Nobel Laureate economist James Buchanan credits his mentor,
noted economist Frank Knight, with teaching him to challenge
everything and leading him to "push beyond the boundaries
of orthodoxy in economics."
Through his work in Public Choice, Buchanan has pushed those
boundaries and challenged conventional thinking about the
role of government in the lives of individuals.
Buchanan once wrote, "... I have felt, and feel, no
moral obligation to promulgate my own ideas, or those of others."
Despite that assertion, Buchanan's views of the political
economy, spelled out in his Public Choice philosophy, have
been the focus of discussion among his peers and have influenced
scores of young economists ever since he published The
Calculus of Consent with colleague Gordon Tullock in 1962.
In the following interview, Buchanan traces the development
of Public Choice, ideas especially relevant today as governments
everywhere try to redefine themselves.
Region: Most people who know your work consider The Calculus
of Consent as your most important book. What was the insight that
brought you to write The Calculus of Consent?
Buchanan: I think that's hard to say. In my own case it
was a general sense that people who were supposed to know didn't
really know what democracy was about. I started out as a regular
public finance economist. Once you start in that direction, you
soon come to the question of how it is that taxes and expenditure
decisions and budgets get made, so you're forced to think about
the political process. One of my first pieces goes all the way back
to 1949 and was nothing more than asking economists to think about
their political models. What model of politics are you assuming
before you start talking about what's good taxation? What's good
spending? I called for them to clarify their assumptions of politics.
I was influenced by the Swedish economist Wicksell, who said if
you want to improve politics, improve the rules, improve the structure.
Don't expect politicians to behave differently. They behave according
to their interests.
I picked up some of the Italians who had paid much more attention
to the model of the state, the model of politics. I spent a year
in Italy (1955-56). It changed my perspective on politics because
I think a lot of Americans, of my generation anyway, still had a
romantic view of politics. Italians, for me at least, served the
function of introducing a lot of skepticism, a lot more questions.
Had I not spent that year in Italy, I might not have ever really
been able to come to the critical realistic view of politics as
I did. All that was by way of background.
Then during the early '50s Kenneth Arrow published his book Social Choice and Individual Values (1951). That stirred up a great deal of interest, both in political
science and economics. My general reaction was that the people who
criticized Arrow, and Arrow himself, really didn't quite get the
message in the sense that the concentration was on the fact that
majority rule would not give you a political equilibrium, that you
get this political cycle and so forth. My criticism basically was,
if that's the way the preferences are, that's what you want to have.
A democracy should not mean one majority simply ruling. It ought
to be a rotation, if that's the way the preferences are. I was kind
of an anti-majoritarian then and now. So my critique of Arrow, which
not many people paid much attention to, got me further into thinking
about these things.
Gordon Tullock came to the University of Virginia in 1958 on a
postdoctoral scholarship, after having spent nine years in the U.S.
Department of State. He was much more of a realist about politics,
naturally, than I would have been. He started to work specifically
on majority rule, influenced a good deal by Duncan Black and Anthony
Downs and also to some extent by Arrow. We started working together
and out of that came The Calculus of Consent (1962). While
I acknowledge that it's probably considered my most important work,
at the time I wrote it, and even now, I don't consider that to be
as original a piece as some of the other things I've done.
Tullock and I considered ourselves to be simply taking the tools
of economics, looking at something like the structure of American
politics in the way James Madison had envisioned it. That is, it
was clearly not a majoritarian democracy, which would be the parliamentary
model (which was the ideal, at that time especially, of all the
political scientists), rather it was a sort of a constitutional
structure. We were the first to start analyzing the Constitution
from an economic point of view. There were other people who analyzed
particular voting rules, like majority voting, but we put that in
a constitutional structure and provided an argument for choices
among voting rules. We concentrated on that. So, in a sense, I considered
us to be simply writing out in modern economic terms more or less
Madison's framework of what he wanted to do, as opposed to anything
new and different. It turned out that nobody had looked at it in
Region: What was the greatest challenge you initially faced
in the academic world when your ideas in The Calculus of Consent were first presented?
