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Rediscovering Buchanan’s rediscovery: non-market exchange versus antiseptic allocation

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Abstract

While Buchanan is best known for the economics of politics and constitutions, his seminal contributions to this field are but one branch of his more underlying methodology and approach to doing social science. Buchanan’s fundamental project was to re-orient economics and social science toward an analysis of symbiotic exchange (catallactics) rather than of antiseptic allocation (optimization). The most definite statement of this contribution lies in Buchanan’s 1963 presidential address to the Southern Economic Association, “What should economists do?” which was later expanded into a book of the same title. This paper seeks to draw attention to several of Buchanan’s more recent but lesser known articles where he fully develops this theme. He calls on economists to rediscover Adam Smith’s “elementary notion” about the division of labor and the extent of the market, and he professes the notion of “generalized increasing returns” as a mechanism for economists to rediscover their Scottish Enlightenment roots within the neoclassical framework. In this same vein, we also discuss how Buchanan’s rediscovery might apply to two prominent and ongoing twenty-first century issues, trade restrictions and populism.

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Notes

  1. Source (video): “Daring to Be Different: Reflections on the Life and Work of James Buchanan”, GMU Archives.

  2. Royal Swedish Academy of Sciences press release, October 16, 1986, at www.nobelprize.org.

  3. Buchanan repeats a similar response in other places. For example, a few years earlier, in his 1979 essay “Politics without Romance”, he called public choice a “new… sub-discipline that falls halfway between economics and political science…. Public choice theory essentially takes the tools and analysis that have been developed to quite sophisticated analytical levels in economic theory and applies these tools and methods to the political or government sector, to politics, to the public economy” (Buchanan 1996[1999], pp.46–48).

  4. Note that even if Boettke, Fink and Smith locate John Hicks in the mainstream groups, Hicks himself seems to have changed his position later in life: “In my sub-title, and in the text of Chapter I, I have proclaimed the ‘Austrian’ affiliation of my ideas; the tribute to Böhm-Bawerk, and to his followers, is a tribute that I am proud to make. I am writing in their tradition; yet I have realized, as my work continued, that it is a wider and bigger tradition than at first appeared. The ‘Austrians’ were not a peculiar sect, out of the main stream; they [?] were in the main stream; it was the others who were out of it” (Hicks 1973, p. 12, n. 1).

  5. For excellent papers that trace Buchanan’s methodology to his SEA presidential speech, see Shughart and Thomas (2014), Wagner (2017) and Boettke and Candela (2017). For details concerning the reception and diffusion of Robbins’s definition of economics during the twentieth century, see Backhouse and Medema (2009).

  6. Buchanan does not claim that economists entirely abandoned Smithean questions. In each of the works discussed here (Buchanan 1964, Buchanan and Yoon 1994, 1999, 2000), we find pointers to isolated works along the way that failed to influence the practitioners of economics and instead became mere fixtures in the history of thought. For excellent work tracing the lineage of Buchanan’s thought from pre-Enlightenment philosophers through his twentieth century adversaries, see Leighton and Lopez (2013), Shughart and Thomas (2014), and Boettke and Candela (2017).

  7. Kirzner (1965, p. 257) replies by arguing that Buchanan’s concern has been raised for years by a “group of writers” and that, while agreeing with Buchanan, computational problems still are part of the economic problem (even if not the main subject of study).

  8. Buchanan also was a radical subjectivist, a point about which he writes plainly but incisively in, for example, Buchanan (1963[1999]) and Buchanan and Vanberg (2002).

  9. See Pennington’s (2011) discussion of robust political economy.

  10. For applications of public choice to civil and criminal law, see Lopez (2010) and Stearns and Zywicki (2019). For coverage of the other broad areas mentioned, and more, see the Encyclopedia of Public Choice (Rowley and Schneider 2003).

  11. For a review of the implications of the mathematization of economics, see Cachanosky (1985, 1986). Also see Boettke (1997).

  12. Salient examples of the political economy of trade being absorbed into the mainstream include Magee et al. (1989), Grossman and Helpman (1994), Rodrik (1995) and Baldwin and Magee (2000).

  13. This is, for instance, the approach taken by García Hamilton (1998) with respect to Latin America’s propemsity for authoritarian governments and low levels of productivity.

  14. On populism see Cachanosky and Padilla (2020), Chesterley and Roberti (2016), de la Torre (2016), Dornbusch and Edwards (1990), Hawkins (2003), Riker (1988) and Weyland (2003).

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  1. Department of Economics, Metropolitan State University of Denver, Campus Box 77, P.O. Box 173362, Denver, CO, 80217, USA

    Nicolás Cachanosky

  2. College of Business, Western Carolina University, 224C Forsyth, 1 University Drive, Cullowhee, NC, 28723, USA

    Edward J. Lopez

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  1. Nicolás Cachanosky
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Cachanosky, N., Lopez, E.J. Rediscovering Buchanan’s rediscovery: non-market exchange versus antiseptic allocation. Public Choice 183, 461–477 (2020). https://doi.org/10.1007/s11127-020-00819-0

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