Vanberg’s Response to Geoffrey Brennan

  

When Geoffrey Brennan begins his assessment of James M. Buchanan’s work with remarks on the author’s authority in interpreting his own creation, he addresses a general issue that is of particular significance when the author is, as in Buchanan’s case, a paradigm-creator whose life-work centers around, as Brennan puts it, “an identifiable research program.” For those who carry such a research program because they consider it more promising than relevant alternatives, there are essentially two alternatives attitudes towards the paradigm-creator’s work. They can look at it as a contribution to what K. R. Popper calls the world of “objective knowledge” and see their own task in further solidifying and expanding the theoretical edifice for which the paradigm-creator laid the foundations, but which he may not have already worked out fully and consistently in all its ramifications. Or, alternatively, they can treat it as a definitive and authoritative doctrine proclaimed by a “master” who has left for them little more than the exercise of interpreting his work most faithfully. The first attitude promotes science as a cumulative enterprise that is advanced by – again in Popper’s terminology – “conjectures and refutations” or “trial and error-elimination.” The second attitude easily leads to sectarianism, a fate that the paradigm Ludwig von Mises created appears to have suffered in some libertarian quarters.

It is obviously the first attitude that informs Geoffrey Brennan’s restatement and reassessment of the “Buchanan position”; it is surely the attitude that Jim Buchanan would have wanted us to display when we approach his work, and more specifically his “constitutional contractarianism”; and it is in this spirit that I want to comment on the first two of the six “questions and queries” that Geoffrey poses in the latter part of his essay.

The first point that, under the heading “Buchanan as a Classical Liberal,” Geoffrey suggests for discussion concerns whether some parts of Buchanan’s work may not be inconsistent with a “true liberal individualism.” Specifically he refers to the argument, central to the Buchanan paradigm, that working out the rules of the social/economic/political game is an “intrinsically collective exercise,” and to Jim’s belief in “confiscatory estate and gift duties.” I will address each aspect in turn.

As far as the consistency of the Buchanan paradigm with a “true liberal individualism” is concerned I have argued on several occasions (e.g. in Vanberg 2001) that, in my assessment, it is Buchanan’s particular merit to have rectified a deficiency of the “free-market liberalism” that many libertarians claim to be the only doctrine consistent with the value of individual liberty. Advocates of free-market liberalism are surely right in emphasizing that market transactions are distinguished by the fact that they are voluntarily entered into by the parties involved, whose agreement testifies that each expects to gain, thereby conferring legitimacy on the transaction. They are also right, when they apply the same logic to collective arrangements – such as business organizations, clubs, or other kinds of associations – that are voluntarily entered into by market participants even if the “constitution” to which the contracting parties agree limits their in-period freedom of choice, such as employees who agree to follow, within defined limits, the orders of their employer, or stockholders who have to accept whatever decisions the agreed-upon corporate decision-procedures generate. Such judgments on within-market transactions and arrangements are derived from the presumption that when we speak of a “market” we thereby mean a social arena within which voluntary contracting is the only legitimate method by which participants can enlist the cooperation of others.

What free-market liberals easily lose sight of is the fact that markets as “arenas for voluntary cooperation” are not a gift of nature, but are rather social institutions the working properties of which depend on the presence and effective enforcement of “rules of the game” that define what strategies the market participants may or may not legitimately employ in pursuit of their self-interest. These rules may be, and as a matter of fact are, defined differently in different polities, and with differently defined rules the outcome patterns that result from legitimate market transactions may differ significantly. [1] Accordingly, the question arises of what provides legitimacy to the very institutional framework within which markets operate and which delimits the liberty individuals enjoy as market participants. What makes this question particularly relevant is that, as much as markets operating within “appropriate” rules can be trusted to work beneficially, markets cannot be expected to spontaneously generate and enforce the rules – at least not all of them – that are required for their beneficial working. Surely, for those rules of the market game that are by necessity subject to collective-political choice, free-market liberals face the question of how, by what criteria, they propose to judge the merits of potential alternative rules. And, upon further reflection, it should be apparent that rules that have evolved spontaneously cannot per se be exempt from critical scrutiny, but that for them, too, free-market liberals must specify the criteria against which they ought to be judged.

I neither want nor need to comment on how – if at all – free-market liberals have responded to the noted challenge, e.g., by invoking natural-rights doctrines. What I want to stress is that James Buchanan must be credited for having spelled out what, as I submit, is in fact the answer that a consistent adherence to a “true liberal individualism” requires. Buchanan’s contractarian constitutionalism simply insists that if a liberal individualism considers market transactions and arrangements legitimate because of their voluntary contractual nature, it must apply the same criterion of legitimacy, namely voluntary agreement among the parties involved, to the constitutional level at which the “rules of the game” are – explicitly or implicitly – adopted, be it the rules of the market or the rules of politics. In other words, Buchanan insists that a free-market liberalism that emphasizes individuals’ sovereignty at the sub constitutional level of within-market choices must be supplemented by a constitutional liberalism that respects individuals as sovereign choosers at the constitutional level as well, where they jointly decide on the rules under which they want to live.

