Political Economy as Political Philosophy

1
Political Economy as Political Philosophy

• Peter Boettke
• Econ 828/Fall 2005
• 29 August

2
The Contributions of James M. Buchanan

• On Doing Economics (see next slide)
• On Doing Political Economy
• Pre-Constitutional Level
• Post-Constitutional Level
• On Doing Social Philosophy
• Play between rules and strategy, on the one hand,
  and questions of justice on the other.
• Choice is never particular distributions but
  always over rules of the game which engender
  patterns of exchange, production and distribution.

3
The Contributions of James Buchanan

• On Doing Economics
• Economics is a "science" but not like the
  physical sciences. Economics is a "philosophical"
  science and the strictures against scientism
  offered by Frank Knight and F. A. Hayek should be
  headed.
• Economics is about choice and processes of
  adjustment, not states of rest. Equilibrium
  models are only useful when we recognize their
  limits.
• Economics is about exchange, not about
  maximizing. Exchange activity, arbitrage, that
  should be the central focus of economic analysis.
  
• Economics is about individual actors, not
  collective entities. Only individuals choose.
• Economics is about a game played within rules.
• Economics cannot be studied properly outside of
  politics. The choices among different rules of
  the game cannot be ignored.
• The most important function of economics as a
  discipline is its didactic role in explaining the
  principle of spontaneous order.
• Economic is elementary.

4
Hamiltons Question Madisons Puzzle

• Alexander Hamilton, Federalist I (October 27,
  1787)
• It has been frequently remarked, that it seems
  to have been reserved to the people of this
  country, by their conduct and example, to decide
  the important question, whether societies of men
  are really capable or not, of establishing good
  government from reflection and choice, or whether
  they are forever destined to depend, for their
  political constitutions, on accident and force.
• James Madison, Federalist 51 (February6, 1788)
• If men were angels, no government would be
  necessary. If angels were to government men,
  neither external nor internal controuls on
  government would be necessary. In framing a
  government which is to be administered by men
  over men, the great difficulty lies in this You
  must first enable the government to controul the
  governed and in the next place, oblige it to
  controul itself.

5
Buchanans Answer, Buchanans Solution

• Constitutional Construction
• Hobbesian social contract
• Protective
• Productive
• Redistributive
• Constitutional Constraints
• Veil of Ignorance
• Calculus of Consent
• Unanimity and costs of agreement
• Generality
• Non-discriminatory politics

6
Constitutional Political Economy as a Research
Program

• Philosophical
• Moral and Social Philosophy
• Rules/Strategies and the nature of pursuing the
  good life
• Analytical
• Tension between presumption toward voluntarism
  and supposed need for force to realize
  voluntarism
• Binding exercises and the paradox of government
• Empirical
• History
• Efforts at constraining the state from Athens to
  today
• Contemporary
• Relationship between constitutional establishment
  and economic growth
• Fiscal Federalism (e.g., work of Weingast)