Will the Real James Buchanan Please Stand up?
In this month’s Reader’s Guide to Democracy in Chains, Rod Kessler puzzles over how the economic and political ideas of James Buchanan could, on one hand, serve as a justification for the Koch network’s stealth assault on the institutions of American Democracy and yet, on the other hand, earn Buchanan a Nobel Prize and a place of respect in the history of the field of economics. Read this feature.
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It might surprise readers of Democracy in Chains, Nancy MacLean’s account of the Koch network’s powerful assault on democracy, to discover how much of the book focuses on economist and political theorist James McGill Buchanan (1919-2013). James M. Buchanan? Who was he and why is he so central?
It was Buchanan’s thinking, his melding of economics and political theory, that illuminated the path forward for the libertarian right in general and for Charles Koch in particular. From Buchanan’s early career in the 1950s into the 60s at the University of Virginia, he denounced the “intrusion” of the federal government to end segregation, and in the late 1960s at UCLA, he opposed black power campus uprisings and the antiwar activism of the times. He also decried strong labor unions and civil rights organizations, not to mention collective action in general, and the very idea of the public’s turning to government to promote social justice.
Throughout his career he was associated with (and lectured at) such far-right conclaves and think tanks as the Mont Pelerin Society, the Cato Institute, the American Enterprise Institute, the Center for Libertarian Studies, the Charles Koch Foundation, the Heritage Foundation—and plenty more. And with a secure base at one university campus or another (always corporate- and Koch-funded), he recruited and trained successive cohorts of like-thinking libertarian economists and public policy professionals– individuals who went on to staff the myriad Koch-funded institutions, as well as private-sector corporate offices and positions of influence in Reagan’s and other Republican administrations.
And Buchanan’s big ideas? The thinking that made him so attractive and useful to the Kochs and like-thinking billionaires isn’t hard to follow: (1) American democracy, unless severely hobbled, is necessarily the enemy of free-market capitalism (what libertarians call “liberty”), and (2) measures to limit democracy are good in the short run (think voter suppression, think “buying” politicians through campaign contributions, think Fox News and conservative radio), but a permanent solution requires Constitutional change.
What the Kochs took from Buchanan and carried even further was, as Nancy MacLean wrote, “to put legal—indeed constitutional—shackles on public officials, shackles so powerful that no matter how sympathetic these officials might be to the will of majorities, no matter how concerned they were with their own reelections, they would no longer have the ability to respond to those who used their numbers to get government to do their bidding. . . . Once these shackles were put in place, they had to be binding and permanent. The only way to ensure that the will of the majority could no longer influence representative government on core matters of political economy was through what he called ‘constitutional revolution.’” (xxvii-xxviii)
In Buchanan’s own words, “the problems of our times require attention to the rules rather than the rulers” (184).
After reading Democracy in Chains, it is natural to regard Buchanan as prejudiced, destructive, unrelenting, and possibly evil. How is it possible, then, that he won the Nobel Prize in Economics in 1986? And what should we make of the respectful treatment he and his ideas still receive in accounts of the history of economics? Winning the Nobel boosted Buchanan’s influence–even British and European right wing think tanks gave him a podium. Was there anything in his ideas and theories that, despite the anti-democratic harm they threatened, had merit?
To answer that, let’s turn to Buchanan’s public-choice theory, the thinking for which he won the prize. If traditional economic analysis dealt with such constituent variables as labor, capital, resources, trade, and markets, Buchanan proposed that governments themselves also be factored in as an economic force— as another variable in itself subject to economic analysis.
The way a particular government is put together, to put it bluntly, will lead to predictable economic consequences that differ from those of a government structured differently.
Assuming (as he did) that elected officials are motivated by narrow self-interest (like any other economic player), their actions will take predictable forms. Such officials will do whatever it takes to be reelected, and in any “numerical democracy,” they will enact the laws and policies favored by the mass of voters, typically programs that benefit the majority (e.g. education, healthcare, transportation, social security) but which also lead to taxation—and the inevitable expansion of government in the providing of services. It’s easy for such office-holders to enact these expensive and expansive policies because they themselves don’t pay for them. Taxpayers do. And whom do you think these office holders might look to to shoulder the burden of such taxes?
And what is there in such a system to preventmarket the enactment of regulations meant to protect consumers (the majority), however burdensome to numerically smaller sector in business and production?
Buchanan’s conclusions follow directly: unless such a system is somehow straitjacketed, it will inevitably lead to government expansion and costly social programs (and protections)— paid for by taxing those with the most resources, the rich minority. Such a system also will constrain markets, siphoning resources away to prop up big government spending and restraining growth by imposing regulations. And—who knows?—if the mass of voters demand labor protections, what’s to prevent those eager-to-please lawmakers from imposing minimum-wage standards and sick-leave guarantees, further distorting and constraining the operation of the market?
