…I remain, in basic values, an individualist, a constitutionalist, a contractarian, a democrat – terms that mean essentially the same thing to me.
James M. Buchanan (1975/2000, p. 11).
Abstract
Democracy and constitutionalism are both central to the Western political tradition. And yet, constitutional restrictions are often perceived to be in tension with democratic commitments. I argue that the constitutional political economy approach developed by Nobel Laureate James Buchanan resolves the tension between constitutionalism and the values of democratic governance by shifting the analysis from a system-attributes perspective that focuses on the particular institutional properties of a political order to a system-legitimacy perspective that focuses on the manner in which political institutions gain democratic legitimacy. In so doing, the approach reveals that constitutionalism can be understood as a natural expression of democratic values.
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Notes
This was, of course, part of Francis Fukuyama’s claim regarding the “end of history” (Fukuyama 1992).
Consider President Obama’s comments in anticipation of the Supreme Court’s decision on the Affordable Care Act, arguing that the Court would be taking “an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress. And I’d just remind conservative commentators that for years what we’ve heard is, the biggest problem on the bench was judicial activism or a lack of judicial restraint—that an unelected group of people would somehow overturn a duly constituted and passed law” (https://www.washingtonpost.com/blogs/right-turn/post/obama-goes-after-the-supreme-court/2012/04/02/gIQAjcZprS_blog.html?utm_term=.90874f9b0cad).
For the classic statement, see Schumpeter (1942/2008, p. 269): “And we define: The democratic method is that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people’s vote.” As we will see below, this is precisely one of the points of attack for Buchanan, whose approach suggests that minimally democratic institutions including free elections and a broad suffrage can be a key feature of democratic governance, but are not themselves sufficient to ensure responsiveness of the political system to the preferences of citizens, properly understood.
This system-attributes approach also is reflected in positive, descriptive research, which tends to place heavy emphasis on the presence of free and competitive elections as a central indicator of democratic quality. See, for example, the widely used Polity IV measures (http://www.systemicpeace.org/polity/polity4.htm).
Buchanan (1991/1999, p. 286): “My own ontological presuppositions do not allow any conceptual separation or distinction between an individual’s choice behavior and his or her utility function. My position is sometimes classified to be one of strict subjectivism.”
This normative individualism in Buchanan’s thought should be distinguished from methodological individualism. The latter (to which Buchanan also subscribed) is a methodological principle that imposes a requirement on the properties of social scientific explanations of collective action. The former is a normative principle that provides the grounding for claims regarding the legitimacy of political orders.
Of course, at the constitutional level, individual preferences over the set of rules will be shaped by expectations of how alternative rules will shape sub-constitutional play. As Buchanan (1981/2001, p. 49) noted, “the choice or selection among different processes or procedures must remain empty unless it is somehow informed by predictions of outcome or end-state patterns that will be generated under alternative rules. To judge a set of procedural rules to be desirable it is necessary to establish at least some proof, within reasonable tolerance, that such rules will ‘work,’ that is, will produce end-states that are valued in themselves.”
One critical implication of the analysis in the Calculus of Consent is that the answers to these two questions are interdependent. As Buchanan and Tullock (1962, p. 83f.) put it, “much state action, which could be rationally supported under some decision-making rules, cannot be rationally supported under all decision-making rules…[there is an] essential interdependence between the choice of rules and the choice as to the location of activity in the public or the private sector.”
It is critical to emphasize here that this does not imply that the goals or values that individuals seek to pursue through collective decision-making are necessarily narrow, or self-interested. These goals may include collective ends, or normative conceptions of the common good. Rather, the key issue is that it is the individuals’ views of what these goods are that is critical, not an exogenously given value scale.
See also Buchanan (1986/1991, p. 463): “The political analogue to decentralized trading among individuals must be that feature common to all exchanges, which is agreement among the individuals who participate. The unanimity rule for collective choice is the political analogue to freedom of exchange of partionable goods in markets.”
Philip Pettit, in work that is in some ways consistent with the CPE approach, appears to be confused on this key point in his critique of Buchanan (Pettit 2008, p. 50). Pettit suggests that Buchanan’s view is that “participants in the electoral polity divide into consumers and producers, and interact in the determination of policies. The producers stand for office in groupings of parties, advertising certain policies and policy-programs, and the consumers go to the polls to register their preferences—presumptively, their consumerist, self-oriented preferences—among the parties and programs on offer. Thus, with nothing more than the collaboration required for parties to form, members of an electorate act in concert to shape the policies that prevail in government. And they allegedly do so, as the model of the competitive market suggests, in such a way that the policies ought to track the trend in preferences expressed by voters.” What Pettit misses, of course, is that Buchanan’s conception of “politics as exchange” is concerned with mutual agreement among citizens on a set of constitutional rules for collective decision-making—a view that is close, in many respects, to Pettit’s own “condominium model” of democratic control. Moreover, much of Buchanan’s work was focused on offering powerful critiques of the “market model” of politics as outlined by Pettit by demonstrating that majoritarian politics can often lead to sub-optimal results from the (constitutional) perspective of all voters.