Buchanan: The political scientists naturally didn't like
it. Basically, it was contrary to their standard way of looking
at things. But it got some very good reviews by some political scientists.
Some people, like William Riker, who became very important at [the
University of] Rochester, established a whole school. He picked
up on it immediately and worked closely with us in the whole Public
Choice work; he had a huge influence in political science and trained
a lot of very good people. So he and a few others were very sympathetic.
But basically the political science community didn't accept it.
A lot of the economics community simply was not interested. They
were interested then, and now, in much more technical stuff. I think
gradually it worked its way in. The whole Public Choice framework
spawned more interest than Black, Arrow or Downs had gone along
with. In one sensethere are two booksour book and Mancur
Olson's Logic of Collective Action (1965)those two
books came along about the same time and they got the interest.
After our book was published, Gordon Tullock and I recognized
that there was a lot of work going on in several fields that were
at least closely related. We got the National Science Foundation
to give us a small grant to organize a preliminary research meeting.
We had a meeting in Charlottesville (we were both in West Virginia
at that time) in 1963 to which we invited all the people that we
thought were working more or less in those areas. We had about 20
people. It was a very exciting two and one-half day conference in
which people were simply exchanging research ideas. Riker, Mancur
Olson, Vince Ostrom and Downs were there. We invited Arrow; he didn't
come. Duncan Black was there, as I remember. Jack Rawls was there
from philosophy. We had several sociologists, psychologists, political
scientists and so forth. Roland McKean and Jerry Rothenberg from
economics were there. We had quite a group. Out of that came the
Public Choice Society. We didn't call it that at that time. We called
it the Committee for the Study of Non-Market Decision Making. We
were getting into how decisions were made outside of a private market
After that we organized and started up a journal. The first was
called Papers on Non-market Decision Making. Tullock took
charge of editing it. Then after meeting a couple of more years,
Riker helped organize the third meeting. Tullock and I organized
the first and second. Then we had a meeting in Chicago in 1967.
At that time we sat around and nobody was happy with the title.
We needed a name. Somebody came up with Public Choice, which really
doesn't fit very well descriptively because a lot of people think
of it as a public opinion polling thing. We get questions about
that. But at least it caught on. From that time on we named the
journal and the society The Public Choice Society. So that was an
institutional embodiment of this that started with The Calculus
of Consent. It started with that meeting. That's a little bit
Region: It seems that many people now see your emphasis
in Public Choice as common sense, that is, applying economics to
government. Please describe your journey in making Public Choice
commonplace in both the practical world of politics and in the academic
Buchanan: It is nothing more than common sense, as opposed
to romance. To some extent, people then and now think about politics
romantically. Our systematic way of looking at politics is nothing
more than common sense.
People ask me how has Public Choice made a difference and how
does it influence ideas. I don't necessarily place Public Choice
as out front in changing a lot of ideas. But I do think that Public
Choice has had a major influence: I think governments overreached
themselves in the '60s, not only in the totalitarian, authoritarian
regimes, but also in Western democratic welfare-state nations, represented
in this country by the Great Society of Lyndon Johnson. By the early
'70s people began to recognize this. They looked about them, and
they saw that political programs were failing. Public Choice came
along and was there to provide them an explanationan understandingof
why politics was failing as it extended beyond certain margins.
So it provided what I would call a foundation or substructure, which
allowed them to interpret better what they were seeing, rather than
leading the way.
Region: Public Choice economics seems to have taken hold
in four or five different areas as far as I can tellbudget,
monetary policy, operation of democracies, growth of special interests
and constitutional framework. Can you outline the essential issues
that Public Choice economists, like yourself, use to understand
Buchanan: I think it's just a way of looking at political
decision structures. Take, for example, the budget policy aspects.
