The Limits of Liberty: Between Anarchy and Leviathan
James M. Buchanan
Another in my series of “economics books I had lying around that I decided to pick up because the author died.” It was not a promising match because Buchanan is far to the right of me on the political spectrum, and this book is focused on the topic of political organization, particularly focusing on Buchanan’s contractarian view of the (normative) state.
The word that floated to my mind to describe this book is “bloodless.” People often criticize economics for being “dry,” but one of the main reasons I like economics is the way it deals with the real, practical decisions that people make every day. Buchanan’s book is almost entirely about (admittedly) hypothetical multiparty contracting, and therefore misses all of that richness. It’s a sharp contrast with many of the best books of economic theory, for example, “The Wealth of Nations” or “Exit, Voice, and Loyalty,” the latter of which is also in the series I mentioned at the beginning. Worse, I felt a kind of political cowardice in Buchanan’s book. He frequently makes vague references to “the way things have come to be in the 1970s” (when the book was published), or “the problems man faces in the 1970s.” Although certainly there were many things in the 1970s worth criticizing, regardless of your political views, this comes across as an expression of the inchoate disquiet felt by an upper-class white man (his grandfather was the governor of Tennessee) in a society where previously disenfranchised groups were making (at least somewhat successful) claims to some political power.
At the end of the day I also just have problems with the contractarian view of government. Buchanan often starts with a thought experiment in which a group of people make a constitutional contract to abide by unanimous decisions, and then elides it with something like, “…but due to the excessive transaction costs associated with unanimous decision-making, they agree to adopt a non-unanimity voting rule.” I think a huge amount is lost in this elision; the difference between unanimity rule and even extreme-supermajority rule is a total difference in kind, and the “transaction costs” thereby eliminated are of deep interest, unlike the transaction costs associated with, say, having to drive to the store.
Ideas that I found useful in this book: the distinction between the “protective state” and the “productive state”; the proto-economic framework for thinking about economic effects in a situation prior to the definition of property rights (what Buchanan talks about as “external economies” and “external diseconomies”).
I found it interesting to be reading this at the same time as the sci-fi novel “The Dispossessed,” which portrays an anarchist society and a “propertarian” society–in particular the way that the latter book seems to shed much more light on the shared issues than the former!