Buchanan was critical of John Rawls on precisely those grounds. Methodologically, Buchanan saw great similarity between his approach, and Rawls’s attempts to derive principles of justices from unanimous agreement behind a veil of ignorance. However, Buchanan disagreed with Rawls’s attempt to derive specific implications of what these principles would be. As he put it (Buchanan 1975/2000, p. 221), “Unfortunately, in my view, Rawls went further than this and attempted to identify those precepts that might be predicted to emerge…. [P]redictably, it is this aspect of his work that is drawing attention away from his more basic contribution, which is the relationship of justice to the outcome of the contractual process itself.”
See also The Calculus of Consent: “[T]he individual will not find it advantageous to vote for rules that may promote sectional, class, or group interests because, by presupposition, he is unable to predict the role that he will be playing in the actual collective decision-making process at any particular time in the future” (Buchanan and Tullock 1962, p. 78). Instead, individuals will favor rules that “are generally advantageous to all individuals and to all groups” (ibid). Obviously, this approach, as Buchanan himself noted, has “considerable affinity with that of John Rawls, who has attempted to derive general principles of justice in a similar manner” (Buchanan 1975/2000, p. 91, n. 18). Note, however, that Rawls’s veil of ignorance is considerably “thicker” than Buchanan and Tullock’s veil of uncertainty and removes far more knowledge from individuals.
Buchanan (1966/2001, p. 257): “But it seems that genuine compromise, genuine consensus, is much more likely to result in this sort of situation than at the stage where, by necessity and invention, individual positions come to be directly opposed, one to the other.”
“[F]or many collective decisions, a supermajority or qualified majority, short of unanimity but more inclusive than a simple majority, might be preferred” (Buchanan 1997/1999, p. 421).
The Duchy of Liechtenstein provides a suggestive example. Lichtenstein’s hereditary monarch exercises considerable political power, including veto over parliamentary legislation. This feature has “often been subjected to criticism from a parliamentary-democratic perspective” (Nigg 2017, p. 88). At the same time, the Liechtenstein Constitution claims to establish a “hereditary monarchy on a democratic and parliamentary basis” (Art. 2), and roots the powers of the monarch in the consent of the governed. Moreover, Article 113 of the constitution provides that a petition signed by 1500 citizens triggers a referendum on the abolition of the monarchy. If this referendum passes, parliament is obligated to draft a new, republican constitution, and to submit it to a referendum. This procedure was invoked in 2012. The initial referendum to eliminate the “undemocratic” institution of a hereditary monarch was rejected by a citizen vote of 76–24%, with a turnout of roughly 83%.
Hayek (1979, p. 128) makes a closely related point when he notes that “the endeavour to contain the powers of government was almost inadvertently abandoned when it came to be mistakenly believed that democratic control of the exercise of power provided a sufficient safeguard against its excessive growth.”
Exogenous in the sense that the principle that leads to the rejection of citizen sovereignty cannot itself be capable of securing the consent of all citizens. If it could, the conflict at issue would vanish.
Hayek (1960, p. 81) makes a similar point: “Only a demagogue can represent as `antidemocratic’ the limitations which long-term decisions and the general principles held by the people impose upon the power of the temporary majorities. These limitations are conceived to protect the people against those to whom they must give power, and they are the only means by which the people can determine the general character of the order under which they will live.”
Buchanan (1991/1999): “If individuals are considered the ultimate sovereigns, it follows directly that they are the addresses of all proposals and arguments concerning constitutional-institutional issues. Arguments that involve reliance on experts in certain areas of choice must be addressed to individuals, as sovereigns, and it is individuals’ choice in deferring to expert-agents that legitimizes the potential role of the latter, not some external assessment of epistemic competence as such.”
Note that “exit” and “voice” differ fundamentally in that (in contrast to exit), voice does not provide an immediate avenue for political change at the individual level, i.e., it allows individuals to express discontent and may contribute to political change, but it does not directly allow an individual to alter her political circumstances in the way that exit does.
In exploring the potential for such constitutional designs, scholars must confront a number of potential challenges. One concerns the identity of the “consumers” for whom jurisdictions compete (see Vanberg 2000 for a detailed treatment): In the case of FOCJs, what is the nature of the service they provide? Does a service require geographically connected provision or does it have significant network properties? Such services may require that entire local units choose the same provider, implying that competition among FOCJs is for local governments. Services without the same properties may be able to compete directly for individual citizens.
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Acknowledgements
This paper is an expanded version of the Presidential Address delivered at the 2018 Public Choice Society Meetings in Charleston, SC. I would like to thank Leah Downey, Mike Munger, Richard Salsman, William Shughart, and Viktor Vanberg for helpful comments on an earlier draft.
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Vanberg, G. Constitutional political economy, democratic theory and institutional design. Public Choice 177, 199–216 (2018). https://doi.org/10.1007/s11127-018-0570-0
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DOI: https://doi.org/10.1007/s11127-018-0570-0