James M. Buchanan

James McGill Buchanan, Jr. (/bjuːˈkænᵻn/; October 3, 1919 – January 9, 2013) was an American economist known for his work on public choice theory (included in his most famous work The Calculus of Consent), for which he received the Nobel Memorial Prize in 1986. Buchanan's work initiated research on how politicians' and bureaucrats' self-interest, utility maximization and other non-wealth maximizing considerations affect their decision making. He was a member of the Board of Advisors of The Independent Institute, a member (and for a time the President) of the Mont Pelerin Society, a Distinguished Senior Fellow of the Cato Institute, and professor at George Mason University.

Buchanan was born in Murfreesboro, Tennessee, the eldest child of James and Lila (Scott) Buchanan. He was a grandson of John P. Buchanan, a governor of Tennessee in the 1890s. He graduated from Middle Tennessee State Teachers College, now known as Middle Tennessee State University, in 1940. Buchanan completed his M.S. from the University of Tennessee in 1941. He spent the war years on the staff of Admiral Nimitz in Honolulu, when he met Anne Bakke, whom he married on October 5, 1945. Anne, of Norwegian descent, was working as a nurse at the military base in Hawaii (she died in 2005).

Buchanan identified as a socialist in his youth, and was unaware of the University of Chicago's strong market-oriented approach to economics. His studies there, particularly under Frank H. Knight, converted him to "a zealous advocate of the market order". Buchanan received his Ph.D. from the University of Chicago in 1948 for his thesis "Fiscal Equity in a Federal State," in which he was heavily influenced by Knight. It was also at Chicago that he first read and found enlightening the work of Swedish economist Knut Wicksell. Photographs of Knight and Wicksell hung from his office walls ever after.

Buchanan was the founder of a new Virginia school of political economy.

He taught at the University of Virginia from 1956–1968, where he founded the Thomas Jefferson Center for Studies in Political Economy. From 1955 to 1956 he was a Fulbright Scholar in Italy.

He taught at UCLA 1968–1969, followed by Virginia Tech 1969–1983, where he earned the title of Distinguished Professor of Economics and founded the Center for the Study of Public Choice (CSPC). In 1983, a conflict with Economics Department head Daniel M. Orr came to a head and Buchanan took the CSPC to its new home at George Mason University, where he eventually retired as "professor emeritus ".

He also taught at Florida State University and the University of Tennessee.

In 1988 Buchanan returned to Hawaii for the first time since the War and gave a series of lectures later published by the University Press. In 2001 Buchanan received an honorary doctoral degree from Universidad Francisco Marroquín, in Guatemala City, Guatemala, for his contribution to economics.

Buchanan's work focused on public finance, the public debt, voting, rigorous analysis of the theory of logrolling, macroeconomics, constitutional economics, and libertarian theory.

Buchanan died January 9, 2013, in Blacksburg, Virginia, at age 93. The New York Times commented that the Nobel Prize-winning economist who championed public choice theory influenced a "generation of conservative thinking about deficits, taxes and the size of government". The Badische Zeitung called Buchanan, who showed how politicians undermine fair and simple tax systems, the "founder of the New Political Economy".

Buchanan was largely responsible for the rebirth of political economy as a scholarly pursuit. Buchanan emphasized that public policy cannot be considered in terms of distribution, but is instead always a question of the choice over rules of the game that engender a pattern of exchange and distribution, a position which he had adopted before the Chicago school of political economy claimed it as its own idea. His work in public choice theory is often interpreted as the quintessential case of economics imperialism; however, Amartya Sen argued that Buchanan should not be identified with economics imperialism, since Buchanan has done more than most to introduce ethics, legal political thinking, and indeed social thinking into economics. Crucial to understanding Buchanan's system of thought is the distinction he made between politics and policy. Politics is about the rules of the game, where policy is focused on strategies that players adopt within a given set of rules. “Questions about what are good rules of the game are in the domain of social philosophy, whereas questions about the strategies that players will adopt given those rules is the domain of economics, and it is the play between the rules (social philosophy) and the strategies (economics) that constitutes what Buchanan refers to as constitutional political economy”.

