David Reisman

Buchanan sees himself as an economist and for that reason a theorist of choice. He is attracted by individual sovereignty, calculative rationality, revealed preference, catallactic process, voluntary contract. He is repelled by top-down authoritarianism, social welfare functions, intolerant ideologists, Hegelian organicists and paternalistic leaders who tell the consumer in the Shop of State which ‘public interest’, which ‘truth’, which ‘good society’ he ought to buy. Buchanan sees himself as an economist and for that reason a student of the future: ‘We can act only now: we cannot act in the past.’ (Brennan and Buchanan, 1985:68). It is too late to turn back the clock, bygones are forever bygone – and we start from here.

Buchanan is an economist. Yet he is also a conservative, a moralist, a believer in cultural consensus, a champion of institutional precommitment. Arguing consistently that an ‘unthinking conservative stance’ (Buchanan, 1986:56) is no substitute for flexible adaptation and responsive reform, Buchanan is insistent nonetheless that the rules must be ‘quasi-permanent’, ‘relatively absolute absolutes’, if individuals are to be in a position to plan their private futures and the nation is to experience a viable degree of stability: ‘It is rational to have a constitution.’ (Buchanan and Tullock, 1962:81). It is rational to build on the past in order to make a success of the future. Rational or not, it’s the only game in town: ‘We start from here because we start from there.’ (Reisman, 1999: 1). There is no other way.

Buchanan is a microeconomic reductionist. He is also an advocate of custom and convention. The mix of time-that-was with history-to-come is a distinctive compromise between the ab initio trade-offs of textbook economics and the respectful replication of an unthinking collectivism that brooks no challenge: ‘What makes Buchanan’s position unusual is the presence of his libertarian individualism alongside his cultural conservatism.’ (Reisman, 1990:123). The subject of this paper is the accommodation between obedience and innovation, duty and liberty, which is so important a characteristic of Buchanan’s window on the world.

Both the commercial contract and the constitutional contract presuppose a notion of inter-temporal obligation: ‘Just conduct is conduct in accord with promises given.’ (Brennan and Buchanan, 1985:100). If buyers and sellers made it their practice to default, if bad Samaritans became free riders in the expectation that good Samaritans would play by the rules, the social order would degenerate into the Hobbesian bellum and further gain-seeking would be difficult if not impossible. Learned attitudes, fortunately, impose a multi-period constraint: ‘Ingrained in Western tradition is a sense of respect for the rights of others, including property rights.’ (Buchanan and Devletoglou, 1970:122). Markets will fail in the absence of a ‘common set of moral precepts’, in the absence of ‘respect for individual rights, once these are defined in law and/or customary standards of behavior’ (Buchanan, 1979:212). The inherited mindset, on the other hand, ‘provides the basic framework for our culture, our economy, and our polity – a framework within which the "free society" in the classically liberal ideal perhaps came closest to realization’ (Buchanan, 1988:108). Markets will fail in the absence of handed-down social capital. Where yesterday’s social contract marches in step with today’s devolved decision-making, the market economy stands a better chance.

The lawbreaker in the sense of Becker makes his home in the present and seeks his utility in the future. Weighing expected benefit against the probability of punishment, his calculus owes something to extrapolated risks but nothing to remembered norms. The lawbreaker in the sense of Buchanan has a clearer recollection of an agreement already concluded. Living in the present, he knows that he made the implicit exchange of some freedom for some security when, at some time in the past, he accepted that mutual protection had to be put above short-term gain. He had given his word to live by the rules. His memory of his past-dated promise makes it impossible for him to proceed, Becker-like, in piecemeal pursuit of the better buy. His word is his bond. The past marches on.

A multi-period settlement is evidently a time-bound compact. Ex ante people agree to the restraints because they expect that the rules will leave them better off in their own estimation. Ex post people discover what the unknowable future really means for their felt well-being. We as a nation agree behind a veil of uncertainty to institute a regime of low proportional taxation – but Jack, years later, becomes incurably dependent on the welfare State. We as a community decide unanimously to contain health spending by concentrating care on young productives – but Jill, moving into the future, learns that she requires a transplant. The regret experienced by Jack and Jill cannot be ignored. In contrast to the repressiveness of Leviathan, however, at least it is the consequence of their own free compacting. The constitution once in place, it was their personal and private wish that they should thereafter start from here – but from there as well.

