The Past, Present, and Future of Public Choice: Part I

Buchanan joined forces with Gordon Tullock at Virginia Tech, they narrowed their focus to the economics of politics—the persistent and consistent application of neoclassical economics to the analysis of political decision making. The public choice research program matured and was operationalized during the period from 1969-1982. But Buchanan also grew impatient with many aspects of that research program. If you carefully read his 1963 essay “What Should Economists Do?” he was already presenting his research program as distinct from a narrow rendering of neoclassical maximization and equilibrium theorizing. As Richard E. Wagner perceptively points out in Rethinking Public Choice (2022), neoclassical economic theory at this time came in two varieties: formal models of maximization and equilibrium (demonstrative reasoning), and an intuitive understanding of market theory and the functioning of the price system (plausible reasoning). Different public choice scholars followed either one or the other approach, with social choice theory the exemplar of the formal theory approach, and the Virginia School of Political Economy the exemplar of the price theoretic approach.

The work of the Center for Study of Public Choice at Virginia Tech during the 1970s could be reasonably described as drawing out the implications of the economics of politics, rather than the more expansive program of political economy. Nevertheless, and despite the narrowed focus, the scholarly work of the Center for Study of Public Choice came under attack from within the economics department for methodological reasons. Buchanan, and his colleagues, were simply viewed as out of step with the modern science of economics; a criticism levelled by colleagues with much less impressive publication records than Buchanan. It clearly was the victory of mediocrity over excellence in academia, as Buchanan would note in a parting essay entitled “Dishwater of the Orthodoxy.”4

Thus, it was time to move again, and dare to be Different. In many ways what the move to George Mason University permitted Buchanan et al to return to the vision of the original Thomas Jefferson Center for Studies in Political Economy and Social Philosophy, but with the hard-earned knowledge that the previous two decades of scientific struggle had taught. Alain and I conclude that the future of Virginia Political Economy will reside with those who continue to embrace this aspect of Buchanan’s project.

What has happened in the decade since the paper I wrote with Alain Marciano? Outside of economics and political economy there has been the rise of critical works on neoliberalism that seek to engage in the sort of broad-brush indictment of the public choice program such as Nancy MacLean’s Democracy in Chains, or Naomi Orekes and Erik Conway’s The Big Myth. To counter these sorts of interpretations, I have done extensive work in Buchanan’s archives. In these efforts to recapture the true purpose of the initiative, I stress the methodological and analytical discomfort with the rise of Samuelsonian neoclassical synthesis (see Paul Samuelson), the Knightian concern with practicing social science from the inside-out versus from the outside-in, and the implications for a functioning modern democratic society. So many subtle points in the Buchanan effort are lost when critics focus exclusively on the ideological and social philosophic position that Buchanan himself articulated in his writings. For one, they too often fail to see his position is an outcome of his analysis, not a hard prior. For another, they too often fail to understand the terms; Buchanan’s commitment to a free society is not some code for a libertarian paradise, but an invoking of the ancient notion of a society of the choosing of its citizens.

Many are keenly aware of this ongoing critical dialogue concerning neoliberalism and public choice, and many probably deem it a waste of time and energy. It is hard to persuade those who refuse to be persuaded by logic and evidence, because the narrative they paint is too convenient for their intellectual comfort. I personally think the crusade is worth the intellectual effort—though not to nudge those who view public choice as the work of an “evil genius” or part of a “neoliberal thought collective.” Rather, younger scholars in the social sciences and humanities should be able to judge us by how we reason, what arguments and evidence we marshal to our cause, and how we conduct ourselves in the wake of not just unfounded criticisms of public choice, but unfair character assassinations of the scholars who initiated the research program. But I will agree this is definitely not the most important development in the late decade.

There are positive trends presenting opportunities for scholars in public choice if they stick to their knitting as found in those original meetings of sixty plus years ago.

First, I want to stress the great opportunity that the focus on Institutional Analysis in the work of Daron Acemoglu and James A. Robinson presents for public choice scholars. They have put at the center of modern political economy the puzzle of predation, and the countervailing powers required to both empower the productive and protective state while constraining the predatory state.

Second, I want to stress the issue of “ideation” in historical political economy that Deirdre McCloskey and Joel Mokyr have put forward in their grand sweeping histories of modern economic growth. Public choice theory must come to a solid reckoning with the power of ideas and the role that ideology plays in the world. This is a topic that Robert Higgs raised in Crisis and Leviathan (1987), and Michael Munger developed in his book with Melvin Hinich, Ideology and the Theory of Political Choice (1996), and more recently in Dani Rodrik’s “When Ideas Trump Interests,” JEP (2014). Ideas in these presentations are not just a cover for interests, but a force in the world independent of interests and institutions, but which interacts with interests and institutions to shape the world we find ourselves occupying. It is, after all, ideas that inform us as to what it is that is in our interest to pursue.

Third, it is this interaction of ideas, interests, and institutions that must be a focal point of our studies in political economy. Many years ago, Chris Coyne, Peter Leeson, and I sought to develop this idea about “institutional stickiness” and how it relates to the transplanting of institutions in the development process. (See Boettke, Coyne and Leeson 2008) More recently, Stefan Voigt and others have been studying the question of constitutional compliance. Compliance has an obvious incentive component when we focus on enforcement, but it also has an epistemic dimension when we focus on acceptance and legitimacy. Voigt himself very early in his career had identified the intimate connection between norms, beliefs, and the acceptability or non-acceptability of the formal institutions in the transition economies. (See Voigt 1993)

Acemoglu and Robinson open the intellectual space for a focus on the constitutional project that follows from the paradox of government. They are not alone, I would point to Douglass North, John Joseph Wallis, and Barry R. Weingast on constitutions, federalism, the violence trap and development, and liberty. As Weingast argues, serious research on this topic all but disappeared from economics and political science, yet it was a major theme in political economy as practiced in its finest hours. The “narrow corridor” in Acemoglu and Robinson is this pathway to the establishment of a functioning system of liberty and prosperity. The balance in their system is the tension between the state and society; these both must be empowered to check-mate the abuses of the other, but also empowered to provide the needed protection and basic public goods for human flourishing. We want a regime of liberty both for the protection of universal human rights and the mass flourishing that such regimes have historically been able to deliver for their citizens.

