Abstract
In Buchanan’s broad “constitutional contractarian” framework ultimate justification depends on the institutional arrangements under assessment being universally accepted (that is, not subject to veto by any of the relevant parties, all of whom possess a right of veto). Accordingly, market arrangements (the definition of rights, and rules about their transfer) have the same status as in-period collective decision-making rules: both equally hang or fall on whether they (could have) emerged from constitutional consensus. The paper underlines this ‘equivalence’ by showing that the constitutional calculus over market ‘rights’ follows the same analytic structure as the derivation of in-period collective decision rules. This means that Buchanan’s view of the virtues of markets is essentially rooted in a collective decision and despite his self-professed “classical liberal” inclinations, his relation to standard defences of the market order (whether grounded in “natural rights” or liberty or in wealth creation or “efficiency”) is at best equivocal.
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Notes
- 1.
The precise relation between ‘libertarian’ and ‘classical liberal’ positions is an interesting matter. The terms are sometimes used interchangeably, though we are disposed to think that there are significant differences of emphasis that are worth drawing out. That, however, is a task for another occasion. For our purposes it is sufficient to note that “the logical foundations of constitutional democracy” embody neither “natural rights” nor “visions of the good life” but rest ultimately on a specific conception of unanimous “collective” agreement.
- 2.
And interestingly, no less explicitly, not a conservative. See Buchanan (2005).
- 3.
And arguably, well before. The ancients had views about the issue—and though they were not as analytically sophisticated as their successors, their conceptions of what aspects of market operation (to the extent they had markets of the modern kind) are normatively relevant has a distinctive and arguably ethically respectable cast.
- 4.
Which constraints are relevant is likely to depend on the normative criteria.
- 5.
The challenge at stake is often treated in terms of an insistence on “feasibility” considerations—but it is not entirely clear that that kind of formulation of the problem is unproblematic. See Brennan (2013).
- 6.
The relevant argument is connected to the “public choice theory” critique of “benevolent despot” conceptions of government. The line gets a more general airing in John Broome’s (1999) claim that “goodness is fully reducible to betterness”.
- 7.
This arguably represents the core of the “public choice” project.
- 8.
Quite explicitly by Samuelson (1955). He makes it clear that the “strong polar case” of public goods is designed so that the “student of public expenditure” can make a case for government action.
- 9.
The point had earlier been conceded by Samuelson (1954). As he put it, the “optimal solution might exist” but the real problem is to find it! And he explicitly expresses scepticism about various kinds of voting mechanisms as means for doing so.
- 10.
In that sense, Smith’s reasoning can explain the experience of the world since 1700—increasing population and increasing per capita output—in a manner that constant returns to scale models (still less diminishing returns models of the Malthusian type) cannot do; a thought that has increasingly occupied Buchanan , see Buchanan and Yoon (1994).
- 11.
Questionnaires that purport to offer evidence of preference satisfaction are widely regarded among economists as unreliable; yet, it is an empirical question whether or not there are, say, corroborated law-like regularities to make reliable predictions based on stated preferences. In any event, the dogmatic but empirically precarious insistence on revealed rather than stated preferences does not alter their “subjectivity”.
- 12.
The German constitutional theorist Franz Böhm (1966) perceptively spoke of the “private law society” in which markets are just one instantiation of free contracting among autonomous persons.
- 13.
With Buchanan ’s own words “‘political exchange’ necessarily involves all members of the relevant community rather than the two trading partners that characterize economic exchange ” (Politics without romance 1999, p. 50). Whether the involvement of all needs to be “prior in time” or some other kind of “priority of higher order” agreement is ‘conceptually’ sufficient may be left open here.
- 14.
Other theorists would deny the empirical validity of the Smithean claim. Like Rawls , and, for that matter also Buchanan they would deem some politico-legal distribution at least at the constitutional stage appropriate to assure that advantage is universal and—in case of Rawlsian justice the least advantaged are benefitting most.
- 15.
Many putatively “democratic regimes” seem to be consistent with political leaders enriching themselves at the public’s expense.
- 16.
- 17.
Less so Buchanan than most, interestingly—and this despite the claimed sympathy with the work of John Rawls .
- 18.
Manderville makes highly salient the possibility (for Manderville it is a fact!) that there may be a conflict between agent virtue and good consequences in terms of general material well-being.
- 19.
Incidentally, Smith thought that market society encouraged trustworthiness and punctuality. He thought it also discouraged the “martial spirit” (and therefore rendered a population less able to defend itself—or at least to do so without a professional military establishment).
- 20.
Amartya Sen (1970, 1982) seems to think that conflicts between “liberty” and “Paretianism” are endemic—and that such conflicts amount to an “impossibility theorem”. This claim has initiated an extended discussion. Since Sen also starts from a collectivist conceptualization of rights yet with conclusions orthogonal to Buchanan ’s, this discussion may seem highly relevant. We think it is not so relevant; but cannot satisfactorily deal with the issues here. In other places, one of us has argued both that the conflict may be overstated and that its resolution need not involve any deep conceptual conflict (see Brennan 2014; while the other see Kliemt 2006), though insisting that Sen mis-specifies the institutional concept of a “right” in his argument concerning the “impossibility of a Paretian Liberal” has a point against a variant of philosophical rather than political liberalism to which Buchanan seems sometimes also to subscribe. For further discussions particularly relevant to the relationship between Buchanan ’s and Sen’s approaches, the special volume of Analyse & Kritik, 18, (1996), as occasioned by Buchanan (1996 [1975]) may be useful. Several articles by Sugden (e.g. 1985, 1993) express views closely related to Buchanan ’s in more technical terms, while Pattanaik (2005) offers a balanced overview. See also footnote 33.