People ask what's the best example in practice of Public Choice
thinking. It's clearly the explanation of the budget deficit regime.
The key to Public Choice, as you said earlier, is common sense.
And common sense tells you that a politician is very much like the
rest of us. A politician who's seeking office or seeking to remain
in office is responsible, as he should be, to constituents. He wants
to go back to a constituency and tell them that he's either lowered
their taxes, or he's brought them program benefits. You plug that
into politics and you have a natural proclivity of a politician
to create deficits.
Then the question comes along: Why didn't we have deficits before?
You see the Keynesian economic revolution gave the politicians an
excuse for deficits. You give politicians half an excuse; they play
out this natural proclivity. So from the '60s on we have the regime
accelerating deficits. This ties into my support of the constitutional
amendment as a corrective device. That's an easy example. You can
also take these other aspectsregulatory policy or anything
like thatand you can come at it from a Public Choice perspective.
Region: How do Public Choicers come at monetary policy?
Is that a serious topic of study for Public Choice?
Buchanan: It has been studied in Public Choice, which splits
itself up in subparts and separate research programs. One part might
be called a Theory of Bureaucracyhow bureaucrats behave under
certain constraints and incentive structures, and so forth. So we've
got one strand of what you might call more positive Public Choice
that has looked at monetary institutions. It looked at the behavior
of Federal Reserve Boards with a very hard-nosed view.
Another research program in Public Choice with which I am more
closely associated, involves the whole emphasis on the constitutional
structureon rules. We've been very critical of existing monetary
institutions because they don't have enough predictability, and
we have gone down the line of having more specific targeting or
guidelines or some kind of alternative to a purely discretionary
policy. Those are more normative studies. We're doing some work
in competitive federalism: how a regime of national central banks
might be better than a single central bank for Europe, for example,
or vice versa.
Region: Many years ago you spoke at Spring Hill Conference
Center in Minneapolis about the need for a balanced budget amendment
and in recent times you have focused your attention on the same
topic. Balanced budget seems to be a long-standing interest of yours
and one that you pursue with some passion. What is your argument
for a balanced budget amendment?
Buchanan: I remember very distinctly that Spring Hill meeting.
That was one of the most delightful conference settings I've ever
seen. I enjoyed that conference. I've forgotten what I talked about
then, but I'm not at all surprised that it was on the balanced budget.
That's an interest of mine that has gone back a long way. My first
individually authored book was on public debt, which I wrote in
1958 (before The Calculus of Consent), in which I attacked
the Keynesian notion about public debt, going back to classical
precursors of what public debt was all about. Then I saw the Keynesian
logic. As you destroy the old- time fiscal religion, you're going
to have this natural proclivity toward deficits, like I said.
Then I wrote a book with a colleague, Richard Wagner, in 1977
called Democracy in Deficit, making the argument that the
Keynesian destruction of the old mythology about balanced budgets
would guarantee the regime that we've had. Certainly the predictions
in that book have held up very well. Again, we were calling for
correction. If you recognize the natural proclivity of democratic
politics to generate deficits, you recognize that we did have a
constitutional norm against deficits. It was basically a moral norm:
It was a "sin" to create deficits prior to the Keynesian period.
If you remove that moral norm you have this natural proclivity.
Then if you also buy into the theory of public debt that I had developed
much earlier, that is, it does involve taxing the people who are
going to be around in the future by imposing costs on them to pay
off whoever happens to own the government-obligated bonds, you realize
that you're going to get yourself deeper and deeper in trouble unless
you introduce some kind of formal constitutional substitute for
that moral norm. I came on board quite early on in favor of a balanced
budget amendment, making me one of the few economists who has consistently
supported a balanced budget amendment. I didn't get very far.