But not every government operates this way, and different rules will lead to different market outcomes (recall that quote of Buchanan’s about needing new rules, not just new rulers?) What about a government that mandates a balanced budget in its constitution? Would that put a stop to a government’s ability to grow any bigger?
What about a government based not on mere numerical majority but on super-majority thresholds—as was the case in the Senate vote over Trump’s recent impeachment, requiring a two-thirds vote?
What about a government whose legislatures required unanimous votes, a position favored by Buchanan as being least restrictive of individual liberty (imagine—every legislator having veto-power)? What if lawmakers could serve just one term? What if only property owners could vote or if a proportion of legislative seats was appointed by the military?
Different governmental rules? Different economic consequences.
Buchanan’s contribution to economic analysis, then, makes government structure itself a factor in market functioning and, well, overall outcomes. It leads to such questions as how can a constitution be constructed or changed to promote a desired societal result? For Buchanan and the libertarian right, it wasn’t exclusively a theoretical question: in the aftermath of the coup against the Allende government in Chile in 1973, Pinochet’s right wing government invited Buchanan to consult on the drafting of a new constitution. How did that turn out? The corporations that benefited from the privatization of social security made out like, well, bandits, but it’s been hard on just about everyone else, and Chileans have been in the streets lately clamoring for constitutional reforms (see piece in the Guardian: https://www.theguardian.com/world/2019/nov/15/chile-referendum-new-constitution-protests )
Putting aside for the moment Buchanan’s assumption that all office-holders are motivated by self-interest and the desire to stay in office (are there no social-justice reformers, no principled altruists?)—putting that assumption aside, we can ask if his approach is necessarily anti-democratic and pro-billionaire? Actually not. If we can construct or change a constitution to champion the unfettered operation of an unregulated free market (Koch’s vision of heaven on earth), why can’t we change or construct one that doesn’t—a constitution that privileges social justice more than the functioning of markets and capital?
One can imagine a constitution structured to facilitate the redistribution of wealth. (What about those Scandinavian countries with universal health care and the rest of it—they must have constitutions too!)
And, finally, what about our Constitution? That’s a topic for another day. But even if the Constitution is a mixed bag, it still has a lot of the right stuff for a living democracy. Or why else would the Koch network and the radical right be so willing to ignore, defy, and ultimately undo it?
January 2020 Notes
MORE READING NOTES FROM DEMOCRACY IN CHAINS by Rod Kessler
In Democracy in Chains, Nancy MacLean illustrates how libertarian economist James Buchanan’s ideas could be translated into the kinds of right-wing public policies that the Koch network would eventually help implement. An illustration of applying Buchanan’s “public choice” economic principles to real world issues lies in his response to campus unrest (the Black Power movement & antiwar activism) in the late 1960s and early 1970s at UCLA and Virginia Tech—the subject of Chapter 7, “A World Gone Mad,” (102-111).
MacLean’s take on Buchanan’s views:
The problem with the university . . .began with its distinctive structural features: “ (1) those who consume its product [students] do not purchase it [at full-cost price]; (2) those who produce it [faculty] do not sell it; and (3) those who finance it [taxpayers] do not control it” (104).
Buchanan saw both the problem and solution in terms of incentive-affecting institutional structures. As MacLean put it:
The cure flowed from the diagnosis. Students should pay full-cost prices, and universities should compete for them as customers. Taxpayers and donors should organize “as other stockholders do” to monitor their investments. “Weak control” by governing boards must end. . .(105)
MacLean’s dissection of Buchanan’s thinking goes further, identifying Buchanan’s analysis of the university’s structure as a “blueprint for the right’s current fight to radically transform public higher education: to turn state universities into dissent-free suppliers of trained labor, run with firm managerial hands and with little or no input from faculty, and at the lowest possible cost to taxpayers (105).” The authors of Academia in Anarchy, “in essence,” argue “that if you stop making college free and charge a hefty tuition, ideally enough to cover the entire cost of each education, you ensure that students will have a strong economic incentive to focus on their studies and nothing else—certainly not on trying to alter the university of the wider society. But the authors were also arguing for something else: educating far fewer Americans, particularly lower-income Americans who could not afford full-cost tuition. And they were telling the businesspeople who tended to dominate governing boards that it was time to get tough with their wards, faculty and students alike (105).
What attracted the Koch team to Buchanan initially (mid-1970s) was his analysis arguing against appeasement of campus protests as well as their shared commitment “to school privatization at every level” (137).
A final note: Public higher education policy remains a hot topic today, with several presidential candidates on the Democrat side, far from advocating privatization, backing free education instead. There are pros and cons to the issue. One summary is at https://www.collegeraptor.com/find-colleges/articles/affordability-college-cost/pros-cons-tuition-free-college/
Notes: Buchanan’s book about solving the problems of the American university (co-authored with Nicos Devletogou) was Academia in Anarchy, published by neoconservative Irving Kristol (1970).