by Don Boudreaux on August 5, 2017

in Myths and Fallacies, Virginia Political Economy

In doing research for a paper that Roger Meiners and I are writing on the concept of externalities, I’m reading Externality and Institutions, a 1994 book by University of Athens economist Andreas Papandreou (the son of Greece’s former socialist Prime Minister).  Here’s Papandreou [pages 55-56] on Jim Buchanan’s and Gordon Tullock’s 1962 book, The Calculus of Consent [original footnote]:

This book was an important contribution to what is today known as the field of public choice, often described as the application of economics to political science. [43]  In contrast to the organic view of the state which seemed at least implicit in most economic analysis, Buchanan and Tullock presented a contractarian theory of the state.  They present an argument as to what the state should be.  Agents are supposed to decide what activities should be private and what activities should be subject to collective choice, and what kind of collective-choice rule should be used.  To avoid the infinite regress implicit in questioning how agents should decide, it is presumed that agents begin in a kind of Rawlsian veil of ignorance, wherein decisions about the constitution are taken under the rule of unanimity.  This affords some normative weight to the emerging constitution.  What state or government functions should exist will be an outcome of such a hypothetical process.  Traditional explanations of the division of public and private domain consider the question from the vantage point of an omniscient person that tries to correct the existing market system, or tries to form some voting rule that will maximize a social welfare function.  Buchanan and Tullock, on the other hand, ask how agents in a veil of ignorance might agree to subject certain activities to collective-decision rules.  Rather than considering how an ‘individual’ can be offered incentives to help the aggregate, they look at how the aggregate through a kind of market will generate the decision rules for the aggregate.

[43] According to [Dennis] Mueller (1989), public choice took off as a separate field around 1948, with the seminal works of [Abram] Bergson (1938), [Paul] Samuelson (1947), and [Kenneth] Arrow (1951).

Andreas Papandreou, I’m sure, is no libertarian.  But he’s a sound economist and scholar.  How different is his perceptive portrait of both the motive and substance of Buchanan’s and Tullock’s scholarly endeavor from the distorted cartoon fable told by Nancy MacLean (in her error-stuffed embarrassment of a book, Democracy in Chains).  Papandreou understands – and appreciates – the institutional and methodological perspective taken by Buchanan and Tullock.  Nowhere in his treatment is there any sense that The Calculus of Consent is a tome written to further a racist and oligarchic agenda.  Of course not.

And note also Papandreou’s footnote.  If Dennis Mueller is correct (and Mueller’s claim is quite plausible), then public choice really began, or was sparked, before Jim Buchanan published his first article – and it began with works by three scholars none of whom anyone would remotely begin to mistake for a free-market libertarian (and much less for a racist toady for oligarchs).


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