Quotes from The Logical Foundations of Constitutional Liberty

By James Buchanan (1998)

The optimality or efficiency of any file prohibiting voluntary agreements can only be demonstrated in those cases where some external effects are present and where there is done asymmetry in the costs of organizing different voluntary agreements.#
Methodology
For the best part of three decades, economists tried to use a perception designed to isolate features of a macroeconomy in deflationary expectational chaos to look at a macroeconomy in postwar boom. The supreme folly of the Keynesians was perhaps the genuinely held but arrogant opinion to the effect that the surge in unemployment and output was itself a consequence of the application of the Keynesian policy tools.#
Economics History
Progressive taxation has been justified because it leads to a more equal distribution of income among individuals. Standing alone, the statement that progressive taxation does redistribute real income is not true. It can be true only on the basis of certain assumptions about the other half of the fiscal system [i.e. expenditures]. . . . The statement that progressive taxation will redistribute incomes but that proportional taxation will not implies that benefits are returned to individuals in proportion to incomes and wealth.#
Politics
[In the prisoners’ dilemma,] the outcome predicted, and possibly observed, to emerge may be classified as “presumably inefficient” for the set of prisoners considered as a group because they are not allowed to make explicit exchanges. . . . [It] may, however, be an efficient institution for forcing prisoners to confess. That is to say, the subset of the population made up of prisoners only may not be the set relevant for a political-collective evaluation of the institution. In the more inclusive community, the test for whether or not that institution which removes the option of binding contracts among prisoners is efficient would depend on the attainment or nonattainment of community-wide consensus on change to some alternative institution.#
Methodology
In the absence of self-imposed constraints, we are simple human animals. And a measure of our advance from this animal state is provided by the distance that separates us from the internally anarchistic psychological benchmark defined by the total absence of self-imposed rules.#
The communitarian challenge to methodological individualism must go beyond the claim that individuals influence one another reciprocally through presence in communities. The challenge must make the stronger claim that individuation, the separation of the individual from community, is not conceptually possible, that it becomes meaningless to think of potential divergence between and among individual interests in a community.#
Methodology
The categorical distinction between choices among rules and choices within rules all but disappears in the utilitarian configuration.#
Methodology
As it operates and as we observe it to operate, ordinary politics may remain conflictual . . . while participation in the inclusive political game that defines the rules for ordinary politics may embody positively valued prospects for all members of the polity. In other words, constitutional politics does lend itself to examination in a cooperative analytical framework, while ordinary politics continues to lend itself to analysis that employs conflict models of interaction.#
Politics Methodology
Perhaps the single most familiar statement in The Wealth of Nations is that which tells us that “it is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest” (I, ii, 2). We understand Adam Smith’s argument here, but if we take the conventional theory of distribution in the competitive economy seriously we immediately sense an apparent contradiction. If the butcher, and everyone else, takes from the economy precisely the equivalent of the value added to the economy by their efforts, how do we benefit from individuals’ self-interested behaviour?#
Economics
If the extent of the market limits the potential for deriving the advantages of specialization, at least one industry in the totality that describes the production-exchange nexus must exhibit increasing returns of the sort indicated.#
Economics Increasing Returns
For the increase in the extent of the market, for all tradeable goods, to generate increases in economic value, properly measured, returns must be increasing (costs must decrease) somewhere in the economy, but the identification of the location of this source of gain may not be possible until after the expansion of demand that calls additional production (in such an industry and elsewhere) into being.#
Economics Increasing Returns
The distinction to be drawn between economics and politics, as disciplines, lies in the nature of the social relationships among individuals that is examined in each. In so far as individuals exchange, trade, as freely contracting units, the predominant characteristic of their behavior is “economic.” And this, of course, extends our range far beyond the ordinary price-money nexus. In so far as individuals meet one another in a relationship of superior-inferior, leader to follower, principal to agent, the predominant characteristic in their behavior is “political.” . . . Economics is the study of the whole system of exchange relationships. Politics is the study of the whole system of coercive or potentially coercive relationships.#
Methodology
The equity norm for the distribution of tax burdens can be viewed as a constitutional standard designed to prevent the exploitation of minorities through the fiscal process.#
Politics
It is clearly wasteful to devote intellectual resources in proffering advice to a nonexistent decision-maker.#
Methodology
Rent-seeking activity is directly related to the scope and range of governmental activity in the economy, to the relative size of the public sector.#
Politics
A necessary condition for deriving a social welfare function is that all possible social states be ordered outside or external to the decision-making process itself.#
Methodology
The definition of democracy as “government by discussion” implies that individual values can and do change in the process of decision-making. . . . If individual values in the Arrow sense of orderings of all social alternatives are unchanging, discussion becomes meaningless.#
Politics
The reason that majority rule proves tolerably acceptable and individual authoritarian dictatorship does not lies not in the many versus the one. It is because ordinary majority decision is subject to reversal and change, while individual decision cannot readily be made so. With identical majority orderings, the majority would, of course, always choose the same leaders, and this advantage of majority rule would be lost.#
Politics
One of the most important limitations placed upon the exercise of majority rule lies in the temporary or accidental nature of the majorities. . . . Majority rule is acceptable in a free society precisely because it allows a sort of jockeying back and forth among alternatives, upon none of which relative unanimity can be obtained. . . . In this way, majority decision-making itself becomes a means through which the whole group ultimately attains consensus. that is, makes a genuine social choice. It serves to insure that competing alternatives may be experimentally and provisionally adopted, tested, and replaced by new compromise alternatives approved by a majority group of ever-changing composition.#
Politics
Majority decision must be viewed primarily as a device for breaking a stalemate and for allowing some collective action to be taken.#
Politics
A felicific calculus becomes absurd in this setting [where man can choose what pleases him], as does all talk of such things as “national goals;’ “national priorities;’ or even such familiar things as “university objectives.” Traditionally, many of us who have been critical of such talk remark that “only individuals can have goals.” But I am here advancing the more radical notion that not even individuals have well-defined and well-articulated objectives that exist independently of choices themselves.#
Economics Methodology