Yet tastes and preferences change; and no undertaking can deliver an invariant utility-level forever. Slopes and intercepts mutate. Indifference curves shift up and down. Most economists treat the re-contracting as timeless and costless. Buchanan is realistic enough to see it as a hurdle. Just as external costs are incurred where a past-dated compact is subsequently perceived to be sub-optimal, so transactions costs must be borne when a society makes up its mind to tear up one constitution and to move on to another. Discussions must be held, balloting conducted, side-payments negotiated lest existing rights-holders feel mugged by the majority. The process takes time. It involves a cost. Writing as an economist, Buchanan concludes that the cost-effective choice will often be to renounce altogether the pursuit of the more satisfying endstate that burns up more resources than it is worth.

Constitutional conservatism cuts down on waste. Due to the Wicksellian test, however, there is also a utility slippage. Jack and Jill, precisely because re-contracting costs too much, are made subject to rules that were settled on before they were born. Jack and Jill are made subject to an inter-generational compact, to a true Burkean commitment that the consistent Buchananite would find deeply disturbing if it were called the budget deficit. Inertia has a pay-off and the status quo a rate of return. Well and good; but still the present day might not have a chance to record an opinion for the simple reason that democracy is not a utopia in which free gifts come without price-tags attached.

Doing nothing cuts down on cost. Doing something means both transactions costs and the diseconomies of pragmatism. On the one hand there are the politicians, calculatively expanding budgets in order to placate marginal constituencies, cynically tinkering with taxes in order to purchase voters’ support: ‘Nothing could do more towards promoting nonconstitutional attitudes than continued readjustment of basic income tax rates. Such readjustment surely furthers the view that the political process, as it operates, is after all little more than a complex profit-and-loss system.’ (Buchanan, 1977:252). On the other hand there are the citizens, hungry to use in-period negotiation as an opportunity to re-think behind-the-veil miscalculations, all-too-aware that long implementation-lags and the prohibition of discretionary management would deliver equity but deprive current cohorts of an imminent return: ‘Reasoned, and reasonable, discussion should be possible on the most efficient structure of asset-transfer taxation that would come into effect in, say, a quarter or a half-century after decision. Individuals who participate in the discussion on this basis will be unable to identify their own positions so clearly.’ (Buchanan, 1967:299). Politicians promote anomie through their example of corruption, manipulation and Keynesian buying on credit. Citizens threaten fairness through rushed re-contracting before the passage of Shackle-like time has had the chance to lower Rawls-like the veil. It is the great attraction of constitutional conservatism that it stands as a bulwark against worst-possible outcomes made especially likely by social actors such as these.

Anxiety, fear and minimax are clearly core elements in Buchanan’s conservatism. A speedy response could mean the successful resolution of what might otherwise have become a major problem. It could also mean that a minor problem is magnified into a disaster. An optimist in respect of intervention might be prepared to take a chance on the day-by-day option. Buchanan, however, is a pessimist, and by nature risk-averse: ‘Hamlet said that it is better to bear those ills we have than to fly to others we know not of, but his statement applies also to benefits or pleasures.’ (Buchanan,1967:71). Tastes and preferences change but the risks of reacting do not. There is in the circumstances much to be said for a tried-and-tested rule that has shown what it can do.

The past lives on in the present. One consequence is that existing titles to property must be treated as prima facie just. Buchanan would not extend his tolerant acceptance of current endowments to possessions seized in breach of the social compact: the street thief enjoys no reasonable entitlement to his haul. Moving backwards into history, however, Buchanan sees little point in re-opening the legitimacy of long-established expectations.

