We argue that in order to answer the challenges that James Buchanan put to contemporary political economists, a reconstruction of public choice theory building on the work of Buchanan, F.A. Hayek and Vincent Ostrom must take place. Absent such a reconstruction, and the significant challenges that Buchanan raised will continue to go unmet.
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Also see Boettke, “Fearing Freedom” (2013b) for a discussion of Buchanan’s challenge to contemporary classical liberals.
See Buchanan and Tullock, The Calculus of Consent (1999, 203).
The concept of equilibrium, while essential in our analytical reasoning, often can become an intellectual straightjacket when utilized as it often is in modern neoclassical economics. The classical economists and early neoclassical economists of the Austrian tradition relied on a notion of equilibrium that was more akin to that used in evolutionary biology—a use that is consistent with novelty, change and adjustment. See David Simpson, The Rediscovery of Classical Economics (2013). See Richard Wagner, Mind, Society and Human Action (2010), and Boettke, Living Economics (2012a). The distinction between “mainline” and “mainstream” economics and political economy can also be usefully referenced here to distinguish between long standing ideas about the “invisible hand” in classical and early neoclassical thinkers, and more modern technical presentations of the “invisible hand” in the Arrow, Hahn, Debreu system of competitive general equilibrium.
Among the Austrian economists, only Murray Rothbard adopted that perspective and he explicitly rejected public choice analysis as ill-founded in Power and Market (1970) on the grounds that given the coercive nature of politics one cannot analyze politics as exchange.
In the most recent NBER Reporter 2 (2013) for the political economy group, Alberto Alisina makes a similar point when he states that “in order to understand the world around us, we need to go beyond the assumption of “homo economicus” maximizing his welfare in isolation in an institution-free world. See http://www.nber.org/reporter/2013number2/2013no2.pdf.
One of the intellectual difficulties here is that rather than a rejection of the analytical importance of the equilibrium construct to economic and political economy theorizing, the argument here is one of relative emphasis. We find particularly useful Richard Wagner’s (2010) discussion about foreground and background. His argument is that in standard neoclassical economics, the equilibrium conditions are in the foreground of the analysis, while the processes that give rise to that equilibrium state of affairs are in the background. In the reconstructed political economy we are discussing, the analytical focus is reversed with the process analysis taken the foreground and the equilibrium conditions as the background.
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We would like to acknowledge the insightful criticisms we received from Chris Coyne and Adam Martin and the research assistance of Liya Palagashvili. We also acknowledge the financial support of the F. A. Hayek Program for Advanced Study in Philosophy, Politics and Economics at the Mercatus Center. The usual caveat applies.
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Boettke, P.J., Snow, N.A. Political economy and the science of association: A suggested reconstruction of public choice through the alliance of the Vienna, Virginia, and Bloomington schools of political economy. Rev Austrian Econ 27, 97–110 (2014). https://doi.org/10.1007/s11138-013-0239-3
- Austrian economics
- Constitutional political economy
- Spontaneous order