Response by Geoffrey Brennan

The responses to what Steve Horwitz aptly refers to as my “once-over-lightly” treatment of Buchanan themes raise a number of very interesting issues. On many aspects of those commentaries, no response is really necessary. They either amplify pieces of the Buchanan intellectual scheme that I dealt with too cursorily or re-express them in more elegant terms. There are, however, at least three themes that I think are worth an additional comment or two at this stage. One, which crops up in several of the contributions (Boettke, Horwitz, and Stringham in particular), relates to the status of anarchy – and more specifically the possibility of “rules without government.” I think the commentators are right that Buchanan is psychologically ambivalent about such possibilities – but I also think the textual evidence on this matter is pretty clear. In particular:

1. In the Limits of Liberty, Buchanan expressly refers to the attractions of anarchy as a snare and delusion. He does not deny the attractiveness to classical liberals of ordered anarchy as an abstract idea – but he is clear that it ought to be rejected as a practical possibility. Again, in his introduction to Freedom in Constitutional Contract, he insists that freedom is possible “only in constitutional contract.”

2. Buchanan is openly skeptical about “evolved norms” as a source of grounding appropriate “rules of the game.” He thought that the evolutionary approach made for an excessive quietism in the face of existing practices. The contractarianism he endorses requires, as he saw it, explicit popular consent of agents to the rules under which they are to be governed. Perhaps in this he was excessively influenced by the American experience – which he saw as a paradigmatic example of a people constructing the rules of the sociopolitical game.

In making this observation, I do not want myself to take a stand. The work of Elinor Ostrom on commons management and of Peter Leeson on the pirates’ code seems to suggest that ordered anarchy is possible in some situations – and specifically in those where the number of agents is not too large. Whether that work is sufficient to dispose entirely of the relevance of the Hobbesian picture is more debatable. Arguably, Buchanan saw his efforts as directed at larger scale institutions like the modern state. And it is important to recall that in that setting he remained committed to changes in rules that would command virtually unanimous support. In that respect, more extreme libertarian proposals seem unpromising.

The second issue is more fine-grained and relates expressly to Viktor Vanberg’s commentary. The issue is the voluntariness of market transactions. I’m not sure whether there is any substantive disagreement between Viktor and me, but it will help to underline my own understanding of the logic of Buchanan’s position if I say a little about it.

Viktor quite rightly observes that “in the case of market transactions,… what ‘voluntary’ means is defined in terms of the rules that constitute the market….” I agree 100 percent. But I think the point cuts deeper than Viktor suggests. Specifically, if he and I are agreed on this, then the remarks Viktor makes earlier about the voluntariness of market transactions seem entirely question-begging.

This is what Viktor says:

Advocates of free-market liberalism are surely right in emphasizing that market transactions are distinguished by the fact that they are voluntarily entered into by the parties involved, whose agreement testifies that each expects to gain thereby conferring legitimacy on the transaction. [Emphasis added.]

It seems to me that this is disingenuous on two counts. One ambiguity involves the definition of the set of “parties involved.” If this is meant to include only the contracting parties, the claim is true by definition. But there are other parties who are affected by exchanges between A and B – namely, others across the whole trading nexus. This is an issue that became more salient to Buchanan as he worked in later life on increasing returns and the work ethic, out of the first three chapters of Smith’s Wealth of Nations. An example will help. When X purchases from Y the right to use Y’s (patented) invention – say, to produce the motor car – X reduces the value of the human capital of many an ostler and horse-breaker and saddle-maker and blacksmith. These people endure losses by virtue of the X/Y exchange. This is, I take it, simply a fact. It is a fact that reflects the manifold and complex interdependencies that make up the market order. Of course, these losses are not, under the rules of the typical market game, “harms” or “injuries”; they simply reflect the fact that within a highly interdependent structure, “rights” are entitlements to inflict as well as to avoid losses. Some losses are called “harms/injuries” and others are not. Which are which is the role of the rights structure to specify.

