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James M. Buchanan: Neoclassical, Austrian, Neither, or Both?

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  • Durnin, Brian

Abstract

James McGill Buchanan (1919-2013) received the Nobel Memorial Prize in 1986 for his work in public choice theory, set out in his The Calculus of Consent (1962), co-authored with Gordon Tullock. The Virginia School of Political Economy can be seen as a product of the work of Buchanan and Tullock, along with Ronald Coase, who published his ground-breaking paper on “The Problem of Social Cost” in 1960 while he was at the University of Virginia. This school of thought is generally thought to be in some ill-defined sense allied to the Austrian school of economics, mainly perhaps because of a shared pro-market policy stance. On the other hand, links between Buchanan and neoclassical economists such as Friedman and Stigler are frequently drawn, again probably with the pro-market policy recommendations of each in mind. It is notable that Buchanan, Hayek, and Friedman were all at various times presidents of the Mont Pelerin Society. Yet the differences between neoclassical and Austrian perspectives are profound. It has often been said that the one can be characterized as “equilibrium always” and the other as “equilibrium never”. The case of Buchanan and the Virginia School is therefore extremely interesting for the historian of economic thought. Significant questions are raised about the scope for reconciliation between schools of thought at the most profound levels of methodology and social philosophy. I posit that, allowing for a slight amount of breathing room, James Buchanan’s economic writings are more Austrian than anything else. From his earliest writings to his last publications, Buchanan clearly had an Austrian-leaning approach. Additionally, many of the criticisms he laid out about the economics profession were directed toward the more neoclassical minded among his peers. While the act of criticizing neoclassical economists does not indicate that Buchanan was an Austrian, it does seem to lay to rest any conclusions that he was a neoclassical economist himself.

Suggested Citation

  • Durnin, Brian, 2017. "James M. Buchanan: Neoclassical, Austrian, Neither, or Both?," MPRA Paper 89629, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:89629
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    References listed on IDEAS

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    8. Robert L. Formaini, 2004. "Knut Wicksell: the birth of modern monetary policy," Economic Insights, Federal Reserve Bank of Dallas, vol. 9(1).
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    JEL classification:

    • B30 - Schools of Economic Thought and Methodology - - History of Economic Thought: Individuals - - - General
    • B53 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Austrian
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State

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