Methodological and normative individualism in The Calculus

I have described how studying Hans Albert’s work shaped my own research agenda in more detail in Vanberg (1994: 2ff.).

“Collective action must be, under our postulates, composed of individual actions. … Our theory thus begins with the acting or decision-making individual as he participates in the process through which group choices are organized” (3).

“The individualistic theory of the constitution that we have been able to develop assigns a central role to a single decision-making rule—that of general consensus or unanimity” (96).

As Buchanan (1959/1999a: 196) has argued elsewhere: “Propositions advanced by political economists must always be considered as tentative hypotheses offered as solutions to social problems”.—“The ‘positive’ political economist, building on the fundamental theorem of positive economics, attempts to device a proposal [for problem-solving] … as a hypothesis” (1959/1999a: 209).

The propositions that an applied science makes, taking the chosen selection- or performance-criterion as given, can be entirely value-free. It is, therefore, misleading when in The Calculus one reads: “Indeed the only purpose of science is its ultimate assistance in the development of normative propositions” (308).—Applied science can provide assistance in problem-solving exactly because, and only to the extent that, it informs about which measures are suitable for achieving the desired effects. In this sense the applied branch of social (as any other) science is no less value-free than its theoretical branch. The only difference is that its analytical focus is dependent on a prior (meta-theoretical) value judgment on what problem is worth studying and what counts as a “good” problem-solution.—Elsewhere Buchanan (1997: 10) states this quite clearly when he distinguishes “the two parts of the inclusive scientific endeavor,” namely offering “an understanding of ‘what is’ along with an understanding of what ‘could be’,” and emphasizes that arguments about the latter “need not be any departure from the realm of strictly positive inquiry.”

In “What Should Economists Do?” Buchanan (1964/1999: 35) has argued more extensively that the question of “how cooperative associations of individuals” may be made “mutually beneficial to all parties … should be central” to economics as an applied science. As he puts it: “This mutuality of advantage that may be secured … as a result of cooperative arrangements … is the one important truth in our discipline” (1964/1999: 36).—For a more detailed discussion on “constitutional economics and the ‘gains-from-trade’ paradigm” see Vanberg (2005: 26ff.).

The “organizational norms” of the market serve, as Buchanan and Tullock put it, to channel self-interested behavior “in such a direction that it becomes beneficial rather than detrimental to the interests of all members of the community” (304).—Buchanan (1997: 4): “When economists refer to ‘the market’ and to its efficiency in enhancing the well-being of persons, they are presuming that the exchange order is operative within a set of appropriately drawn ‘laws and institutions,’ to use the terms of Adam Smith.”

This is how, as I suppose, one should read statements such as: “The rule of unanimity provides us with an extremely weak ethical criterion for ‘betterness,’ a criterion that is implicit in the individualist conception” (14).

Buchanan and Tullock expressly emphasize that the role of unanimity as the ultimate test of mutual gain must be distinguished from its role as actually practiced decision rule in social choice. In other words, we must distinguish between unanimity as legitimizing principle and unanimity as practiced decision rule. One of the principal, and best known, arguments in The Calculus is, of course, that individuals may well have prudential reasons to agree on “a majority rule for the operation of certain collectivized activities” (94). It is, however, again only from their agreement on majority rule that such deviation from unanimity can be concluded to be mutually beneficial.

It is in this sense that Buchanan (1964/1999: 38) speaks of the market as “the institutional embodiment of the voluntary exchange processes that are entered into by individuals in their several capacities.”

“Adopting the criterion implicit in the contract theory, the analysis of political institutions asks: On what changes in the existing set of rules defining the political order can all citizens agree?” (319).

“An imposed constitution that embodies the coerced agreement of some members of the social group is a wholly different institution from that which we propose to examine in this book” (14).—“Clearly, a relationship that does not embody unanimous consent is not a contract” (253).

“We have then tried to answer the question: What set of rules should the fully rational individual, motivated primarily by his own self-interest, seek to achieve if he recognizes that the approval of such rules must embody mutual agreement among his fellows” (312).

As Buchanan (1986/1999: 462) puts it elsewhere: “The focus of evaluative attention becomes the process itself. … The constitution of policy rather than policy itself becomes the relevant object of reform.”—Buchanan (1986/1999: 42): “Economists [should] concentrate attention on the institutions, the relationships, among individuals as they participate, in trade or exchange, broadly considered.”

“The welfare economist falls back on some non-individualistic ethical ordering as given by a ‘social welfare function’’’ (93).—“This function conceptually orders all possible states of society, and quite unambiguously allows for the selection of the ‘best.’ … We have rejected this approach. … We admit as ‘better’ only those changes that are observed to be approved unanimously by all members of the group” (284f.).

Buchanan (1959/1999a: 203): “Even if the value judgments expressed in the function say that individual preferences are to count, these preferences must be those presumed by the observer rather than those revealed in behavior.”

Buchanan (1954/1999: 100f): “A necessary condition for deriving a social welfare function is that all possible social states be ordered outside or external to the decision-making process itself. What is necessary, in effect, is that the one erecting the function be able to translate the individual values (which are presumably revealed to him) into social building blocks. If these values consist only of individual orderings of social states (which is all that is required for either political voting or market choice) this step cannot be taken.”

Buchanan (1966/2002: 255): “There exists no ‘social welfare function’ … in a society of freely choosing individuals, and there seems no reason to invent such a conception for analytical convenience.”