Front Page Titles (by Subject) Preface - The Collected Works of James M. Buchanan, Vol. 4. Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
Return to Title Page for The Collected Works of James M. Buchanan, Vol. 4. Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
The Online Library of Liberty
A project of Liberty Fund, Inc.
Search this Title:
Preface - James M. Buchanan, The Collected Works of James M. Buchanan, Vol. 4. Public Finance in Democratic Process: Fiscal Institutions and Individual Choice 
The Collected Works of James M. Buchanan, Vol. 4. Public Finance in Democratic Process: Fiscal Institutions and Individual Choice Foreword by Geoffrey Brennan (Indianapolis: Liberty Fund, 1999).
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
Foreword © 1999 Liberty Fund, Inc. © 1967, 1987 The University of North Carolina Press.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
Fiscal theory is normally discussed in a frame of reference wholly different from that adopted in this book. This dramatic shift of emphasis plays havoc with disciplinary orthodoxy, and few guideposts remain to indicate whether or not the bounds of reasoned argument have been overextended. By necessity the approach taken here requires that I consider the processes through which individual choices are transmitted, combined, and transformed into collective outcomes. Careful research and scholarship in this area is in its infancy, and the necessary reliance on crude, unsophisticated models underscores the exploratory nature of the work.
My best critics have been my graduate students, and the theme most recurrent in their comments concerns the unreality of the individualist-democracy models of political order on which the analysis is based. In the real world, individuals, as such, do not seem to make fiscal choices. They seem limited to choosing “leaders,” who will, in turn, make fiscal decisions. This idea, that, in modern political structures, individuals are satisfied when they “choose the choosers,” is sufficiently pervasive to justify some discussion, even at this early stage. In certain aspects of life, it is, of course, meaningful and efficient for the individual to choose “experts” who will, in turn, be empowered to make the necessary ultimate decisions. The case of medical care is perhaps the most familiar. In selecting a doctor, the individual is choosing someone that he considers more qualified than he to make decisions on his behalf. The individual does so, however, only because the ultimate criterion, good health, is understood by both parties and is capable of reasonably definite objective measurement.
Is politics like medicine? Are we willing to choose “experts” who will decide for us? Are we prepared to allow government “for the people” but not “by the people”? It is apparent that there is a fundamental difference here, and that it is summarized by the absence of agreed-on and objective criteria. We are not normally willing to allow chosen political “leaders” to decide for us, save within very restricted limits, because we disagree sharply among ourselves concerning what should be chosen. In one sense, the departure from standard democratic procedures during periods of war emergency confirms the basic hypothesis of democracy. For only in such periods are collective goals or objectives shared sufficiently by the populace to make genuine delegation of decision-making to experts acceptable. In the absence of such emergency, the delegation of ultimate decision power to experts, or presumed experts, is inconsistent with our notions of a free society. Individuals do not agree on criteria, and the range for collective action is wide. Why should the individual be willing to delegate to a presumed expert his power of public choice when he is unwilling to so delegate his power of private choice?
The delegation of choice discussed here is not the same thing as representative government. To an extent, of course, elected representatives choose for their constituents in any large democracy. So long as their choices are, however, constrained and guided by the ultimate wishes of their constituents, the democratic models retain relevance.
The central criticism of the individualist-democracy models is in part introspective, and it stems from each person’;s feeling that he is alienated from “the State.” The primary psychological relation of the single individual to government is one of coercion, and, recognizing this, the individual is reluctant to discuss, or even to think about, voluntaristic aspects of the process. This reaction mechanism need not be damaging, so long as the alienation is kept within appropriate limits. Effective democratic process, and useful theorizing, does not require that each and every citizen feels himself to be a participant in a continuous referendum. The individual may, and does, recognize that many of the complex political-governmental institutions are beyond his own range of control or influence. He must, nonetheless, recognize that some power of ultimate choice rests with him and his fellows. To the extent that personal alienation from the State extends beyond this point, to the extent that the individual loses all sense of influence in determining the limits on political action, effective democratic process is eliminated, and the models developed in this book are admittedly inapplicable.
In this case, the analysis should properly shift from the behavior of the voter-citizen-taxpayer-beneficiary to that of the decision-maker, who secures benefits without suffering costs, and of the decision-taker, who suffers costs and secures benefits only at the suffrage of his rulers. The political-fiscal process factors down into a two-class model, and the behavior of two groups must be examined. Developments in American democracy may suggest to some observers a shifting toward such a model. Descriptive realism is often deceptive, however, and, hopefully, the individualist-democracy models retain predictive relevance. If they do not, we should at least be willing to examine the alternative.
Is it not possible, indeed probable, that our conceptual analysis of social-political institutions is basically analogous to our visual reaction to the familiar staircase figure below? We can view the figure in either one of two ways, but it is impossible to view it in both ways simultaneously. One must, somehow, shift his vision, itself an interesting mental process, in order to change the steps into risers and vice versa.
Our conception of fiscal process seems much the same. It may be consistently interpreted and analyzed in a ruling-class, “establishment,” or force model of political order. And, as I hope this book suggests, the process can also be consistently interpreted through an individualist-democracy framework. In any relevant modern setting that is broadly described as “democratic” in the Western sense, each of the two conceptions possesses some explanatory potential. The relative efficacy of the two models need not be discussed, and the normative implications can also be left out of account. Orthodox discussion in public finance reflects an uncertain mixture of the two approaches, along with a liberal dosage of idealist-democracy norms. The resulting inconsistencies are not surprising. If this book does little else than call attention to the importance of the political decision process in public finance theory, its lesser purpose will have been achieved.
The basic draft of this book was written during the summers of 1962, 1963, and 1964. The manuscript was thoroughly revised during the period, February-August, 1965, and final changes were made in early 1966. I am indebted to the National Committee on Government Finance, Brookings Institution, for research support and assistance. Helpful clerical assistance has also been provided by the Thomas Jefferson Center for Political Economy, University of Virginia, and especially through the services of Mrs. Betty Tillman. Emilio Giardina, Charles Goetz, W. C. Stubblebine, and Gordon Tullock provided helpful comments on early drafts. Among editorial readers who were identified James S. Coleman, Anthony Downs, Roland N. McKean, and William= N. Riker contributed useful advice for revision. Mark Pauly deserves especial thanks for his assistance with the index.