The Online Library of Liberty

A project of Liberty Fund, Inc.

• Foreword
• Preface
• The Reason of Rules
• 1.: The Constitutional Imperative
• I.: Introduction
• II.: Reasons For Rules
• III.: Rules of Games
• IV.: Rules of the Road
• V.: Rules of the Market Order
• VI.: Rules of Political Order
• VII.: The Importance of Rules
• 2.: The Contractarian Vision
• I.: Introduction
• II.: Noncontractarian Constitutionalism
• III.: Individuals As Sources of Value
• IV.: Contract and Exchange
• V.: Politics In the Exchange Perspective
• VI.: Unanimity As the Contractual Ideal
• VII.: Agreement On Rules and the Veils of Ignorance and Uncertainty
• VIII.: Conclusions
• 3.: The Myth of Benevolence *
• I.: Introduction
• II.: Private Good and Public Good
• III.: Science, Truth, and Politics
• IV.: The Authoritarian Imperative
• V.: Majoritarian Democracy In the Noncontractarian Paradigm
• VI.: The Aim of Politics
• 4.: Modeling the Individual For Constitutional Analysis
• I.: Introduction
• II.: Homo Economicus In Politics: the Argument For Symmetry
• III.: Science and the Empiricist Defense
• IV.: A Methodological Defense of the Differential Interest Model of Behavior
• V.: Social Evaluation and Quasi-risk Aversion
• VI.: Gresham’s Law In Politics
• VII.: Summary
• 5.: Time, Temptation, and the Constrained Future *
• Preface
• Part 1.: Individual Private Choice
• I.: Introduction
• II.: The Ultimate Z ’s
• III.: Preferences For Preferences
• IV.: Past, Present, and Future
• Part 2.: Individual Public Choice
• I.: Introduction
• II.: Society With a History
• III.: Temporal Interdependence
• IV.: An Illustration
• V.: Moral Rules And/or Constitutional Commitment
• 6.: Politics Without Rules, I: Time and Nonconstrained Collective Action
• I.: Introduction
• II.: The Social Discount Rate
• III.: The High-tax Trap
• IV.: The Inflation Trap
• V.: The Public-debt Trap
• VI.: Other Examples
• VII.: Conclusions
• 7.: Rules and Justice
• I.: Introduction
• II.: Just Conduct and the Notion of Desert
• III.: Justice and Promise Keeping
• IV.: Justice Among Rules
• V.: Just Rules, Agreed-on Rules, and Just Conduct
• VI.: Conclusions
• 8.: Politics Without Rules, II: Distributive Justice and Distributive Politics
• I.: Introduction
• II.: Distributive Justice: the Conventional View
• III.: The Constitutional Perspective and Institutional Incidence
• IV.: The Incidence of Unrestricted Majoritarianism
• V.: Tax Rules and Distribution Under Majority Rule
• VI.: Direct Constitutionalism and Distributive Justice
• VII.: Summary
• 9.: Is Constitutional Revolution Possible In Democracy?
• I.: Introduction
• II.: Pareto-superior Change and Wicksellian Unanimity
• III.: Distributional Limits and Prospective Rules
• IV.: Status Quo Entitlements and Distributional Envy
• V.: Constitutional Change and Free Riders
• VI.: The Role of Norms
• VII.: Toward a Civic Religion

I.

Introduction

Any analysis of the effects of alternative rules on patterns of outcomes emergent from social interaction must embody some assumptions about the nature of the persons who interact. In this chapter, our objective is to set out our own assumptions and to defend them. This is no small order. The basic model of the individual that we shall advance as the most appropriate for comparative institutional or constitutional analysis—for investigating the implications of alternative sets of rules—is basically the Homo economicus construction of classical and neoclassical political economy. Earlier experience demonstrated to us that the use of this model, particularly outside conventional market settings, is widely regarded (even within the economics profession) as one of the most objectionable features of what has been called the new “economic imperialism.” We do not propose to, and indeed cannot, restrict our discussion to behavior in alternative market orders. Much of our attention will be directed toward behavior in nonmarket institutions, and to behavior in political processes in particular. Hence, we shall have to confront the general antipathy to the use of the Homo economicus model in nonmarket settings and to deal with possible objections.