Personally, I'm not the type of economist who does much testifying
before Congress or for political parties. I'm very, very much ivory
tower. The only policy issue at all that I've been on board with
is the balanced budget: the constitutional change. So I did a little
bit of work during the period when they were trying to get state
resolutions for a constitutional convention. Now that more of this
has come up again through the Congress, I've been very supportive
of it. So I would like to have seen it go through. It seemed to
me that as it came nearer to reality, there was a lot of obfuscation
thrown in by the opposition. I've written some pieces recently on
simply trying to clarify some of that confusion. It seemed to me
that a lot of smoke was thrown in just to confuse a lot of the issues
Region: It appears at first glance that many Public Choice
economists are politically conservative and free-market oriented.
Would that be an accurate description of those academics in the
Public Choice movement?
Buchanan: I think it's an accurate descriptionbut
it's an accurate description for a reason. If you take the story
I've given you, if you recognize that the traditional way we looked
at politics had a lot of romance in it, then Public Choice comes
along and removes the romance. I think the natural outcome of that
is you're going to be more skeptical about government than you would
have been otherwise.
Mancur Olson, a good friend of mine, has been influential in Public
Choice and objects very strongly to this argument that there is
this conservative bias. There is no bias in it as such. But Mancur
himself has necessarily had to look at politics differently because
of that, despite the fact that his natural proclivity would be more
left than mine. There's nothing inherently biased about it. It's
just that the fact that if you start looking at the political sector
or politics from a non-romantic view, you come to a different view
on what has been traditional.
Economists traditionally have been much more pro-market and anti-
politics, anti-government than the other parts of the Academy in
general. But throughout the decades economists have been frustrated
by the fact that they put their ideas out there and nobody pays
any attention. Economists have found you can't go out there and
sell the idea of a market economy very readily. You have to be sophisticated
to understand it. It's difficult to sell the idea of a market economy,
so economists haven't been very effective. Potentially, Public Choice,
it seems to me, has been effective in a different way altogether.
Public Choice does not say that the market is perfect or the market
works at all. That's not part of it. But it says that politics fails.
There are a lot of people out there who will recognize that politics
fails and, therefore, will be in support of a market, who would
never have come around to support the market in terms of the pro
side. They'll see the anti-politics side, so that's how Public Choice
Region: In the past you've called for a constitutional
revolution to reassess the entire spectrum of constitutional rights
of individuals. In 1995, what would that mean? A balanced budget
amendment, for sure. But what beyond that?
Buchanan: We're just at the threshold beginning to examine
the whole structure of our institutions in a foundational sense.
It's partly because the ideology that was behind a lot of the socialist
thrust is gone. Partly we recognize a lot of failures. We recognize
that the political or governmental sector is too large. The problem
is more acute in some countries than it is in ours. Sweden, for
example, is in really bad trouble. They've over-extended the welfare
state. They don't know what to do. They're failing. They're falling
behind. But it's true in all the major countries.
There's beginning to be a fundamental evaluation of our institutions.
You saw it in this country with the 1994 elections and the questions
that people are raising about values. How this is going to play
out is very difficult to see now. Just today I got an invitation
for a lecture series organized for next year at Michigan State.
The whole question of big government is in the air. Again, the balanced
budget amendment is a case in point. When you get down to the crunch
and try to do something specifically, then you run into all the
Another good example is this so-called Conference of States. The
idea was to have a meeting in Philadelphia of the governors of all
states plus a bipartisan group of leading legislators from each
state. They were to come to Philadelphia and meet for the first
time since 1790. The states would meet quite separately from the
federal government. The idea behind thisI know because I was
invited to be on the academic advisory committeewas to have
these governors meet and have a discussion about ways and means
through which we could genuinely get some power evolved from the
central government back to the states. But the plan was killed by
agitation not from the left but from the right. Ironically, the
whole thrust was to try to reduce political power. Instead, the
idea was killed completely, just like the right was finally influential
in part of killing the balanced budget amendment.
Region: Given this agitation and the new mood, I don't
think people can call you "mildly subversive" anymore. Would you
say that's right? Or are you still mildly subversive?
Buchanan: I think that's a very perceptive point you make.
