James M. Buchanan,
The Collected Works of James M. Buchanan, vol. 8 (Democracy in Deficit: The Political Legacy of Lord Keynes) 
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About this Title:
Vol. 8 of The Collected Works.
Democracy in Deficit is one of the early comprehensive attempts to apply the basic principles of public-choice analysis to macroeconomic theory and policy. The book serves to bolster Buchanan’s central beliefs in the necessity of a balanced-budget amendment to the U.S. Constitution and in monetary rules rather than central bank discretion. The book is co-authored with Richard Wagner.
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Foreword and coauthor note © 2000 Liberty Fund, Inc.
Democracy in Deficit: The Political Legacy of Lord Keynes © 1977 by Academic Press, Inc. 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.
Table of Contents:
Richard E. Wagner
PART ONE: What Happened?
1.: What Hath Keynes Wrought?
The Political Economy
A Review of the Record
The Theory of Public Choice
Fiscal and Monetary Reform
2.: The Old-Time Fiscal Religion
Classical Fiscal Principle
Fiscal Practice in Pre-Keynesian Times
Balanced Budgets, Debt Burdens, and Fiscal Responsibility
Fiscal Principles and Keynesian Economic Theory
The Fiscal Constitution
3.: First, the Academic Scribblers
“Classical Economics,” a Construction in Straw?
The Birth of Macroeconomics
The New Role for the State
The Scorn for Budget Balance
The New Precepts for Fiscal Policy
Budget Deficits, Public Debt, and Money Creation
The Dreams of Camelot
4.: The Spread of the New Gospel
Hypothetical Budget Balance
Monetary Policy and Inflation
The Rhetoric and the Reality of the Fifties
The Reluctant Politician
Political Keynesianism: The Tax Cut of 1964
Economists, Politicians, and the Public
Functional Finance and Hypothetical Budget Balance
5.: Assessing the Damages
The Summary Record
Budget Deficits, Monetary Institutions, and Inflation
Inflation: Anticipated and Unanticipated
Why Worry about Inflation?
Inflation, Budget Deficits, and Capital Investment
The Bloated Public Sector
Tragedy, Not Triumph
PART TWO: What Went Wrong?
6.: The Presuppositions of Harvey Road
The Presuppositions of Harvey Road
The Economic Environment of the “General Theory”
Strings Can Be Pulled
The Great Phillips Trade-off
Reform through National Economic Planning
7.: Keynesian Economics in Democratic Politics
Budgetary Management in an Unstable Economy
Taxing, Spending, and Political Competition
Unbalanced Budgets, Democratic Politics, and Keynesian Biases
Budget surpluses and democratic politics
Budget deficits and democratic politics
Deficit Finance and Public-Sector Bias
8.: Money-Financed Deficits and Political Democracy
Budget Deficits Financed by Money Creation
Benevolent and Independent Monetary Authority
The Political Environment of Monetary Policy
The American Political Economy, 1976 and Beyond
9.: Institutional Constraints and Political Choice
The Public Economy and the Private
Fiscal Perception and Tax Institutions
Debt-Financed Budget Deficits
The Ricardian theorem
The Keynesian proposition
A public-choice, post-Keynesian synthesis
The incentive structure of debt finance
Money-Financed Budget Deficits
PART THREE: What Can Be Done?
10.: Alternative Budgetary Rules
Budget Balance over the Cycle
Budget Balance at Full Employment
The Budget Reform Act of 1974
Short-Term Politics for Long-Term Objectives
11.: What about Full Employment?
Current Unemployment and the Quandary of Policy
The Keynesian Theory of Employment
The Inflation-Unemployment Trade-off
The Inflation-Unemployment Spiral
Biting the Bullet
So, What about Full Employment?
12.: A Return to Fiscal Principle
The Thrill Is Gone
The Case for Constitutional Norms
The Case for Budget Balance
Fiscal Decisions under Budget Balance
Tax Rates and Spending Rates as Residual Budget Adjustors
A Specific Proposal
Debt Retirement and Budget Surplus