James Buchanan and the Ideological Divide

The death of Nobel Laureate James Buchanan has been much noted in the libertarian blogosphere, by Don Boudreaux for example. Alex Tabarrok lists more.

In contrast, those of us who were educated at left-leaning institutions learn almost nothing about Buchanan. There, he is (was) that right-wing guy who was a big proponent of public choice theory. He is treated as a shallow thinker whose claim to fame is treating government officials as self-interested.

In fact, Buchanan is one of the few economists who I credit with thinking more deeply than I do. (Yes, this reveals a lot about my self-regard. My egotistical view of the world is that other economists forego philosophical rigor in exchange for mathematical precision.)

To see what I mean about Buchanan, go to the library of economics and liberty and read Cost and Choice. (Note that you get to the contents of the book by clicking on the links over on the left. Or you can purchase the book relatively inexpensively.) Here is an excerpt (from the beginning of chapter three), to see what you are getting into.

A century has elapsed since the subjective-value revolution in economic theory, but the subjective theory of value has not been fully reconciled with the classically derived objective theory. As the notes on the development of the concept of opportunity cost indicate, economists have not drawn carefully the distinction between a predictive or scientific theory and a logical theory of economic interaction. As subsequent chapters will demonstrate, this methodological confusion is the source of pervasive error in applied economics. The treatment and discussion of cost, especially in its relation to choice, provides a usefully specific context within which the more general methodological issues can be examined.

…The following specific implications emerge from this choice-bound conception of cost:

1. Most importantly, cost must be borne exclusively by the decision-maker; it is not possible for cost to be shifted to or imposed on others.
2. Cost is subjective; it exists in the mind of the decision-maker and nowhere else.
3. Cost is based on anticipations; it is necessarily a forward-looking or ex ante concept.
4. Cost can never be realized because of the fact of choice itself: that which is given up cannot be enjoyed.
5. Cost cannot be measured by someone other than the decision-maker because there is no way that subjective experience can be directly observed.
6. Finally, cost can be dated at the moment of decision or choice.

I like to wrestle with these sorts of topics, but, for better or worse, my goal in writing is to bring them down to a layman’s level, as in my essay on subjective value.

Anyway, the point should not be to talk about me. What strikes me about James Buchanan is that, apart from the libertarian fringe, no economists attempt to appreciate the depth of his thought. I find that sad and disturbing.

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18 Responses to James Buchanan and the Ideological Divide

  1. Georg Thomas says:

    ” … economists forego philosophical rigor in exchange for mathematical precision.”

    An important and remarkable observation, not least because few people, let alone economists, recognise just how bad their guildsmen tend to be at philosophical reasoning.

    As for the lack of appreciation for Buchanan, what makes matters even worse: a large and influential faction of the libertarian fringe, the anarchist-leaning wing, is essentially Anti-Buchanan; in view of which it is rather odd that devotees of this school of thought like to portray Buchanan (not only in their obituaries) as being rather a congenial mind, when in fact he was a classical liberal and in that capacity a passionate opponent of anarchism and hence the very basis of their creed – incidentally, just like Ludwig von Mises.

    Clearly, a case of selective perception on their part: after all, to Buchanan the state has been equally important and worthy of in-depth study

    (i) as a condition of liberty, and
    (ii) as her antagonist

    – in sharp contradistinction to the inclination of many libertarians to effectively stop the process of building a positive theory of the state in favour of adopting a largely normative theory (based on bad philosophy) that systematically selects aspects of the state considered undesirable at the expense of a(n unbiased) comprehensive picture of the state-society-nexus.

  2. Mark T says:

    Very well said. His work deserves much greater awareness. The comment preceding mine is also insightful.

  3. Chad Reese says:

    In trying to determine why Matt Yglesias was somewhat callous and referred to Professor Buchanan’s passing by calling him “overrated,” I got this response from him regarding the source of his criticism: “It’s plainly not the case that constitutional shenanigans explain presence or absence of effective public institutions.”

    Since this was via Twitter, that’s a necessarily short response, but what might you say to folks like Yglesias and others who might be unconvinced that Buchanan’s work was important?

    • Dismalist says:

      I would ask to consider the constitutional shennanigans that took place over a not very large number of months before the end of January, 1933, in a city named Berlin, under a constitution named for the place it was written: Weimar.

      Perhaps examples from long ago and far away don’t count, though.

    • Jeff says:

      I’d wager it’s pretty simple: Buchanan wrote things people like Yglesias don’t want to hear.

    • Paul says:

      Could you elaborate on what Yglesias’ objections are to Buchanan? I think a little bit more context might make clear why Yglesias thought it was plainly not the case.

  4. Thaomas says:

    While I agree that economists on the left do not vale Buchanan as highly as do those ore to the right, I think it is trenmedously overstated that “He is treated as a shallow thinker whose claim to fame is treating government officials as self-interested.”

  5. Lonely Libertarian says:

    Great post – and great first comment…
    I confess to being less acquainted with all of Professor Buchanan’s work than I hope to be by the end of the year. What I have digested to date HAS played a large role in helping me move from conservative to libertarian – and reconcile some of the nasty inconstancies that I wrestle with – like the role of government noted above.

    He wil be missed – but I would predict that he will be greatly remembered as time pases and we try to navigate the massive debts and obligations we face.

  6. Greg Ransom says:

    Buchanan’s Cost and Choice is great.

    I like to think of it a good science, sound and logically rigorous science, rather than anything philosophical.

  7. Greg Ransom says:

    The Buchanan you’ve quoted is essentially a summary of Friedrich Wieser’s work, a picture of cost and choice familiar to American economists at the turn of the century, and then lost in the wake of Paul Samuelson & Abba Lerner.

  8. Jared Harris says:

    The way Buchanan defines “cost” in the quote you give makes it mean something quite different from the English meaning of “cost” — perhaps it could be more accurately called “anticipated dysphoria”.

    I wonder how well his work holds up in the context of hyperbolic discounting, Knightian uncertainty, heterogeneous models of the world, etc.

    At some point Economics will learn to distinguish science (produces trustworthy knowledge) from philosophy (produces impressive arguments). I don’t think we’re there yet.

  9. Jared Harris says:

    Also important in that list of things that probably undercut this approach: Other regarding preferences.

  10. Steve Roth says:

    What Buchanan failed to realize, IMO: better sets of choices themselves have utility (subjective value). And those sets are *not* determined by the decision maker.

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