Download 0 Buchanan for GMU RAE

Public Choice As Political Philosophy
David Schmidtz
Kendrick Professor of Philosophy
Eller Chair of Service-Dominant Logic
University of Arizona
Tucson, AZ 85721
CORRESPONDENCE: [email protected]
ABSTRACT: Moral philosophy as it emerged from the Scottish Enlightenment spawned the
social sciences in general and the field of political economy in particular. The latter field itself
went on to splinter into two. James Buchanan, however, walked us back from our tendency to
over-specialize and recovered the field of political economy as it was done in its classical heyday.
KEY WORDS: justice, incentive compatibility, corruption, utilitarianism, distribution, self-interest
JEL CODES: A12, B12, H, P1
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James Buchanan worked in a contractarian tradition that we date back to Thomas Hobbes (1651).
To Hobbes, human action orbits around a goal of personal survival. Accordingly, we call
Hobbes an egoist in our introductory courses. However, there is more to the story. To Hobbes,
we are born at center of our universe, so we have an egocentric bias. Our egocentrism fosters…
what? In fact, the consequence of egocentrism is not enlightened self-interest, but what Hobbes
called vainglory—roughly what we call vanity today. Other people see the world from a different
perspective. They do not see that we are at the center of the universe, which is infuriating. Thus,
everything the people around us do is an implicit insult and an unending provocation, which
makes us prone to violence. We spend our lives retaliating against those whose universe does not
revolve around us, and we spend our days convincing ourselves that someone else fired first shot.
As a first approximation of Public Choice theory’s core insight, we observe not that
people who acquire the power of government are narrowly self-interested but more
straightforwardly and uncontroversially that people who run courts and legislatures are much the
same as people who run businesses or households. Some people want money. Some want power.
But if we single out those who devote their lives to acquiring power, we will notice that they all
want to use power for something.
Maybe power-seekers are pursuing narrow self-interest, but it is usually more
complicated. Sometimes it is worse. (Not every power-seeker has as much self-control as
narrowly self-interested people have.) But maybe sometimes it is better. Between Hobbes and
Buchanan there was a Scottish Enlightenment whose main figures were David Hume (1738)
and Adam Smith (1759, 1776). Smith put an equally complex but gentler spin on our moral
psychology, positing a drive to be esteemed, but also something more: namely, a drive to be
genuinely worthy of esteem. We are social animals. We have a propensity to truck and barter.
But what drives us to truck and barter is not simply the money. The truth is more profound.
What drives us to truck and barter is our nature as social animals. We truck and barter to make a
place for ourselves in a community. We truck and barter so that we can lay down for that last
time knowing it was good that we were here—knowing (even if no one else knows) that we made
the world a better place.
For Scottish Enlightenment scholars, the mid-1700’s was a heady time. Europe had never
seen a better opportunity to make progress. Hume and Smith, following Galileo and Francis
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Bacon, then Newton, were on a quest to “introduce the experimental method of reasoning into
moral subjects” (to borrow the subtitle of Hume’s Treatise). Among philosophers, the Scottish
observation-based approach was called empiricism.
1. PRODUCTION PARTS WAYS WITH DISTRIBUTION
By the mid-1800’s, John Stuart Mill had taken empiricism to the limit, arguing that everything
we know comes to us by experience and experiment. We draw inferences from observed
empirical regularities. Even propositions like “two plus two equals four” are learned by
generalizing from observed results. In his day, Mill was highly visible and highly influential as
an expositor of the new moral sciences. Accordingly, he was taken very seriously when, in a
series of works culminating in 1848 with Principles of Political Economy, Mill separated the
study of how goods are produced from the study of how goods are distributed. That is what you
do for sake of analytical rigor and tough-minded science: if two things can be separated, you
separate them.
Here is a further thought. Mill thought humanity had largely exhausted frontier of
technological progress (Vallier 2010). To be sure, the telegraph was invented in 1837, and by
1848, many thinkers suspected that electricity’s potential, especially in the realm of distance
communication, was far from exhausted. Thus, even as Mill was writing, there was plenty of
reason to doubt Mill’s view that a steady-state economy was around the corner, and plenty of
reason to doubt that better distribution was the only remaining avenue for substantial human
progress. On the other hand, by 1831, Mill, inspired by economists such as David Ricardo had
already separated production from distribution (Vallier 2010). So, it is hard to know exactly what
Mill could have been thinking, but perhaps he was set in his ways and simply overlooked
increasingly plain evidence that technological progress was exploding rather than tapering off. In
any case, for whatever reason, Mill did believe the coming age would be an economic steady
state with relatively little news on the production side. Human progress would come via better
distribution, not rising productivity, which made distribution the crucial topic.
