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Politics as exchange: the classical liberal economics and politics of James M. Buchanan

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  • James Gwartney
  • Randall Holcombe

Abstract

James Buchanan advocated the market mechanism for allocating resources because it is based on voluntary exchange. People engage in market transactions only when they believe they benefit from doing so. Buchanan depicted the political process the same way. People engage in collective activities to accomplish together ends that they would be unable to accomplish individually, or through bilateral exchange. Buchanan’s vision of politics as exchange is a normative framework for evaluating the rules within which political activity takes place. Rules that meet the criterion of agreement are desirable constitutional rules, and Buchanan recognized that not all government activity satisfies that criterion. Buchanan is the father of the subdiscipline of constitutional political economy, and his “politics as exchange” approach provides the foundation for much work in that area. Buchanan has created a foundation that is rich in ideas, but leaves behind a number of unanswered questions that point the way toward a further development of the research program in constitutional political economy. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • James Gwartney & Randall Holcombe, 2014. "Politics as exchange: the classical liberal economics and politics of James M. Buchanan," Constitutional Political Economy, Springer, vol. 25(3), pages 265-279, September.
    • Handle: RePEc:kap:copoec:v:25:y:2014:i:3:p:265-279
    DOI: 10.1007/s10602-014-9165-z
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    References listed on IDEAS

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    1. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    2. James D. Gwartney & Robert A. Lawson & Randall G. Holcombe, 1999. "Economic Freedom and the Environment for Economic Growth," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(4), pages 643-643, December.
    3. James M. Buchanan, 1954. "Social Choice, Democracy, and Free Markets," Journal of Political Economy, University of Chicago Press, vol. 62, pages 114-114.
    4. James D. Gwartney & Randall G. Holcombe & Robert A. Lawson, 2004. "Economic Freedom, Institutional Quality,and Cross-Country Differences in Income and Growth," Cato Journal, Cato Journal, Cato Institute, vol. 24(3), pages 205-233, Fall.
    5. Leland B. Yeager, 1985. "Rights, Contract, and Utility in Policy Espousal," Cato Journal, Cato Journal, Cato Institute, vol. 5(1), pages 259-294, Spring/Su.
    6. Brennan,Geoffrey & Buchanan,James M., 2006. "The Power to Tax," Cambridge Books, Cambridge University Press, number 9780521027922.
    7. James M. Buchanan, 1954. "Individual Choice in Voting and the Market," Journal of Political Economy, University of Chicago Press, vol. 62, pages 334-334.
    8. Sandmo, Agnar, 1990. "Buchanan on Political Economy: A Review Article," Journal of Economic Literature, American Economic Association, vol. 28(1), pages 50-65, March.
    9. James Buchanan, 1990. "The domain of constitutional economics," Constitutional Political Economy, Springer, vol. 1(1), pages 1-18, December.
    10. James M. Buchanan, 1949. "The Pure Theory of Government Finance: A Suggested Approach," Journal of Political Economy, University of Chicago Press, vol. 57, pages 496-496.
    11. Hochman, Harold M & Rodgers, James D, 1969. "Pareto Optimal Redistribution," American Economic Review, American Economic Association, vol. 59(4), pages 542-557, Part I Se.
    12. James M. Buchanan & Richard A. Musgrave, 1999. "Public Finance and Public Choice: Two Contrasting Visions of the State," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262024624, December.
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    Cited by:

    1. Randall G. Holcombe, 2020. "James M. Buchanan’s constitutional project: past and future," Public Choice, Springer, vol. 183(3), pages 371-387, June.
    2. Otto Lehto & John Meadowcroft, 2021. "Welfare without rent seeking? Buchanan’s demogrant proposal and the possibility of a constitutional welfare state," Constitutional Political Economy, Springer, vol. 32(2), pages 145-164, June.
    3. Daniele Bertolini, 2019. "Constitutionalizing Leviathan: A Critique of Buchanan’s Conception of Lawmaking," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 36(1), pages 41-69, October.
    4. Young, Andrew T., 2022. "Consent or coordination? assemblies in early medieval Europe," International Review of Law and Economics, Elsevier, vol. 72(C).

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    More about this item

    Keywords

    James Buchanan; Constitutional economics; Classical liberalism; Economic freedom; Politics as exchange; Public choice; JEL Classification; H1; H4;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H4 - Public Economics - - Publicly Provided Goods

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