The fundamental question remains, how do we detail the path from a state that discriminates and dominates its citizens, or the absence of a functioning state, to a social arrangement that exhibits neither relationships of domination nor engages in discriminatory politics? As Rosolino Candela and I point out in “Productive Specialization, Peaceful Cooperation, and the Problem of the Predatory State” (2019), in addressing this issue we must be careful not to confuse descriptions of initial conditions with explanations of the evolutionary path. Too much of Acemoglu and Robinson is baked into those initial conditions, and too little explanation is provided of the mechanisms that get you inside the narrow corridor in the first instance and how to progress inside that corridor to be able to achieve a constitutional order that shackles Leviathan. How does a Myanmar of today become a Denmark of tomorrow? We cannot be content with saying that Myanmar is Myanmar because it is Myanmar, any more than we can be content with saying Denmark is Denmark because it is Denmark. There is no explanation there, only description.

The public choice and constitutional political economy tradition as developed by Buchanan and Tullock, but also by Vincent and Elinor Ostrom does postulate paths out of the Hobbesian jungle. Situations of conflict can be transformed into opportunities for peaceful social cooperation by changes in the structural rules under which we interact with one another. Buchanan’s Limits of Liberty (1975), Tullock’s Social Dilemma, Vincent Ostrom’s The Meaning of Democracy (1997), and Elinor Ostrom’s Governing the Commons (1990) all postulate development paths in the political economy of rule-making. There is the possibility of freedom through constitutional contract. The Ostroms individually as well as jointly tackle the question of the construction of the common knowledge required to play cooperative social games in the first place.

When we confuse descriptions for explanations in political economy, we end up doing what Elinor Ostrom identified as institution-free institutional analysis. Genuine institutional analysis, on the other hand, must recognize the devil is always in the institutional details and explicate the dynamics of the mechanism(s) set in motion by those details. We seek to explain the variation in the pattern of outcomes we see in the world by variation in the institutions that individuals find themselves operating within. “Theories” that postulate that differences in people determine the differences in outcomes we observe are not really theories.5 We don’t need elaborate theory, as F. A. Hayek pointed out in The Counter-Revolution of Science (1952) if the claim is good people do good things and bad people do bad things. What requires our theoretical skill is to tease out how “bad people”, i.e., self-interested agents, can produce publicly desirable outcomes, and how “good people”, i.e., other regarding agents, can produce publicly undesirable outcomes. We need theory to articulate the invisible hand of the market, as well as how the road to hell can be paved with good intentions. Only when outcomes diverge from preferences do we need an explanation of the mechanisms at work that either give us an outcome greater than the sum of its parts, or less than that sum.6 It is the machinations of politics (or law or society) that shapes and directs human behavior. We need the discipline of the rational actor model, because it prevents us from postulating that some actors are ignorant and others are enlightened, but we also need only a very thin model of the rational actor that recognizes that in our striving we stumble, we have cognitive limitations and face transactional difficulties, and must cope with our ignorance as we engage in decision making under deep uncertainty.

This research program on endogenous rules still has theoretical legs, as well as practical significance in the field of development economics, and in political economy more generally. I hope to see more work along the lines of the individuals I mentioned above populate the pages of Public Choice, Constitutional Political Economy, the American Political Science Review, the Journal of Political Economy, the American Economic Review, and more. There are talented scholars prepared to carry this research forward and are doing so in the field of historical political economy. It is not, and must not, just be about state capacity. It can and should be about self-governance in its great diversity of manifestations across time and place.

Footnotes

[1] See James Buchanan’s 2003 essay “Public Choice: The Origins and Development of a Research Program,” PDF file; or see the “History of the Public Choice Society,” by James Buchanan on the PCS About page [scroll to page bottom for the essay].

[2] For Peter J. Boettke and Alain Marciano’s paper, see “The past, present and future of Virginia Political Economy.” Public Choice, Vol. 163, No. 1/2, Special Issue: Symposium on the 50th Anniversary of the Public Choice Society (April 2015), pp. 53-65; published online February 2014. JSTOR.

[3] On this subtle point about Buchanan and classical political economy see Richard Wagner’s James M. Buchanan and Liberal Political Economy (2017).

[4] This essay, along with many other gems from the archives, has now been published in The Soul of Classical Political Economy, edited by Peter Boettke and Alain Marciano (2020).

[5] I refer you to the Monty Python skit dealing with the ‘theory’ of the brontosaurus. A more serious discussion is provided if you look up Richard Feynman’s discussion of the difference between naming and describing and theorizing and explaining: see Richard Feynman–Names Don’t Constitute Knowledge.

[6] Just a note of reminding that 60 year ago, the Public Choice Society was formed to bring together scholars who shared a desire to tackle a frustrating puzzle of 20th century democratic society. Namely, that simple majoritarian politics did not prove sufficient to discipline the behavior of elected officials to pursue public policies in the public interest and policies that reflected the preferences of the citizens.