Today, we hardly remember John Stuart Mill pressing that distinction, or that we simply
took Mill’s authority for granted and went along with him. Today, we cannot see how spurious
that distinction was, for we can hardly imagine not seeing production and distribution as separate
topics. But sometimes, what seems to be two things is actually one thing, along the lines of the
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morning star and the evening star. If we presume to treat them as radically separable simply
because they appear to be separable, we end up being badly misled.
Indeed, in the aftermath of Mill’s distinction, philosophy was cut off from the scientific
study of what makes some societies more productive than others. The latter became the province
of some other department. Within departments of philosophy themselves, the impact was not
detectable by the tools left to philosophy, but nonetheless momentous. Since Philosophy and
Political Economy came apart, we have portrayed what society produces as a pie. Philosophy has
been like the proverbial drunk looking for his keys under the street lamp not because that is where
the drunk dropped his keys but because the light is better there. We treat the question of justice as
a question of how to treat the pie because pie is what we can study with the analytical tools we
have left. Questions about what produces the pie had to be left to the social sciences. What
philosophy was equipped to do was to bring a priori intuitions to bear on the question of what to
count as a fair way of dividing the pie.
In Philosophy, the picture is something like this (Schmidtz 2017). We look at a snapshot
of a busy intersection. We see how arbitrary it is that some people have red lights and others
have green. We focus exclusively on the snapshot because the cause and effect and the empirical
generalizations about the process that we study in sociology, economics, and psychology—these
things are all autonomous social sciences now. Where the pie comes from is a social science.
How people navigate in their communities, and which ways of managing traffic work better than
others, are questions of social science. What works is the province of social science.
What is fair is the province of Philosophy. If we set aside social science and just look at
the snapshot of social life at its busy intersections where traffic is congested and conflicts of
interest become apparent, then it seems obvious: In an ideally just world, everyone would have a
green light. At the same time.
That may be highly impractical. If that is justice, then we have to compromise justice for
humanitarian reasons: that is, so that human beings can afford to live together at all. If that is
justice, or the basic ideal of justice, then every compromise that we accept so that people can
tolerate living together is a lamentable practical concession to the corruptness of human nature.
When do we go back to square one and ask whether our intuitions about the snapshot are
anything other than ridiculous in a world of cause and effect? We cannot go back. If we did, we
would be doing social science, and therefore not working on justice anymore.
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Yet, there was a time when we knew that justice has roughly nothing to do with how we
treat the pie, and everything to do with how we treat bakers. If we set aside everything we have
learned about the terms of engagement under which bakers are better off living together, there is
no testable answer to question of how to divide pie. There are only untestable intuitions. We
know justice is not merely a matter of opinion, but that is what we made it resemble when we
started treating Philosophy as outside the realm of empirical test. Under those constraints, the
best we can do is to theorize about why unreasonable people have intuitions unlike ours.
Hume and Smith understood, as did James Buchanan, that economic justice pertains to an
ongoing process, not an outcome. What we call “pie” is a metaphor for lifetimes of work. To
Hume, we assess patterns of mutual expectation. To be sure, not all conventions command
respect. On Hume’s theory, the conventions that command respect are useful or agreeable to self
or others. To Smith, the question is even more pointedly empirical. We assess conventions in
terms of how they affect wealth of nations. How do wealthier societies manage commercial
traffic? What are documented consequences of alternative trade policies? Their questions
mattered, and their questions had testable answers.
By the mid-1900’s, when James Buchanan was starting out, Philosophy had painted itself
into a corner. It had taken Mill’s intellectual division of labor to logical conclusion. A onceexciting and fruitful empiricist project culminated in philosophers analyzing the meanings of
words as used in ordinary language, and affecting a certain pride in knowing that there is nothing
more to philosophy than that. That is one story about how Philosophy came to be what it is today,
isolated and marginalized as the social science departments emerged in 1800s.
Was Mill really that pivotal? I am not sure there is any such thing as an unequivocal
historical record. If there is, I am not enough of a historian to isolate it. I suspect that no
historical record that can settle exactly why things happened as they did. Hume taught us, after
all, that correlation is one thing, while causation is another. So let me mention three other key
events that also correlate with philosophy’s marginalization. We can think of them as competing
or as complementary explanations.
