Liberty Matters

Buchanan’s Communitarian Contractarianism – Munger and Beyond

James Buchanan is seen as a contractarian because he starts from unanimity. Practically nobody ever asks what kind of unanimity is meant, individual – any number that agrees on something may go ahead – or collective unanimity – any legitimate action must be authorized by the collective body politic under a unanimity rule.
In The Calculus of Consent (1962),[37] Buchanan and Gordon Tullock at least implicitly start from collective unanimity. They are communitarian contractarians not club contractarians. Their starting point, which I personally regard as mistaken, is not absurd. It rather can lead to a coherent view of how ideals of interpersonal respect can be expressed in a statist order despite the fact that there is a collective-choice mechanism.
The price for protecting the individual against collective impositions is, however, that all acts in the relevant realm in which the individual is protected – by the collective body – must be put into the domain of collective decisions in the first place and be forbidden unless allowed by everybody under the unanimous veto rule. This somewhat drastic conclusion represents in the normative-ethical sphere exactly what Jasay says in the factual sphere about the inherent tendency of a state to pervade all life. In the sphere of normative argument, the invasion has taken place once collective authority over a realm is presupposed.
Not by chance the subtitle of The Calculus of Consent refers to “logical foundations of constitutional democracy“ (italics added). The default must be that nothing may be done unless all are willing to omit to veto a change. If that were not the case, no one could have veto power (as assumed in the Calculus).
Starting with unanimity, there must be a collective (democratic) monopoly in the first place. In the next step one might then consider the various voting rules as, for instance in The Calculus of Consent,authorized by unanimous prior voting. Again, how could we vote on something unless it was put into the realm in which we could legitimately have a vote?
One should keep in mind, too, that The Calculus of Consent was written in Charlottesville around 1960, when Buchanan, Tullock, and Coase were there together. Everybody was focusing on the theme of “externalities” then. Polar to Coase, Buchanan and Tullock were starting from the premise that externalities of individual action are trivially absent if no actions are performed. So conceptually they started from the premise that no actions are permitted initially. That means that there are no legitimate externalities of action.
As in the modern communitarian liberal conceptions of Amartya Sen – as expressed in his version of the alleged liberal paradox – the collectivity is authorizing all acts, including those of all individuals, since it claims the monopoly of action. Buchanan forcefully criticized Sen’s approach.[38] However, ironically in his own Calculus he started from the same premise of collective authority: Only if all agree or omit to veto it, an individual’s action is allowed since all externalities are “internalized” by the agreement or omission of veto. If side-payments must be made to get things going, then the monetary transfers see to it that external effects are indeed internalized. (This is like a Wicksell tax seeing to it that Kaldor-Hicks monetary compensations are actually paid under the influence of veto power.)
The crucial normative point is: If initially all acts are forbidden and can be allowed only if all agree unanimously, then by omitting to veto or explicitly consenting to the performance of an act (or to the general permission of such acts) the consequences of conducting the act are internalized by the consent of all. That is Buchanan-Tullock-type communitarian or Kantian contractarianism.
The Kantian and Knigthian ideals that Buchanan shared with his then-Charlottesville colleague Rutledge Vining[39] rest somewhat uncomfortably with Buchanan’s metaethical skepticism concerning knowledge a priori of right and wrong. Yet on the whole, veto-unanimity is clearly much more coherent than what many likewise skeptical economists say when they assume that tolerance in practical matters follows “logically” from the fact that there is no a priori knowledge of moral right and wrong.
Jasay is impervious to the latter fallacies. In a way he may be seen as spelling out the social philosophy that Coase never produced: Initially all acts (externalities) are allowed, leaving legitimate internalization of external effects of acts to inter-individual conventions and agreements. There is no legitimate monopoly on deciding on a certain realm collectively. In fact there is no sphere of morally right acts such that the individual should submit his or her authority to judge. This, in a way, repeats only what ethical skepticism claims anyway.
[37.] James M. Buchanan, The Collected Works of James M. Buchanan, Vol. 3. The Calculus of Consent: Logical Foundations of Constitutional Democracy, with a Foreword by Robert D. Tollison (Indianapolis: Liberty Fund, 1999). </titles/1063>.
[38.] James M. Buchanan. “An Ambiguity in Sen’s Alleged Proof of the Impossibility of a Pareto Liberal.” Analyse & Kritik 18, Nr. 1 (1996 1975): 118–25.
[39.] Rutledge Vining. Economics in the United States of America. A Review and Interpretation of Research (Paris: UNESCO, 1956).