Thursday 10 January 2013

James M. Buchanan, 1919-2013

The Balanced Budget Amendment: Clarifying the Arguments
James Buchanan, the 2006 Noble Laureate in economics, was born in rural Tennessee, and lived most of his life in the American South. His paternal grandfather had been a Confederate cavalryman who, with Populist support, went on to be a Democratic governor of Tennessee. Buchanan later recalled his boyhood spent reading ‘in grandfather’s attic piled high with radical pamphlets of the 1890s  ... The robber barons were real to me’. By that time the Buchanan family was living in ‘genteel poverty’ in ‘a huge house…in varying states of disrepair’. Young James was expected to re-win the lustre of the family name. But in the approach of world war he was drafted into US Naval Reserve Officers Training Program, where he experienced the ‘blatant discrimination against Southerners, Westerners and Mid-westerners’ that radicalised him against the ‘eastern establishment’. He graduated 6 out of 600, and learned that ‘even unwashed rednecks of Appalachia could stand to measure with scions of Newport’.  One such ‘scion of Newport’ of the same Program was John F Kennedy.  To Buchanan’s mind, Kennedy’s triumph in 1960 was no more than the ‘raw injustice’ of ‘a purchased presidency’.

Buchanan was allocated to the staff of Admiral Nimitz, and there acquired a loathing of the grand-standing of General Macarthur. In July of 1945 he received an instruction to arrange for the USS Minneapolis to pick up ‘a special cargo’. Puzzled by this unusual order, he made out the dispatch nonetheless. Earlier, while on his leave in his home state, he had heard rumours of the Oak Ridge plutonium plant, but only after the Hiroshima bombing, did he realise how he had been one tiny cog in the mechanism of nuclear destruction.

Upon demobilisation, he enrolled in economics at University of Chicago. He saw himself as a ‘liberal socialist, but within was weeks he was a free market advocate. His world view was completed by his study leave in Italy 1955, that acquainted him with the pathologies of the Italian state, and pitiless realism of Italian thinkers towards it. The upshot was an outlook on the relation between government and the economy that was at odds with that of most mid-20th century economists.  They were trustful of government custody of economic management, but wary of democratic pressures on that. Buchanan reversed that position; he distrustful of government and hopeful of democracy. Whereas the standard view saw government as benevolent and competent, in Buchanan’s ‘Public Choice’ position government is no more benevolent than any business. Worse, it was typically a sole provider of its services, and so was best analysed as a monopoly. He argued that this interpretation of government implied that even ‘good policy’ would be for  the ill; as ‘good policy’ simply allowed the goose to be plucked less painfully, and so plucked the more fully.

Whereas in the standard view democracy was the articulation of a ‘general will’ by majoritarian institutions, to Buchanan democracy was a system of competitive political markets. Parliament is a market place - a political market place - where exchange between political constituencies takes. In his classic co-authored work of 1962, The Calculus of Consent ,  he argued that a political system consisting of single chamber making decisions by 50 percent plus one basis could not amount to a process of political exchange. If a reliable majority was secured that would amount to a political monopoly, and consequently constraints should be imposed on such majorities. This was not undemocratic since such constraints would be approved consensually before the political contest began. Buchanan’s analogy was with a game of cards; before the cards are dealt all players agree to the rules that will make the game work. These rules are the constitution, and constitution is essential to healthy democratic politics. Strongly under the sway of US constitutional tradition, Buchanan was seeking to retell the wisdom of his country’s founding fathers to their 20th c descendents.

Buchanan’s confidence in the US political system faltered in the tumult of 1960s, that included bombing of the office of his head of department at UCLA. He saw the spread of ‘constitutional chaos’ underwritten by an unholy alliance of Democrats and Republicans to repeal the ‘unwritten’ prohibition of budget deficits. The fall of the Berlin Wall 1991 brought him little sense of triumph; socialism is dead, he said, but ‘Leviathan lives on’. And while the economists who had that supplied the matter for his ‘economic theory of politics’ were no longer beholden to myth of the benevolent state, they were no longer beholden to anything: they were ’ideological eunuchs’, engrossed in make-believe world of pure theory, that he compared to science fantasy. Of the economics of the last generation, he said ‘I am reminded’ of J. K. Tolkien, ‘who through sheer power of imagination created a whole new world of beings, the hobbit world, in his trilogy, The Lord of the Rings. The analogy is revealing when we recall that Tolkien was writing fairy tales for children.’


Buchanan had the greatness that allowed him to fruitfully cultivate his contradictions; the wish debunk political romance with an attraction to  that of his own;  a readiness to deploy scientific method while maintaining a philosophic texture of mind; to be both alienated from his country and and to love it; to deny all the gods and to give thanks to them.

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