I think 20 years ago clearly I would have been. Right now I don't
think so. I'm behind the curve now.
Region: What is the Virginia School and what was your role
in its evolution?
Buchanan: That appellation Virginia School was put on us
by Mancur Olson in a speech he gave. Once we got it, we were perfectly
happy to have a specific designation. It does have some embodiment.
I mentioned the one meeting. I can go back further than that. When
Warren Nutter and I joined the faculty of the University of Virginia
in 1957, we had already discussed the fact that we needed some place,
some concentration, some research program that would be more of
a return to the emphasis of classical political economy and away
from the modern formalism. When we got that opportunity we set up
what we called, at that time, the Thomas Jefferson Center for Political
Economy at Charlottesville, University of Virginia. We set up a
graduate program. We brought in some distinguished visitors and
got some good graduate students. So we made an impact on the profession
in terms of making the Virginia product a little different, a little
unique. That was kind of a political economy emphasis, looking at
institutions, looking at structure. Out of that emerged Public Choice.
Warren Nutter himself never would have gone in that direction, but
Then Tullock and I set up this little group that became the Public
Choice Society out of that Virginia emphasis. So that started also
in Virginia. Then we shifted away. I went to UCLA and Tullock went
to Rice, but we came back and went to Virginia Tech where Charles
Goetz was. We set up the Center for Study of Public Choice there
and called it Public Choiceagain a Virginia orientation. About
that time Mancur called it the Virginia School. Then at VPI [Virginia
Polytechnic Institute] in Blacksburg we began to get a lot of visitors
coming from all over the world to spend a few months or a year with
us. That's how it centered on a Virginia emphasissimply locational,
historical. That's where the work was done. It does have a different
methodological flare in a certain sense, more emphasis on constitutional
structure, clearly a Virginia characteristic. Although work at Virginia
is also done in empirical public choice, that's more characteristic
of Chicagothe Stigler, Becker, Peltzman type work. We do some
of that. Bob Tollison here does a lot of that. But basically ours
is a slightly different emphasis.
Region: If you were advising the Federal Reserve, what would
you say are the unsolved economic problems of the day?
Buchanan: It's not the Federal Reserve's role to be solving
the economic problems of the day. I think the Federal Reserve has
enough to do, and it should target itself much more carefully toward
keeping the value of the monetary means stable and quit doing other
As far as the problems of the day, our political sphere and the
governmental sector are too large. This not only applies to our
country. We need somehow to get back to where our government limits
itself much more toward things it can do and not try to do everything
for everybody. That goes back to the constitutional revolution question.
That ties in with my future work. What I'm doing now is trying
to finish a book. It's different from The Calculus of Consentone
way of interpreting that book would be as an attack on majoritarian
democracy. Let's accept that public attitudes are such that majority
rule is going to be equated with democracy. We're going to have
to live with majority rule. What can we do constitutionally here
to rein in some aspects of government or the worst aspects of government?
This new book is an argument, both analytical and with applications,
for trying to extend the generality principle into politics. This
gets back to what I commented about a while ago. It seems to me
that far too much of our politics is favorable treatment or unfavorable
treatment for particularized groups. If we could somehow introduce
into politics the requirement that would be analogous to the rule
of law, that is, don't treat one group differently from another
group. That has a lot of implications. That would not necessarily
mean we'd have much smaller politics or government. It would mean
there'd be a quite different characteristic of government.
Recently, this analytical argument (and it's a switch from where
I was 10 or 15 years ago) has led me to come out very strongly in
support of a flat taxevery dollar of income being taxedas
opposed to a progressive tax. This ties in with an area of Public
Choice that we haven't mentioned because I have not been directly
involved in it. Gordon Tullock has been. If you have discriminatory
politics, it invites a tremendous amount of investment, it wastes
resources in rent seeking in trying to get particular favors, either
a tax exemption for your industry or a particularized spending program
for your district or for your industry or your profession or whatever.
