The Online Library of Liberty

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• 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

VII.

Summary

Homo economicus, the rational, self-oriented maximizer of contemporary economic theory, is, we believe, the appropriate model of human behavior for use in evaluating the workings of different institutional orders. The central feature of the Homo economicus model in this connection is its presumption of the ubiquity of conflict among interacting agents; it is this presumption that underlies the skepticism toward the possession of power that characterizes our attitude (and that of classical political economists) toward the design of institutions. Such skepticism means that it cannot be presumed that discretionary power possessed by agents under a particular institutional regime will be exercised in others’ interests, unless there are constraints embedded in the institutional structure which ensure that effect. In this sense, our model lies a great distance from the predominant “benevolent despot” model of politics in which public-interest orientations are assumed simply as a matter of course.

In mounting our defense of the Homo economicus alternative, we have focused on analytic and methodological arguments rather than purely empirical ones. Our arguments are several:

• 1. There is a strong analytic case for undertaking the comparison of institutions with the same basic behavioral model, rather than shifting behavioral horses midstream.
• 2. To the extent that institutional design is supposed to transform private-interest motivations into public-interest behavior, it makes analytic sense to focus on private-interest motivations and abstract from any purely behavioral altruism.
• 3. If market and political institutions are valued instrumentally for their capacity to produce goods and services that citizens want, and if the preferences for these goods and services exhibit standard convexity properties, it is rational for citizens to design institutions assuming a model of political agents’ behavior that generates “worse” outcomes than the empirical record would suggest emerge on the average.
• 4. Unless there is a critical mass of altruistically inclined individuals, which might be a substantial majority of citizens, it may well pay even the altruistically inclined to behave selfishly.
• 5. Because those who bid most for power in institutional orders will tend to be those whose private projects require major modification in the behavior of others, all citizens can rationally expect discretionary power to be exercised in ways that will be uncongenial to themselves.

There is, of course, empirical content in these arguments. However, in contrast with the purely predictive “science of behavior” models of conventional economics, empirical aspects are not entirely decisive. The significance of this fact is not that we believe that the purely empirical case for the use of Homo economicus is weak, although we believe that case to be rather weaker than some of our more zealous colleagues do. The significance is rather that the empirical record is singularly difficult to unravel, not least because observed behavioral patterns may be substantially influenced by the prevailing institutional structure, so that when that structure is altered there are entirely predictable but (necessarily) currently unobservable behavioral changes. Consequently, rather than attend to ultimately inadequate observations, we have attempted to develop our argument on the basis of reasoned speculation. Of necessity, such reasoned speculation makes up a large part of constitutional analysis. And as for our political-economist forebears, so for us: The Homo economicus-derived model of social conflict and cooperation seems uniquely appropriate for our constitutional speculations.

5.

Time, Temptation, and the Constrained Future*

[* ][Geoffrey Brennan and James M. Buchanan, The Power to Tax: Analytical Foundations of Fiscal Constitution (New York: Cambridge University Press, 1980), volume 9 in the series.]