Abstract
Public choice theory, built on the homo economicus model, is regularly attacked as an empirically inadequate and potentially harmful example of economic imperialism. I offer a methodological defense of the homo economicus assumption and argue that public choice theory provides not merely a negative theory of “government failure.” Instead, public choice can be understood as a positive, optimistic enterprise that points to the potential for institutional reforms that are in the common interests of citizens.
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Notes
- 1.
Contrary to common misconceptions, this does not imply a view of “atomistic” individuals, or that “groups” can play no role in social processes. It merely implies that groups must ultimately be reducible to their individual members, and “group action” must be explained in terms of the behavior of individual group members. This was, of course, the fundamental insight of Olson’s critique of interest group pluralism offered in The Logic of Collective Action (1965).
- 2.
One important consequence of this position—and a key contribution of public choice —is that it implies that is inappropriate to impose on the political process a unitary actor assumption that policy is chosen by a “benevolent dictator” who maximizes social welfare. Instead, political decisions must be explained as “the results of individual decisions when the latter are combined through a specific rule for decision-making” (Buchanan and Tullock 1962, p. 35), which may place significant limitations on what is feasible in the political process. See Vanberg and Vanberg (2012, pp. 247–248) for an elaboration.
- 3.
It is worth noting in this context that there are some disagreements even within the public choice tradition on the importance of material self-interest as a motivation for voters. Most prominently, the theory of “expressive voting” argues that voting behavior is not primarily driven by material self-interest (precisely because voters recognize that they are highly unlikely to be pivotal), but instead motivated by desires to express support for particular values (see Brennan and Lomasky 1993).
- 4.
As Brennan and Buchanan (1988, p. 184) note explicitly, “…there is no invisible hand operative in majoritarian political institutions analogous to that operative in the market setting…” In a bizarre twist, Pettit (2008, pp. 50–51) proceeds to criticize what he has described as the “market model” on the basis of arguments that identify precisely the kinds of issues raised by public choice analysis of majoritarian politics, including the fact that voters are rarely pivotal and must confront bundles of choices, and cannot choose “at the margin.”
- 5.
Note that in the idealized market setting, this conclusion can be reached on purely procedural grounds, without any detailed information about the parties’ preferences, etc. Of course, there are potential complications here, e.g., the question of what makes exchange voluntary (see Munger 2011).
- 6.
As Buchanan puts it (1999 [1990], p. 386): “As it operates and as we observe it to operate, ordinary politics may remain conflictual…while participation in the inclusive political game that defines the rules for ordinary politics may embody positively valued prospects for all members of the polity.”
- 7.
One of the key analytic points made by Buchanan and Tullock is that this “calculus of consent” regarding the constitutional rules that an individual would want to consent to will typically imply that individuals prefer constitutional rules that do not require unanimous consent for day-to-day decisions. See Vanberg (2018) for a detailed discussion.
- 8.
Critically, for Buchanan , this is a humble role. Expert judgments cannot be substituted for the judgements of citizens as sovereigns as expressed in their decisions to consent to a particular institutional arrangement. Expert judgments can only be offered as advice. See Buchanan (1999 [1991], p. 288): “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.”
- 9.
Brennan and Buchanan (1981, p. 159): “…whatever model of man is to be used in evaluating alternative social orders – alternative rules of the economic/political/social game – it must be applied uniformly over all the possibilities to be compared…If we are to employ one set of behavioral postulates for one institution, and another set for another institution, no legitimate comparison of the two institutions can be made.”
- 10.
As Brennan and Buchanan put the point, the “claim is that homo economicus rightly belongs in the analytical derivation of normative propositions about appropriate institutional design” (1981, p. 159).
- 11.
This is, of course, exactly the kind of “calculus of consent” that the representative individual conducts when considering the trade-off between “external costs” (the costs imposed by collective decision the individual opposes) and “decision-making costs” (the costs of reaching a decision in light of divergent preferences, as well as the costs of decisions the individual favors that are blocked by others) in the model presented by Buchanan and Tullock in Chapter 6 of The Calculus of Consent.
- 12.
Brennan and Buchanan (1981, p. 160): “The question we are interested in posing about any particular social order is whether the rules by which individual actions are coordinated are such as to transform actions undertaken by participants in their own private interests into outcomes that are in the interests of others. We know that this curious alchemy is in fact worked by the market – that the invisible hand operates, under certain more or less well-defined conditions, to convert private interest into public interest. The prime task of comparative institutional analysis is to enquire whether other institutions do the same…”
- 13.
See also John Stuart Mill in his Considerations on Representative Government (1991, p. 374): “…since the very principle of constitutional government requires it to be assumed, that political power will be abused to promote the particular purposes of the holder; not because it always is so, but because such is the natural tendency of things, to guard against which is the especial use of free institutions.”
- 14.
Note the close affinity between this methodological point, and Karl Popper’s defense of the “rationality principle” as part of what he calls “situational logic.” For Popper, the rationality principle serves as the animating force for models in the social sciences by ensuring that we assume that individuals act “appropriately” within the context of a model. As he put it (1985 [1967], p. 359): “If you look upon the rationality principle from the point of view which I have here adopted, then you will find that it has little or nothing to do with the empirical or psychological assertion that man always, or in the main, or in most cases, acts rationally. Rather, it turns out to be an aspect of, or a consequence of, the methodological postulate that we should pack or cram our whole theoretical effort, our whole explanatory theory, into an analysis of the situation: into the model.”
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Vanberg, G. (2018). Constitutional Design and Politics-as-Exchange: The Optimism of Public Choice. In: Wagner, R. (eds) James M. Buchanan. Remaking Economics: Eminent Post-War Economists. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-03080-3_28
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