- 21.
- 22.
The challenge for a broadly subjectivist account of individual preference (and perhaps derivatively well-being) was how to formulate the idea of universal advantage in some operational manner.
- 23.
Cooperative advantage seems more closely related to advantage as assessed subjectively while “symbiotic” relations seem to have stronger objective ring to them.
- 24.
Sometimes Buchanan seems to allow for normative moral-political assessments that are not restricted to pointing out Pareto improvements. Yet, ultimately politics as exchange requires that unanimous agreement is at least conceivable.
- 25.
It may be noted in passing that Herbert Hart’s (1961) central concept of the rule of recognition is also foundational in an epistiemic and a justificatory sense for identifying what is positive law.
- 26.
It is worth noting that in the Wicksellian version, the normative credentials of unanimity are contingent on a prior “just” distribution. Unanimity is then for Wicksell merely “justice-preserving” rather than justice-creating (and he does indeed talk explicitly in terms of justice).
- 27.
The hierarchy of norms emerges from a single basic normative source which guarantees the unity of the order so constructed; see for the traditional concern with the unity of the order Kelsen (2000 [1934]).
- 28.
The adherents of what alluding to Buchanan ’s theory of clubs may be called “club contractarianism” might be inclined to argue here that unanimity concerns merely the exit and entry choices to clubs with alternative constitutions. Yet this kind of argument is foreclosed for those who take both the communitarian nature of constitutional democracy and its inherent conception of mutual respect seriously.
- 29.
Optimal to the extent that the costs are all that matters.
- 30.
The cost curves of Fig. 35.1 are either those of a representative individual or assumed to be representative of a class of cost curves that are inter-individually different but identical in shape. In the latter case, we cannot say that each individual will come to the same conclusion as far as the optimal majority parameter is concerned. However, if the individuals are not optimizers but boundedly rational satisficers there may be a non-empty region in which individual aspirations are satisfied and no veto is provoked, despite the fact that individually optimal solutions may not be reached. In particular, if the model of Fig. 35.1 serves—like Rawls’ original position—as a device to assist the equilibrium search of individuals who reflect on the society in which they as a matter of fact live and which as a matter of fact has shaped their aspirations, framing-cum-satisficing seems to lead to acquiescence more plausibly (corresponding to non-veto). On bounded rationality, aspiration levels, and satificing see Simon (1957, 1985) and Selten (1990, 1998).
- 31.
Sen does not sufficiently distinguish between the stage on which the rights are constituted as parts of the rules of the game, where he may prima facie have a point, and the post-constitutional stage on which the rights are in place as parts of the move structure of the game. On the post constitutional stage, there certainly is no paradox even though Sen tries hard to make it appear so.
- 32.
“…the inclusive constitutional contract …defines the whole set of individuals’ rights” [LL: 1999 [1975], p. 55].
- 33.
It is not entirely obvious that this is the case however. Specialization in markets involves each individual in acquisition of highly risky (because specialized) human capital. Arguably individuals will be more disposed to make such risky investments if there are in place “safety nets” that will limit the downside losses if things go wrong.
- 34.
Buchanan might add, though, that the model of politics as exchange underlying the Calculus, when framing the deliberations of individuals who were brought up and are living under the institutions of a Western constitutional democracy, is unlikely to lead them in reflective equilibrium to illiberal conclusions.
- 35.
See in particular Buchanan (2005), where he attempts to lay out the “normative vision of classical liberalism ” (as the sub-title has it) and to distinguish that vision from the ‘conservative’ one with which it is often confused.
- 36.
As Buchanan (1999 [1975]: 7, p. 55) emphasizes, in the Calculus, he and Tullock ‘derived a logical basis for the adoption of less-than-unanimity rules, although we did not present arguments for any specific one among a large set of alternatives.’
- 37.
Here “best” may be interpreted “either in terms of the individual’s own interests or in terms of the individual’s own version of some general interest” (Buchanan 1999: 1, p. 372) or indeed, presumably of other ethical precepts which the individual endorses.
- 38.
Though, wearing his constitutional contractarian hat, Buchanan does often talk as if he were so committed.
- 39.
It is exactly here that the aforementioned problems footnotes 26 and 37 with the paradox of liberalism arise.
- 40.
We will not engage the discussion concerning whether fictitious agreement is agreement at all, whether a merely virtual unanimous agreement is in some sense less defective than a virtual disagreement etc. As a matter of comparative political philosophy (parallel to comparative institutional theory) the contractarian competitors of Buchanan ’s approach are no better off in these regards.
- 41.
- 42.
Independently of whether or not the motivation to play by the rules of law is “ethical”, to have rule of law at all, there certainly must be sufficiently many sufficiently influential individuals who are intrinsically motivated to uphold the legal rules in compliance with a common rule of recognition.
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Brennan, G., Kliemt, H. (2018). The Constitution of Markets. In: Wagner, R. (eds) James M. Buchanan. Remaking Economics: Eminent Post-War Economists. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03080-3_35
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