What we can say is that, in any transaction between X and Y, there are:

Expected gains to X (Bx); Expected gains to Y (By); Actual losses endured by third parties (Lc); Actual gains accruing to fourth parties, (Bd).

In most cases, and specifically for “private goods,” there is a strong presumption that the aggregate of these gains and losses is positive. Market transactions will in such cases be “efficient.” But this does not make them fully voluntary: Any losses endured by the C’s are involuntary losses. So, though we can make a defense of market transactions on the basis of their expected efficiency, we cannot do so on the basis of their voluntariness. Put another way, if voluntariness “confers legitimacy on the transaction,” then we have to define “voluntariness” to exclude the will of any losers – and that seems just plain arbitrary.

Another way of putting the point is to observe that unanimity among all citizens (what Buchanan identifies as the ultimate contractarian test) is not the same as agreement among contracting parties in a market exchange, because in the case of explicit unanimity every affected party has a right of veto, which is not true in the market!

What Buchanan recognized fully, I believe – and what I think Viktor only recognizes in part – is that market transactions can only make claim to full contractarian credentials if those who lose under any market transaction have agreed to the rules of the market game. Viktor emphasizes that markets can operate under a variety of more detailed rules, and hence free-market liberals need a procedure for deciding which among those possible rule-regimes are "truly voluntary.” But it seems clear to me (as I believe it did to Buchanan – at least, the post-Smithian Buchanan of the “work ethic” strand) that the very idea of voluntariness that is thought to undergird market transactions is not self-evident. Free-market liberals are not “surely right” – indeed they are not right at all! – to claim that market transactions are voluntary for the “parties involved,” unless one is prepared to stipulate that only the contracting parties themselves (and not affected others) have moral standing. And that seems to require a notion of “voluntariness” that is entirely question-begging.

I have taken a lot of space trying to clarify this point, because it seems to me to be one on which many free-market liberals seem to be confused. Buchanan himself was certainly not confused on this point. He clearly thought that markets require a deeper contractarian defense – and it is this defense that the constitutional contract is designed to provide. As I say, I am not sure whether Viktor would disagree. But some of the things he says seem inconsistent with others; and I think this is a matter that demands total clarity.

The final issue is specific to Lomasky’s commentary. And here, I have to confess to some surprise -- surprise both as to Lomasky’s own position and to his attribution of Buchanan’s.

The latter first. Lomasky describes Buchanan as committed to a motivational structure involving “self-interest narrowly construed” in both politics and economics. For Buchanan, Lomasky says, “politics without romance” means that homo politicus and homo economicus are one. My perception of Buchanan’s position here is that it was more nuanced. He was committed to basic motivational symmetry; but he recognized as early as 1954 – and certainly in his paper on “voter choice” with me in 1981 – that the same motivational structure could admit different behaviors. He did insist that anyone who claimed any difference between political and market behavior had to provide a justificatory argument. And it would have to be consistent with motivational symmetry. But his commitment to homo economicus always struck me as more equivocal than Loren paints it (and for example more equivocal than Gordon Tullock’s or Bob Tollison’s were).

Second, on Loren’s own position, I had taken it that he himself is deeply skeptical about the extrapolation of homo economicus to electoral settings. Accepted that political issues (and issues of institutional design) are of less interest to most ordinary mortals than they are to political philosophers (and probably, for that matter, than they were to Buchanan!). However, I take it that the difference between ideal and non-ideal theory is less a matter of the extent to which theorists of either stripe think political theory is important, and more a matter of how feasibility considerations bite in the analysis. I agree that, in this ideal/non-ideal typology, Buchanan is definitely on the non-ideal side of the fence. But it would certainly be a mistake to think that, to be a non-ideal theorist, one would have to embrace predominant self-interest as a political motivation. Or that making such an assumption might help to find an appropriate "middle way"!

Copyright and Fair Use Statement

Current Posts

Part of: James Buchanan and the Economics of Anarchy: Introduction