2. UTILITARIANISM PARTS WAYS WITH SELF-INTEREST
Not long after Mill separated questions of production and distribution, Henry Sidgwick separated
egoism from utilitarianism and developed them into what he called two alternative Methods of
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Ethics that could not be reconciled (except by God). Once the methods of determining what to do
were separate, that made it harder to connect utilitarian moral analysis to real world policy and
political questions. The question of incentive compatibility is a question about how to arrange
the opportunities and incentives implicit in institutional structures so that when people do what is
in their own best interest, they will be serving the common good as well. To be able to answer
that question is to be able to answer the question of which institutions actually work in the real
world as methods of promoting the general welfare. Questions like those were once the questions
that drove utilitarian philosophers (or proto-utilitarian, we sometimes misleadingly say, as if they
were groping toward the more sophisticated approach that we take today). The reality of what
works was once the focus of utilitarian analysis, not something to set aside as interesting only to
egoists. Today, such questions are left to social science. They are questions for planners and
practitioners—literal and metaphorical traffic managers—anything but philosophers.
3. UTILITARIANISM PARTS WAYS WITH MANAGING EXPECTATIONS
Also following Mill, but later and perhaps more gradually, utilitarianism became a philosophy
that’s officially about maximizing but in reality is all about distributing. This development did
not originate with, but does seem to have culminated in, Peter Singer’s “Famine, Affluence, and
Morality” (1974), one of the most widely read bits of philosophy ever written. Singer would not
characterize his view this way today, yet he inspired many followers to suppose that
utilitarianism’s one and only moral duty is to check you pocket to see whether you have any
money. If you do, then to be moral is to put that money somewhere else: put it wherever
someone needs it more than you do. So long as someone somewhere has a better use for the
money than you do, being moral is entirely a matter of giving until you have nothing left to give
or until you have nothing that anyone needs more than you do. The premises of the argument are
shockingly narrow. The basic idea is so far from social science that even cause and effect is
pretty much excluded. The idea that money in one’s pocket might be evidence that one is a baker
and might thus command a form of respect that merely being in need does not command, is
excluded. Productivity is something we encourage, but we encourage it as a means to an end, not
because productivity per se commands respect. The only end, and the only question left to
occupy ethical center stage, is a question about distributing opportunities to consume.
Before Mill, utilitarians worked on nature and sources of wealth of nations. They studied
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property rights and other tools of commercial traffic management. Since Mill, and certainly by
the time of Peter Singer’s notorious essay, we were beginning to ask questions like, what if you
had the opportunity to prevent a runaway trolley from killing five innocent people, but only at a
cost of killing one person? The question notoriously is a question about intuitions: ideas that we
cling to but cannot test. We cannot test them, that is, until we start heading back up the road to
making contact with institutional reality. That is, we ask the sort of question that the utilitarian
philosophers asked before Mill: how do communities work? How do hospitals work? Why do
hospitals never have a policy allowing (or requiring) doctors to kill one innocent person
whenever they could save five patients by doing so?
Before Mill, we treated such questions as testable and answerable (Schmidtz 2017). We
observed that the way to minimize the number of killings in our world is not to issue licenses to
kill but to make killing illegal. Again, the question of whether it is right to kill one to save five is
unresolvable as a question about a snapshot. As a question about what real world social and
political animals need to do in order to be able to trust each other, in order to know what to
expect from each other, and thus to have a framework for living good lives together, the question
is eminently resolvable. If we investigate, we observe that there is no great tension between
individuals respecting value and communities promoting value. A real-world community
promotes value precisely by requiring its members to respect value. Institutions promote the
value by promoting respect for the value. We do not see that by looking at the snapshot. We
have to look at the process.
Here is a final thought about the cost of moving toward treating utilitarian ethics as a
question about what we ought to do, and moving away from treating it as a social science
question about what works. Hume understood that it is built into the essence of justice that
whether the right thing to do maximizes value in a particular case matters less than we imagine.
