James Buchanan, the Nobel Prize winning economist and my former professor, has died at 93. There is much that one can say about him, not the least of which is that he was still intellectually sharp and active into his 90s. In short: he changed the face of economics and politics and advanced the cause of liberty as much as anyone in the second half of the 20th century.

Buchanan’s work changed political economy in fundamental ways.  Thanks to him and his colleagues, three things are true:  No one who wishes to talk responsibly about politics can be ignorant of public choice theory. No one should ever invoke the language of market failure (including externalities) without having digested his work on government failure. And people who run around talking about the constitution better be able to understand something of his contributions to constitutional political economy.

For readers of BHL, Buchanan, like Hayek, saw much of value in Rawls.  Buchanan too had the veil of ignorance/uncertainty concept and saw Rawls as having made an important contribution to liberal theory.  Buchanan’s classical liberalism was without question one where the concerns of the least well off among us played a prominent role.  Understanding public choice theory is indispensable for understanding why good intentions are not enough to make the case for government intervention.  If we want to understand why decades of government solutions have not been very successful at improving the condition of the least well off, public choice theory and Buchanan’s work is the place to start.

Beyond all of that, he was a role model of the old school scholar: widely read and properly skeptical of turning economics into an engineering discipline. He was, at bottom, a humanist and a liberal in the oldest and best senses of the terms. And best of all: he was utterly unimpressed by degrees from fancy schools. As he put it, he was one of “the great unwashed” and he instilled that spirit of refusing to kow-tow to his supposedly more credentialed superiors into the whole George Mason program.

I am very grateful for his work and his teaching and his modeling what a long and successful career and life looks like.

Rest in peace Professor Buchanan. The world is a better place for your work.

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  • Rick

    Just learning about Buchanan here, and trying to understand his “constitutional economics:” http://en.wikipedia.org/wiki/Constitutional_economics

    According to this Wikipedia link, “Constitutional economics mimics a traditional contractarian political economy in its focus on the contract, or consent, between the governed and government.”

    I’m wondering how Buchanan might reason that the individual is presently contracting/consenting to the actions of his/her government. Perhaps through our use of the central bank’s notes? If so, what alternative does the individual have?

    I have lots more to learn about Buchanan, but it seems to me that studying the U.S. political economy, which has largely been led by the Federal Reserve Corp. since the New Deal era, would more accurately be called “Commerce Clause economics.”

    At least this term would not give the impression that the entire U.S. Constitution has condoned the Fed’s agenda over the last several decades, and that the individual has other options, contained in the other Constitutional clauses, for withdrawing consent or putting it elsewhere.

    • j_m_h

      I”m not sure that your questions really applies, as I understand you asking it, to Buchanan’s work. Within the markets we certainly engage in bilateral contracts in our market activities. Money (an economic institution) clearly is an important aspect of our choices and actions as will the legal structure we act within.

      Casting those types of individual interacts into a constitutional setting think about what institutional structures people operate within while attempting to establish the rules which govern our social interactions. One of the distinctions he used to make was choices of rules and choices within the rules. The behaviors may well differ because we’ll have a different set of interests and different knowledge set that informs our choices.

      • Rick

        Thanks, I’m going to look at his “Limits of Liberty:” http://www.econlib.org/library/Buchanan/buchCv7c0.html#Foreword

        Chapters 3 & 4 seem to be about his conception of Constitutional and post-Constitutional contract.

      • Rick

        I like a lot of what Buchanan is saying, and it’s going to take awhile for me to fully understand his position, but as with most economists, I question whether we can assume that the Federal Reserve system, at least in its form while Buchanan was writing, was fully legitimate or “constitutional.”

        There’s lots of evidence cropping up from my research that while Congress has exclusive power over the coining of money, which power it cannot delegate, and while it also has a separate and independent power under the Borrowing Clause to create non-coined money in some circumstances, which power it *can* share with private banking corporations, Congress does not have the power to delegate the entire money creation process to private bankers.

        • j_m_h

          I don’t think you want to read everything Buchanan says on constitutional economics through the lens of the US Constitutions and Constitutional Law that flows from that document.