Extending the fundamental normative principle of voluntary choice and voluntary contract to the constitutional level of course raises the question of how this principle can be meaningfully specified and secured at that level, a question that is obviously much more difficult to answer than in the case of market transactions where what “voluntary” means is defined in terms of the rules that constitute the market as an arena of voluntary cooperation. Yet the fact that the question is difficult to answer cannot be a legitimate excuse for classical liberals simply to ignore it. They should, instead, at least appreciate – if not join – the enterprise that Buchanan’s research program pursues: Inquiring into how the processes by which constitutional rules are adopted and reformed may themselves be framed by rules that advance and secure voluntariness in constitutional choice. That the political processes in modern democracies, not to speak of other regimes, have grave deficiencies in this regard has often and rightly been criticized from within the liberal paradigm. With his contractarian constitutionalism Buchanan reminds his fellow liberals that they ought to go beyond such criticism and face the task of suggesting institutional reforms in the democratic process that may help to strengthen individual sovereignty at the constitutional level -- to the extent that, given the inherent nature of collective-political choice, it can be realized at that level.

On the sub-issue that Geoffrey raises under the heading “Buchanan as a Classical Liberal,” namely Jim’s “passionate belief in confiscatory estate and gift duties,” I have only a very brief comment to make. It can, indeed, be viewed as an exemplification of what I noted at the beginning of my comment, namely, that there is little reason to expect a paradigm-creator to be always consistent in his own contributions to the theoretical edifice for which he laid the foundations. The very logic of his own paradigm implies that if Buchanan’s noted belief is meant to reflect more than his personal preference, it can only be treated as a proposal for constitutional reform that he conjectures to produce mutual gains for all members of the polity. Whether there are indeed good reasons to assume that this conjecture is correct is surely debatable. And whether it is a proposal that is likely to pass the agreement test is, as Geoffrey submits, rather doubtful.

The second question that, under the heading “The Double Role of Exchange,” Geoffrey poses concerns whether Buchanan’s insistence on agreement among the individuals concerned as “the ultimate test” of the constitutional economists’ conjectures about welfare-improving constitutional reforms means that the “actual constitutional contractors” are assigned the authority to determine the truth of claims that economists make about the factual working properties of institutions in markets and politics. As Geoffrey notes, it would indeed be “bizarre” if the contractarian-constitutional paradigm were to imply that, say, the members of a polity to whom a constitutional economist proposes what he conjectures to be a mutually beneficial constitutional reform were to determine, by their acceptance or rejection of the proposal, the truth or falsehood of the factual claims that are part and parcel of it. This is, however, definitely not the case, and it becomes apparent why this is so as soon as one explicitly distinguishes between the two subconjectures that are included in the constitutional economist’s conjectures about mutually beneficial constitutional changes, namely, on the one hand, conjectures about the change in outcome patterns that the suggested reform can be expected to produce and, on the other hand, the economist’s presumption that the addressees of his proposal will welcome the predicted changes and will, therefore, share a common constitutional interest in the suggested reform.

Accordingly, the “truth value” of the constitutional economist’s conjectures about mutually beneficial constitutional reforms will depend, on the one hand, on the correctness of his hypotheses about the factual working properties of rules and, on the other hand, on his conjectures about the addressees’ subjective evaluation of the consequences that the rules under consideration are predicted to have. If his reform proposal does not pass the agreement test, his conjecture that the suggested reform promises mutual gains for all persons involved must be regarded as refuted, at least for the time being. [2] Such refutation, however, does not at all mean that the economist’s hypotheses about the factual working properties of the pre-reform and post-reform rules are thereby falsified. The contractarian-constitutional paradigm respects the members of a rule-choosing group as the ultimate judges of what, in their own assessment, can count as a “welfare-enhancing” reform. Yet it definitely does not install them as judges on the truth or falsehood of the economist’s conjectures about the factual consequences that suggested constitutional reforms can be expected to produce.

[1] Consider for example the different outcome patterns that can be expected to result if the property rights in urban plots include or exclude the right to use them for purposes such as, e.g., pig breeding or operating a shooting range.

[2] The qualifier “for the time being” is added to account for the possibility that the failure to gain agreement may be due to misperceptions on the addressees’ part, misperceptions that might be corrected by further information on the actual effects of the suggested reforms.