Buchanan's important contribution to constitutionalism is his development of the sub-discipline of constitutional economics. According to Buchanan the ethic of constitutionalism is a key for constitutional order and "may be called the idealized Kantian world" where the individual "who is making the ordering, along with substantially all of his fellows, adopts the moral law as a general rule for behaviour". Buchanan rejects "any organic conception of the state as superior in wisdom, to the citizens of this state". This philosophical position forms the basis of constitutional economics. Buchanan believed that every constitution is created for at least several generations of citizens. Therefore, it must be able to balance the interests of the state, society, and each individual.

Buchanan's work Cost and Choice (see below in List of publications) is often overlooked for its contributions in defining the parameters of opportunity cost. In it, he writes that the costs to individuals determine what the price of a good or service is. For example, the physical work that is required to hunt an animal as well as the price of the tools necessary to hunt it and the time spent hunting all play a factor in the price an individual places on the meat. The asking price of the meat will vary from person to person because the input costs required for each person are not the same.

Buchanan is considered to be a quasi-member of the Austrian school of economics, not formally associated with the school but sharing many common beliefs. As Buchanan puts it: "I certainly have a great deal of affinity with Austrian economics and I have no objections to being called an Austrian. Hayek and Mises might consider me an Austrian but, surely some of the others would not." Buchanan went on to say that: "I didn't become acquainted with Mises until I wrote an article on individual choice and voting in the market in 1954. After I had finished the first draft I went back to see what Mises had said in Human Action. I found out, amazingly, that he had come closer to saying what I was trying to say than anybody else."

• Economics is the study of the whole system of exchange relationships. Politics is the study of the whole system of coercive or potentially coercive relationships (In What should Economists Do? 1964).

• He listed his principal books as of 1988 as: Liberty, Market and State, 1985; The Reason of Rules (with G. Brennan),1985; The Power to Tax (with G. Brennan),1980; What should Economists Do? 1979; Freedom in Constitutional Contract,1978; Democracy in Deficit (with R. Wagner), 1977; The Limits of Liberty, 1975; Cost and Choice, 1969; Demand and Supply of Public Goods, 1968; Public Finance in Democratic Process, 1967; The Calculus of Consent (with G. Tullock),1962; Fiscal Theory and Political Economy, 1960; Public Principles of Public Debt, 1958.
• The Collected Works of James M. Buchanan by James M. Buchanan, at the Library of Economics and Liberty. Twenty-volume work, copyrighted but nine of the 20 volumes are free to read and access; fully searchable online. (Also available at: The Collected Works of James M. Buchanan.)
• A listing of Buchanan's publications from 1949 to 1986 can be found at The Scandinavian Journal Of Economics, 1987, Vol. 89. No. 1, pp. 17–37. These are available through the Library of Economics and Liberty at:
  • Public Principles of Public Debt: A Defense and Restatement
  • The Calculus of Consent: Logical Foundations of Constitutional Democracy, with Gordon Tullock
  • Public Finance in Democratic Process: Fiscal Institutions and Individual Choice
  • The Demand and Supply of Public Goods, by James M. Buchanan, at the Library of Economics and Liberty
  • Cost and Choice: An Inquiry in Economic Theory
  • The Limits of Liberty: Between Anarchy and Leviathan
  • Democracy in Deficit: The Political Legacy of Lord Keynes, with Richard E. Wagner
  • The Power to Tax: Analytical Foundations of a Fiscal Constitution, with Geoffrey Brennan
  • The Reason of Rules: Constitutional Political Economy, with Geoffrey Brennan
• Why I, Too, Am Not a Conservative: The Normative Vision of Classical Liberalism (Cheltenham UK: Edward Elgar, 2005)
• Economics from the Outside In: Better than Plowing and Beyond (College Station: Texas A&M Press, 2007)