I would like to see us move forward on. Well as I turn this tape off and leave, as a citizen, is there anything I can do to influence those changes? Well I think what I stress- what I try to stress- try to understand the distinction between constitutional rules and operation within the rules and try to think about the value of having checks and balances, restrictions on the power of our politicians. That’s the thing I would leave you with.

4 thoughts on “PRC Forum: James Buchanan (U1026) – Full Video

  1. This man is my favorite (political) economist. He has written many great books and papers that anyone interested in public choice theory has to read in order to understand it clearly.

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