An economist might find it obvious that we often have better things to do than to pursue local
optima, but a snapshot of the moment viewed through the narrowest contemporary utilitarian
lens makes it appear that local optimization is the only game in town. David Hume, by contrast,
understood that the kind of truth that manages traffic is truth about whose turn it is, not truth
about who has the superior destination. That makes justice an artificial virtue, that is, a nonmaximizing virtue, yet the kind of virtue on which communities are built. That also makes
justice an egalitarian rather than an aristocratic virtue—a bourgeois virtue as Deirdre McCloskey
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(2006) might say. The function of justice is to enable everyone to share an understanding of
whose turn it is, and for everyone to be able to know when to expect their turn. To Hume, justice
has no further point, but that is enough to make justice the foundation of a peaceful, thriving
community. Indeed, Hume thought that, in terms of justice, a society’s most important social
institution was its system of property rights. Property rights are society’s most consequential
traffic management device.
No one imagines that a system of property allocates property rights efficiently at any
given moment. It is true of almost everything you own that someone else needs it more than you
do, and in any case someone else could put it to better use. Yet, that is not what matters. What
matters is living in a system where everyone has common understanding of who owns what. That
is the knowledge that enables everyone to make efficient decisions about whatever resources
they possess at a given moment. Crucially, some key decisions are decisions that people make
about what to produce with what they have. A system of justice that misses that crucial fact
about why we need justice, and why we approve of justice, is missing a lot.
4. ‘IS’ PARTS WAYS WITH ‘OUGHT’
In 1903, another towering philosopher, G.E. Moore, published Principia Ethica and transformed
the Is-Ought problem into one of moral philosophy’s core puzzles. The problem continues to
stump us to present day (Schmidtz 2017).
Here is the problem. Deductive logic cannot get us from premises about what is the case
to conclusions about what ought to be done. David Hume, as early as the mid-1700’s,
understood the problem. Some say Hume invented it. He certainly drew our attention to it. But
Hume had a genius for identifying skeptical problems of all kinds, and Hume did not treat the IsOught problem as unique.
Hume was using Is-Ought problem to model a key feature of scientific reasoning.
Scientific reasoning is a process of collecting data, then formulating hypotheses about what
would cause the data to look like that. We do not exactly deduce what explains data. Neither do
we directly observe causation. Instead, we jump to a conclusion about what explains the data.
Then we test our theory by seeing how well it predicts what we observe under controlled
experimental conditions. Hume understood that the Is-Ought problem tells us something about
the scientific method. Namely, science does not generate new knowledge by deduction. Hume
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thus went some way toward establishing moral subjects as on a par with natural science. Most
knowledge, including scientific knowledge and including moral knowledge, is of truths other
than necessary truths. But we missed his point.
It is part of human nature to experiment, guess, take risks, make mistakes, and learn fast.
Proof and evidence are related, yet distinct. Proof is rare; evidence is everywhere. We look at
facts and see reasons. We derive reasons from facts a hundred times a day, but not by deducing.
That does not mean facts are not relevant! We have known this since we were toddlers.
The first time we experimented with placing our hand on the top of the stove, on the glowing red
spiral, we were able to jump to a conclusion, based on experience, that we ought to move that
hand! Almost all of us tried it once. Once is enough too. We never need to try it twice to
reconfirm how that part of reality works. Our conclusion is not the outcome of a valid deduction,
but neither is it a mistake.
The lesson, then is not that there is no truth about how we ought to live, but that (as a
matter of empirical observation) deductive logic is not what moves us from factual premises to
conclusions about how we ought to live. Of course, we make mistakes. The conclusions we
jump to—that scientists jump to—are often mistaken. What is crucial is not to avoid mistakes so
much as to avoid being slow to admit mistakes.
5. CONCLUSION
Public Choice’s core insight is, I said, that people who occupy political office are much the same
as everyone else. Even less controversially, the Public Choice insight is that legislators play
whatever cards the system deals them, just like everyone else. If the people who govern us do not
seem to be good people, it is easy to complain that we need to elect better people. At all levels
of institutional design, however, the real task is to design a framework that leads imperfect
human beings as they are to act in ways that serve the common good (Pennington 2011).
Realistic political theory comes to grips with the fact that the rules of the game are built
and rebuilt from the inside, by the players themselves, competing, negotiating, compromising.
But the discipline mutually imposed by free and equal trading partners who can operate within a
framework of the rule of law, who can decline to pay for services that are not worth the price, is
hard to reproduce in the case of political decision making.