There is no question that such antipathy exists. In some of our recent work, for example, in which we attempted to develop a theory of the fiscal1 and monetary2 powers to be assigned to political agents, we modeled those agents precisely as their counterparts in market contexts are modeled by economists. The thrust of that work was to test the adequacy of constraints on the behavior of political agents under prevailing political institutions and to compare such constraints with those that might become operative under alternative structures. In part, we were examining the question as to whether constraints other than those present in the operation of electoral competition under majority rule might be required to secure tolerable outcomes for the citizenry.

Reactions to the work were predictably diverse, but there was no mistaking a widely shared skepticism about the use of the Homo economicus model for human behavior in political contexts. In one particularly strident commentary, for example, our “cynical” attitude toward human motivation was characterized as having “fascist”3 overtones. And in remarks to the American Academy of Arts and Sciences, no less a personage than Paul A. Samuelson advanced similar charges against “the boys from Chicago” and the whole tax limits movement.4

We therefore have both a personal and a professional interest in establishing the legitimacy of the Homo economicus postulate about human motivation, at least in the specific context of evaluating alternative social rules.5 In more general terms, however, our experience is simply further evidence for the hypothesis that many social analysts feel most comfortable with some sort of “public interest” or “benevolent despot” model of government (or agents in governmental roles). Preference (often implicit) for the public-interest model may, however, stem not from empirical, intellectual, or ideological foundations but from sheer analytic convenience. The public-interest model enables the analyst to proceed with normative policy evaluation unhindered by any concern with policy implementation. To judge a social outcome “unsatisfactory” by some ethical standard is, almost definitionally, to reckon that the outcome ought to be changed. The manner in which such a change is to be secured is not a matter to be taken too seriously at the purely ethical level, but the implication seems to be that since the problem is a “social” one, “society” must act. And since the notion of society “acting” is strictly meaningless, it seems natural to replace society with its agent, the “government.” In this mind-set, the implicit presumption that government will, in fact, do what is normatively suggested may not appear to be relevant. The implications of “social ethics” as distinct from “private ethics” seem to be that government either has or ought to have the powers to act as the analyst recommends and that the government will so act once the moral force of the normative recommendation is understood. Of course, the analyst might respond by saying that no such implications are intended in his exercise. He might conceive his task to be limited to the specification of what policy options are “good” and what options are “bad”; the implicit model of government and politics becomes a mere methodological convenience for him. He would defend his procedures by arguing that the evaluation of policy options is a useful exercise, quite apart from any attempt to model political behavior explicitly. So it may be; but as we have previously noted, a similar argument could be made in support of exercises involving the imagination of undiscovered realms of resource and energy potential. We suggest that even if advanced solely for convenience in evaluating what the analyst thinks are relevant policy options, the benevolent despot model of politics and government has promoted and sustained monumental confusion in social science, and social philosophy more generally.

We do not propose to introduce the Homo economicus model for any comparable analytic convenience. Nor do we wish merely to strike some sort of balance between this model, on the one extreme, and the benevolent despot model, on the other. Our use of Homo economicus stems from our conviction that this model is the most appropriate one for constitutional analysis. The remaining sections of this chapter deal with various lines of defense of the Homo economicus construction in the constitutional context.

[1. ]See Geoffrey Brennan and James M. Buchanan, The Power to Tax (Cambridge University Press, 1980).

[2. ]See Geoffrey Brennan and James M. Buchanan, Monopoly in Money and Inflation (London: Institute of Economic Affairs, 1981).

[3. ]See John Foster’s summary review of our Monopoly in Money and Inflation in Economic Journal 91 (December 1981): 1105.

[4. ]See Paul A. Samuelson, “The World Economy at Century’s End,” Bulletin of the American Academy of Arts and Sciences 34 (May 1981): 44.

[5. ]Two of our papers, “The Normative Purpose of Economic Science,” International Review of Law and Economics 1 (December 1981): 155-66, and “Predictive Power and the Choice among Regimes,” Economic Journal 83 (March 1983): 89-105, represent earlier efforts to justify the use of the Homo economicus construction in constitutional analysis.