RIP James M. Buchanan

The Royal Swedish Academy of Sciences awarded Buchanan the Nobel in economics “for his development of the contractual and constitutional bases for the theory of economic and political decision-making.”
Buchanan was a pioneer in the field known as public-choice theory, which views government decisions through the personal interests of the bureaucrats and elected leaders who want to advance in their careers and win campaigns.
He summarized public choice as “politics without romance” and said it helps explain why established bureaucracies “tend to grow apparently without limit,” why pork-barrel politics endure and why the tax system is defined by “the increasing number of special credits, exemptions and loopholes.”

Individuals choose, and as they do so, identifiable economic interest is one of the "goods" that they value positively, whether behavior takes place in markets or in politics. But markets are institutions of exchange; persons enter markets to exchange one thing for another. They do not enter markets to further some supra-exchange or supra-individualistic result. Markets are not motivationally functional; there is no conscious sense on the part of individual choosers that some preferred aggregate outcome, some overall "allocation" or "distribution" will emerge from the process.

The extension of this exchange conceptualization to politics counters the classical prejudice that persons participate in politics through some common search for the good, the true, and the beautiful, with these ideals being defined independently of the values of the participants as these might or might not be expressed by behavior. Politics, in this vision of political philosophy, is instrumental to the furtherance of these larger goals.

Wicksell, who is followed in this respect by modern public choice theorists, would have none of this. The relevant difference between markets and politics does not lie in the kinds of values/interests that persons pursue, but in the conditions under which they pursue their various interests. Politics is a structure of complex exchange among individuals, a structure within which persons seek to secure collectively their own privately defined objectives that cannot be efficiently secured through simple market exchanges. In the absence of individual interest, there is no interest. In the market, individuals exchange apples for oranges; in politics, individuals exchange agreed-on shares in contributions toward the costs of that which is commonly desired, from the services of the local fire station to that of the judge.

This ultimately voluntary basis for political agreement also counters the emphasis on politics as power that characterizes much modern analysis. The observed presence of coercive elements in the activity of the state seems difficult to reconcile with the model of voluntary exchange among individuals. We may, however, ask: Coercion to what purpose? Why must individuals subject themselves to the coercion inherent in collective action? The answer is evident. Individuals acquiesce in the coercion of the state, of politics, only if the ultimate constitutional "exchange" furthers their interests. Without some model of exchange, no coercion of the individual by the state is consistent with the individualistic value norm upon which a liberal social order is grounded.