Hobbesian vanity can make people terrifyingly over-confident in the rightness of their
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vision. The “men of system” infamously observed by Adam Smith are public-spirited in a way,
but when they see that other people do not share their vision, they are too vain to realize that
their vision is parochial and uninformed and that the reason why other people do not share their
vision is that there is no reason why they should. In the marketplace, if you are wrong, your
trading partners say your offer is not good enough. They walk away, and you go back to the
drawing board. By contrast, when you have given your life competing for the power to impose
your vision, you will not be impressed by the contrary opinion of legions of back-seat drivers
who, unlike you, did not give their lives to acquire the power you now (fleetingly) hold. The
discipline of the market, which makes us pay a price for gross overconfidence, just isn’t there.
When a subset of players acquires the power to rule, and to reframe the rules going
forward, what stops them from pursuing their own agenda at other people’s expense? It is a hard
question, and there may not be a good answer. What Buchanan thought, and what he credits the
framers of the American Constitution for realizing, is that the constitutional part of constitutional
democracy is the part that limits what democratically elected rulers have a right to do. If we
decide democratically, we need to be able to count on making those decisions within a
constitutional framework. We are not a democracy unless some things are off the table. The
winning party does not get to take advantage of their current majority to call for a vote on
whether the minority party should permanently lose the right to vote. Citizens need to be able to
count on their status as citizens not being up for grabs every time someone is in a position to
bring a motion to a vote.
Because of the Constitution, legislators have to obey the law of the land like everyone
else. Or at least, that is the theory. No one has ever believed there is a sure-fire way of achieving
that goal. Instead, the Framers believed that eternal vigilance is the price of liberty. We institute
a Supreme Court, a divided legislature, and we try to secure a freedom of the press in order to
create a rule of law that imposes some constraints on even the highest offices. That is all we can
do. No one thinks that there are any guarantees.
That’s the central problem that Buchanan salvaged from Scottish Enlightenment and
Hobbesian Contractarianism, and the American founding. I don’t think Buchanan ever saw
himself or anyone else as having answered that question, but he admired some failures more than
others.
He seemed to embrace a straightforwardly and honorably liberal ideal of good
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government. First, governments do not own the people. Governments are agents of the people.
Second, a community is like a game. Citizens are the players. Third, citizens institute
government, and accept government as legitimate, when government does what citizens have
appointed it to do, namely, help make the community a better game for everyone involved.
Fourth, citizens bring hopes and dreams of their own to the game. Citizens are the players.
Governors don’t decide what citizens are for. Good governors are good referees, and good
referees let the players play.
What makes some players want to be referees? Once they become referees, what makes
them want to aim at letting the players play, rather than cooperate with other referees to turn
refereeing from the unobtrusive thing it should be into a rent-seeking extravaganza for referees?
Today, philosophers are still imagining how to divide the pie. To Buchanan, the more profound
task of political philosophy was to imagine how to avoid dividing the pie; that is, how to not
need to divide the pie, and how to make other people’s visions of justice nonthreatening.
Acknowledgement
My work on this essay was supported by a grant from the John Templeton Foundation. The opinions expressed
here are those of the author and do not necessarily reflect the views of the John Templeton Foundation. Thanks
especially to the Georgetown Institute for the Study of Markets and Ethics at Georgetown University’s
McDonough School of Business for hosting me as a Visiting Scholar in the fall of 2016.
References
Hobbes, Thomas (1651) Leviathan. Reprinted by Oxford University Press, New York (1996).
Hume, David (1738) A Treatise of Human Nature. Clarendon Press, Oxford.
McCloskey, Deirdre (2006) The Bourgeois Virtues: Ethics for an Age of Commerce. University of Chicago Press.
Mill, John Stuart (1848) Principles of Political Economy. Reprinted by Hackett, Indianapolis (2004).
Moore, G. E. (1903) Principia Ethica. Reprinted by Cambridge University Press, Cambridge (1993).
Pennington, Mark (2011) Robust Political Economy. Edward Elgar Press, Cheltenham.
Schmidtz, David (2017) “Ecological Justice,” Environmental Ethics, edited by D. Schmidtz. MacMillan, Boston.
Sidgwick, Henry (1874) Methods of Ethics. Reprinted by Hackett, Indianapolis (1981).
Smith, Adam (1759) The Theory of Moral Sentiments. Reprinted by Liberty Fund, Indianapolis (1984).
Smith, Adam (1776) Wealth of Nations. Reprinted by Liberty Fund, Indianapolis (1976).
Vallier, Kevin (2010) “Production, Distribution, and J. S. Mill,” Utilitas 22: 103-25.