          Constitutional Economics applies to any political system — it’s an economic analysis of how a polity is constituted. From that perspective whether or not the FED is Constitutionally legal doesn’t really matter. It clearly exists and has an impact on how our markets and government functions.

          That’s probably a poor definition or description but gets near the center of the target I think.

          • Rick

            After a country decided on a constitution, “post constitutional” rules seemed to become very important to Buchanan, especially if the “referees” (the judiciary) didn’t understand or apply the rules consistently, which could lead to a Leviathan government. (Imagine trying to have a football game where the referees couldn’t agree on which player actions should be allowed or penalized.)

            After reading some of Buchanan’s views on taxation, however, I’m concerned that he doesn’t recognize what he calls a “labor income tax” as a currency-regulating tax (on the use of non-coin money substitutes) which does not depend on the Sixteenth Amendment for legal support, and which is not a direct tax on labor.

            This means to me that he doesn’t see a way to avoid the tax, so consequently he doesn’t question the legitimacy of the post-1963 Federal Reserve system, or the corrupt biased way in which that system allows money (property rights) to enter the economy.

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  • j_m_h

    This is the saddest news I could have expected to hear on opening the blog. My heart goes out to his family and his friends and colleges. He was a remarkable person and exceptionally gifted with communicating the core of an economic concept/issue in clear, easily understood language.

    He should be sorely missed by his profession.

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  • Christopher Morris

    - The Calculus of Consent, written with Gordon Tullock, is an important work, but I think The Limits of Liberty is more important for political philosophers with interests like this group’s. As Steve Horwitz notes, he was a humanist, but also, to my mind, an important political theorist.

    – Thinking about the recent debates on taxes, spending, and the budget I kept remembering Jim’s work on balanced budgets in the 70’s (he published a short book with Richard Wagner that is probably worth reading now). He could have taken little pleasure in the corrections of his predictions about the political or institutional dangers of deficit spending.

    – If one was not pretentious or a windbag, he was kind and very generous with his time, esp. the young.

    How sad to learn that he has left us.

    CM

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  • Ray Lopez

    Author says: “Buchanan too had the veil of ignorance/uncertainty concept and saw Rawls as having made an important contribution to liberal theory” – I’m sure the author knows more than I about Buchanan and Rawls, but Rawls American liberal proponents, as I understand them, use the “veil of ignorance” to claim that since most people are risk adverse (and statistics show this true), they would opt for a socialist agenda more so than a laisse faire agenda if confronted with a veil of ignorance.

    • Christopher Morris

      Two points:

      – Technically, agents in Rawls’ original position can’t be risk-averse as they have no knowledge of probabilities. But you’re right to think that Rawls thinks his original position is constructed in such a way as to yield principles that favors the least well-off and that rules out classically liberal alternatives.

      – Buchanan was (often) hostile to what philosophers call “realist” conceptions of moral value (e.g., natural law or rights) and favored constructivists accounts of rights and obligations. This made him sympathetic to Rawls (Gauthier and others) but not to Nozick.

      • j_m_h

        “But you’re right to think that Rawls thinks his original position is
        constructed in such a way as to yield principles that favors the least
        well-off and that rules out classically liberal alternatives.

        In the last bit are you saying that was what Rawls thought or saying that rules limiting how bad a person’s lot can be does rule out the classical liberal alternatives?

        • Christopher Morris

          Good question. I was saying that Rawls thought his construction rules out classical liberalism. Most interpreters seem to think it does. Hayek thought it didn’t, and Buchanan has an interesting article in the 70s which argues it doesn’t (roughly). But I think the consensus is correct, that the way the Rawlsian framework is set up, it legislates against classically liberal positions. Nozick seems to be right about this.

          But one can tinker with the Rawlsian framework, and abandoning some features will make a big difference. Gauthier’s bargaining model, as well as Buchanan’s, yield results more congenial to classical liberalism.

          Is that helpful?

          • j_m_h

            Quite helpful. Thanks.

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