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. Hamilton’s Question; Madison’s 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. Buchanan’s Answer, Buchanan’s 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)