Realism and Deliberation in Normative Economics

This chapter discusses the normative dimension of economics, or more specifically, constitutional political economy (CPE), and how to fruitfully integrate positive insights into normative reasoning. It presents a dialogue between two of CPE's most prominent proponents, James Buchanan and John Rawls. In spite of their different political leanings, their respective approaches share a surprising amount of commonalities. However, it is the tensions between their approaches – in the context of (psychological) realism and (public) deliberation – which provide us with an enlightening take on the question of how to include positive elements into normative economics. The chapter starts with Buchanan's twofold critique of Rawls's theory, i.e., Buchanan argues it is unrealistic since it assumes people's reasonableness and too normative since it predefines the outcome of a constitutional choice. Despite this critique, the chapter argues that Buchanan's own theory does not provide a satisfying answer to the challenges he identifies in Rawls, partially due to the methodological constraints he imposes on his own reasoning. The chapter argues that the solution to Buchanan's critique is an updated and expanded reading of Rawls's later work on democratic deliberation and public reasoning.