James A. Dorn is editor of the Cato Journal and vice president for academic affairs at the Cato Institute. He is also professor of Economics at Towson University in Maryland.
James M. Buchanan: A Model Plowman
Jim Buchanan was as good with a plow as he is with a pen, but we are lucky he chose a pen. A model plowman finishes his job quickly and competently by moving straight ahead and concentrating on the task at hand. Buchanan did that in his early years in middle Tennessee, and he has carried that consistency and focus into his professional life as a pioneer in public choice and constitutional political economy (see Buchanan 1992). When it comes to getting a job done--and done well--no one is better than Jim Buchanan.
The grand occasion of his 80th birthday is an opportune time to reflect on the essence of Buchanan's work. As a young plowboy, he prepared his father's soil for planting; as an academic plowman, he has returned to basic principles and reminded us of the importance of property rights and rules in improving the spontaneous market process.
For Buchanan, "The most important central principle in economics" is "the principle of spontaneous order"--that is, "the spontaneous coordination which the market achieves" (Buchanan 1979: 81-82). By focusing on that principle, rather than on the narrow allocation problem, or the "maximization paradigm," Buchanan has challenged economists to think about the process of market exchange and how the "rules of the game" can be improved to increase opportunities for mutually beneficial exchanges--whether in the private or the public sector.
In his insightful essay, "What Should Economists Do?" Buchanan (1964) criticizes the model of perfect competition, just as his mentor Frank Knight had done, and admonishes economists to extend "the theory of markets," to consider "the various institutional arrangements" that emerge from--and are necessary for--voluntary exchange, and to appreciate the beauty of Adam Smith's "invisible hand."
The spontaneous order of the market is inseparable from individual freedom and private property rights--in a word, consent.
That is why Buchanan has always been a political economist--or more exactly, a constitutional political economist. Just as the market cannot operate in an institutional vacuum, economics must be interdisciplinary and take account of the constitutional boundaries of the political economy within which choices are made.
What interests Buchanan is how to exploit new opportunities for exchange at the margin by removing barriers to free trade and by allowing individuals the maximum freedom to discover better alternatives to existing institutions. Block that freedom and justice will disappear along with the wealth of the nation.
The collapse of the Soviet Union has exposed the failure of central planning and has focused attention on the transition from plan to market. The search for a smooth transition has forced economists to take account of the role of institutions in shaping incentives and behavior, and to think about the market process and the rules that guide it. But the profession's love affair with welfare economics and with the differential calculus rather than the calculus of consent has diverted attention from the principle of spontaneous order. "Market failure" has become the favorite mantra of policy gurus, not government failure.
Communism may be dead but, as Buchanan (1994: 7) has noted, socialism is not:
The socialist vision of politicized control-regulation of economic interaction has by no means been exorcised from the modern mind-set despite the evidence from reason or from history. The belief that persons, acting jointly through their membership in collectivities, can effectively "improve" on the spontaneously generated outcomes of market processes remains imbedded in the modern psyche.... The romance of socialism, which is dependent both on an idealized politics and [on] a set of impossible behavioral presuppositions, has not yet disappeared.
The challenge will be for constitutional political economists to figure out how to tame the leviathan and then to persuade policymakers to do so. The lifework of James M. Buchanan is a giant step in that direction. All lovers of liberty and intellectual honesty owe him a great debt.
He has taught us to be skeptical of conventional wisdom, to search for fundamentals, and to train our vision on the essentials--on freedom, on markets, and on the "cooperative arrangements" that make liberty and responsibility allies in the constant struggle for individual and social betterment in a very imperfect world. For that, we can say, "Thanks for a noble effort by a Nobel man."
On a more personal note, thanks Jim for all your support over the years, especially your intellectual and moral support for the work the Cato Institute is doing in trying to limit the size and scope of government and in promoting understanding of the principle of spontaneous order and the importance of constitutional limits on democratic rule. Your contributions to Cato as a Distinguished Senior Fellow, a member of the Cato Journal's editorial board, and a speaker at many Cato events, including our first annual monetary conference in 1983 and our historic Moscow meeting in 1990, are all greatly appreciated. I wish you a very happy 80th birthday and many more to come.
Buchanan, J.M. (1964) "What Should Economists Do?" Southern Economic Journal 30 (January): 213-22.
Buchanan, J.M. (1979) "General Implications of Subjectivism in Economics." In Buchanan, What Should Economists Do? 81-91. Indianapolis, Ind.: Liberty Press.
Buchanan, J.M. (1992) Better Than Plowing and Other Personal Essays. Chicago: University of Chicago Press.
Buchanan, J.M. (1994) "Notes on the Liberal Constitution." Cato Journal 14 (Spring/Summer): 1-9.