Present-day fortunes can be traced back to the Old South slave-trade, tax-funded pensions to the Downsian vote-motive, protective tariffs to Olson-like redistributive coalitions. Society should take great care not to repeat the errors of the past. It should certainly not pretend to itself that the mistakes were progress, that whatever is is good: ‘I have no faith in the efficacy of social evolutionary process. The institutions that survive and prosper need not be those that maximize man’s potential.’ (Buchanan, 1975:167). What society cannot do is to alter the rules retrospectively in such a way as to confiscate the claims that existing asset-holders acquired as a consequence of social conventions once in force. We start from here: ‘I do not especially like the status quo defense that my methodology forces me into, but where can I go? … The point I always emphasize is that we start from here and not from somewhere else.’ (Buchanan and Samuels, 1975:19, 27). Indeed we do; and so did the asset-holders. We start from here. They started from there. Their there has become our here. That’s the way it is.

As with matter, so with mind. Socialised attitudes are the institutional inheritance that gives unity to the present-day’s strivings. Most visibly so in a traditional, tribal society, Buchanan believes that the handed-on mindset is also the constitutional prerequisite for self-perceived success in the case of market capitalism, history’s most dynamic-and decentralised-economic system.

Market capitalism presupposes that parents will have taught their children how to play the game. The valuational capital will extend to purposive search for utility and profit, rational choice as the selective standard, the Protestant work-ethic supported by deferred gratification, the acceptance of individual responsibility, the commitment to lawful contract. It will also incorporate an understanding of sequence and life-plan, the putting in place of the basics and the foundations upon which stepwise incrementalism (the marginalism, say, of a heart surgeon applying for a more senior post) will subsequently have to build: ‘A person who has not trained for long-distance running cannot compete in the Boston marathon regardless of a strong desire to do so.’ (Brennan and Buchanan, 1985:71). The valuational capital, favourable as it will be to the entrepreneurial initiative of the ambitious go-getter, will assign a high importance to long decision-making horizons.

It will look with the deepest suspicion upon the permissive short-termism of ‘"Enjoy, enjoy" – the imperative of our time’ (Buchanan and Wagner, 1977:65). In that sense the constitutionalism appropriate to dynamic capitalism is also the conservatism that characterises the essence of the constitutional perspective itself.

Both the capitalism and the constitutionalism would be put at risk by moral anarchists such as welfare scroungers and student activists. The revolt against the rules, short-sighted and self-defeating, is in truth a revolt against the living standards and the liberties for which the multi-period constraint is the sine qua non. Buchanan is strongly in favour of a society in which citizens adhere behaviourally ‘to the precepts of a moral order’ (Buchanan, 1986:116), in which young people are prepared to carry on ‘the ways of conduct known to be "decent" by their elders’ (Buchanan and Devletoglou, 1970:103). The moral order is not an in-period consumable. The elders pass on the conventional wisdom. Buchanan is an economist. Fundamentally, he is a conservative as well.

Brennan, H.G. and Buchanan, J.M. (1985), The Reason of Rules (Cambridge: Cambridge University Press)

Buchanan, J.M. (1967), Public Finance in Democratic Process (Chapel Hill: University of North Carolina Press)

Buchanan, J.M.(1975), The Limits of Liberty (Chicago: University of Chicago Press)

Buchanan, J.M. (1977), Freedom in Constitutional Contract (College Station and London: Texas A & M Press)

Buchanan, J.M. (1979), What Should Economists Do? (Indianapolis: Liberty Press)

Buchanan, J.M. (1986), Liberty, Market and State (Brighton: Wheatsheaf)

Buchanan, J.M. and Devletoglou, N.E. (1970). Academia in Anarchy (New York: Basic Books)

Buchanan, J.M. and Samuels, W.J. (1975), ‘On Some Fundamental Issues in Political Economy’, Journal of Economic Issues, Vol. 9

Buchanan, J.M. and Tullock, G. (1962), The Calculus of Consent (Ann Arbor: University of Michigan Press)

Buchanan, J.M. and Wagner, R.E. (1977), Democracy in Deficit (New York : Academic Press)

Reisman, D.A. (1990), The Political Economy of James Buchanan (London: Macmillan)

Reisman, D.A. (1999), Conservative Capitalism: The Social Economy (London: Macmillan)