We moved a little bit away from that in the 1986 Tax Reform Act.
We were all enthusiastic about that. But Public Choice theory predicted
that the provisions wouldn't last long. Now they're tearing up the
1986 act; they have been tearing it up ever since.
The normative thrust of my current work is to try to push the
generalization principle to the maximum extent possible, that is,
so you don't have particularized exemptions. One person gets it,
everybody gets it. It cuts in favor of something like a flat tax.
It cuts against means testing. The huge pressure now in all these
welfare programs is going to be toward means testing. By the time
you, as a professional, qualify for social security it's likely
that you won't get anything, because it will be means tested even
more than it is now. But that's going in the wrong direction. That's
introducing more discrimination in democratic politics. My point
is that discriminatory politics simply won't work with majority
rule. The only way majority rule can work, can be plausibly said
to be pushing the general interest, is you require that everything
that is done politically be general. That's where I'm coming from.
Region: I understand that outside of your academic life
you are also a farmer?
Buchanan: I'm not really a farmer. I grew up on a farm
in Tennessee and did a lot of farm work as a boy. But I didn't have
any real nostalgia for the farm. That was not the reason for getting
back into it. But I think I was perhaps more affected by the 1960s
than most of my colleagues. I really did think the world that we
knew was falling apart. I was very upset by the behavior of the
Academy, which I was a part of, especially in California. When I
came back to Blacksburg, to the Virginia mountains, I began searching
around for some space, privacy. I like space around me. I bought
this century-old log cabin and started fixing it up and added to
it and so forth. I kept buying more land, more land, more land.
I found out something about my utility function as I did that, because
I found out that every step I took toward genuine self-subsistence
really gives me a big charge. If I can build a fire in my wood stove
and don't have to depend on electric heat if we have a power outage,
then I'm that much happier. Or if I can go across the street to
the spring and get a bucket of water as opposed to having an electric
pump to the well, that gives me a charge. Or if I grow my own vegetables
or pick my own berries, which I'm doing now. This year there is
a good blackberry crop. I became more and more interested in having
at least a backup, so self- subsistent existence really did give
me a lot of utility. I never got involved in farming per se. What
I do now is I grow a good deal of my own vegetables and fruits,
and we freeze and can them to some extent. So I kept buying more
and more land and now have about a square mile. It's mountain land
and some pastures. I run some cattle on parts of it. I let another
man do the operating part. We have some hay fields, but no commercial
Region: You had once written about yourself, "I hope that
I seem what I think I am: a constitutional political economist who
shares an appreciation for the Judeo-Christian heritage that produced
the values of Western culture and institutions of civil order, particularly
as represented in the Madisonian vision of what the United States
might have been and might still become. Am I grossly naive to think
this definition is sufficient unto itself?" I wonder if this is
still the way it is.
Buchanan: I think that summarizes it still.
Region: Thank you, Mr. Buchanan.
More About James Buchanan
Nobel Prize in Economic Science, 1986, for work in Public
Some of the books most relevant to the Nobel Award: The
Calculus of Consent, with G. Tullock (1962); The
Limits of Liberty (1975); Freedom in Constitutional
Contract (1978); The Power to Tax, with G. Brennan
(1980); Liberty, Market, and State (1985).
Other books: Cost and Choice (1969); Democracy
in Deficit, with R. Wagner (1977); Explorations into
Constitutional Economics (1989); Essays on the Political
Economy (1989); Better than Plowing and Other Personal
Essays (1992); The Return to Increasing Returns,
with Yong J. Yoon (1994).
Currently, Advisory General Director, Center for Study
of Public Choice, and Harris University Professor, George
Mason University, Fairfax, Va.
Has also previously taught at Virginia Polytechnic Institute
(1969-1983), University of California, Los Angeles (1968-1969)
and University of Virginia (1956-1968).
Received bachelor's degree from Middle Tennessee State
College in 1940, master's from the University of Tennessee
in 1941 and doctorate from the University of Chicago in