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Quotation of the Day…

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… is from page 40 of my late Nobel-laureate colleague Jim Buchanan [2]‘s 1982 article “The Related but Distinct ‘Sciences’ of Economics and of Political Economy,” as this article is reprinted in Moral Science and Moral Order [3] (2001), Vol. 17 of The Collected Works of James M. Buchanan [4]:

The raison d’être of natural science is to provide knowledge and to control natural processes. Most economists believe that they should practice economics in the same manner, i.e., accumulate knowledge of the behaviour of men and of the economy that enables the powerful to control other people’s behaviour with increasing efficiency…. [I]n doing so, economists forget the moral basis of their science and thereby miss the raison d’être of economics. The true purpose of the distinctive “science of political economy” is to design alternative legal structures and to evaluate their potentialities in enhancing efficiency in the exploitation of the mutuality of advantage.

DBx: I love Jim’s insight here that the scientistic cast of modern economics conveys the false impression that that which even the best economists discover is knowledge that better enables ‘efficient’ social engineering.

But I pick a nit with Jim’s use of the term “design alternative legal structures” to describe what he, Buchanan, believes to be among the true and valid purposes of economics.

Economics done well and with wisdom can assist us (1) to better understand why existing legal structures have evolved as they have evolved, (2) to evaluate more fully the range of consequences of any interventions into those legal structures, and (3) to conceptually compare the likely long-run consequences of one ‘kind’ of legal structure (e.g., socialism) to other kinds of legal structures (e.g., a regime based largely on private property rights and freedom of contract). Economics, however, can no more assist people in designing a legal system than it can assist people in designing a health-care sector or a metals industry.