Stability of the Liberal Order, Moral Learning, and Constitutional Choice: An Unresolved Tension in James Buchanan's Political Economy

Abstract

Buchanan mentions at several points in his oeuvre the necessary role for a constitutional attitude. This attitude is both explanatory and evaluative; it explains why citizens value liberty but also highlights one of the necessary conditions for the stability of a free society. We argue that Buchanan's idea of a 'constitutional attitude' is extremely relevant, though underdeveloped. Firstly, it remains an open question what exactly a constitutional attitude means in practice and it is unclear what kind of institutions would foster it. Secondly, we believe that the success of his constitutional political economy project depends on some account of moral learning. Although Buchanan stresses the individual aspect of the process of self-constitution, he doesn't take sufficient account of how the institutional environment and our social relationships structure this process. We discuss to what extent a broadly neo-Aristotelian account of moral learning can provide a more robust foundation for Buchanan's ideas.

Full text

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Stability of the Liberal Order, Moral Learning, and Constitutional Choice:
An Unresolved Tension in James Buchanan’s Political Economy
Malte F. Dold, Pomona College, Department of Economics
Email: malte.dold@pomona.edu
Matías Petersen, Universidad de los Andes, Centro UANDES Signos / ESE Business School
Email: mpetersen@uandes.cl
Abstract: Buchanan mentions at several points in his oeuvre the necessary role for a
constitutional attitude. This attitude is both explanatory and evaluative; it explains why citizens
value liberty but also highlights one of the necessary conditions for the stability of a free society.
We argue that Buchanan’s idea of a ‘constitutional attitude’ is extremely relevant, though
underdeveloped. Firstly, it remains an open question what exactly a constitutional attitude
means in practice and it is unclear what kind of institutions would foster it. Secondly, we believe
that the success of his constitutional political economy project depends on some account of
moral learning. Although Buchanan stresses the individual aspect of the process of self-
constitution, he doesn’t take sufficient account of how the institutional environment and our
social relationships structure this process. We discuss to what extent a broadly neo-Aristotelian
account of moral learning can provide a more robust foundation for Buchanan’s ideas.
JEL: A13; B25; B41; D91
Keywords: James M. Buchanan; Constitutional Attitude; Virtue Ethics; Institutions.

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1. Introduction
In recent years, the Western liberal order turned out to be more fragile than predicted by
Fukuyama’s famous declaration of the “end point of mankind’s ideological evolution and the
universalization of Western liberal democracy as the final form of human government” (1989,
4). Traditional parties of the center are in decline in many Western democracies. Populist
movements of the right and the left have won elections or significant shares in parliaments. In
many places, citizens do not any more regard the liberal post-WWII consensus – i.e., the
combination of a competitive market economy, an open democracy, and the rule of law – as the
most attractive form of social order. Rather, they increasingly delegate their individual rights
of democratic participation to strong populist leaders who make far-ranging decisions on their
behalf (Rodrik, 2018, Deneen 2019).
In the context of this ‘new’ crisis of liberalism (Dold and Krieger, 2019), the writings of
Nobel Prize Laureate James M. Buchanan have experienced a resurgence. Both critics
(MacLean 2017, Block 2018, Mirowski 2019) and advocates (Coyne 2011, Boettke 2014, Levy
and Peart 2019) of his constitutional political economy refer to his work when discussing the
culprits and saviors of the current instability of liberal social orders. In this paper, we will not
delve into the debate about the impact of public choice theory and Buchanan’s work on current
politics and academia. Rather, we will engage in an immanent critique of his work by analyzing
how Buchanan himself struggled with the issue of the stability of liberal institutions, in
particular, the question of whether one can be sure that rational agents will show an interest in
constitutional thinking, i.e., in reforming and improving the ‘rules of the social game’.
For the sake of the argument of this paper, it helps to differentiate between two elements
of Buchanan’s constitutional political economy. On the one hand, his project is a moral-
justificatory endeavor in that it reconstructs the liberal legal-political order based on the
assumption of rational, self-interested agents (see, e.g., Buchanan and Tullock 1962; Buchanan
1975). On the other hand, Buchanan wants his account to be a positive-pragmatic enterprise.
At various points in his oeuvre, Buchanan points out that his approach can deliver the necessary
ideas to make existing liberal constitutions more robust and, if necessary, stimulate debates
about ongoing reforms (Buchanan 1975: 209ff.; Buchanan and Tullock 1962: 299ff.; Brennan
and Buchanan 1985: 134ff.). This paper will focus on the pragmatic, not the justificatory aspect
of Buchanan’s account. In other words, we will ask whether Buchanan’s account deals

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sufficiently with the question of what the necessary conditions for the robustness and stability
of liberal institutions are.
We argue in this paper that, although Buchanan recognizes the need for morally motivated
individuals in moments of constitutional choice,
1
he cannot solve the practical problem of
rational ignorance. Consequently, Buchanan’s analysis might justify large-scale liberal orders
in theory, but it is unable to explain convincingly how individuals develop a constitutional
attitude, i.e., a sense of responsibility to engage in constitutional choice at the individual (‘the
private man’) and social level (‘the public man’).
2
Furthermore, his account cannot explain how
liberal political orders come about, stabilize and advance. This is largely because Buchanan (a)
fails to specify what a constitutional attitude would mean in modern, large-scale democracies
and he (b) underappreciates the formative role that social relationships and practices play in the
development of individuals’ constitutional attitude. As a result, it remains unclear what kind of
institutions (informal and formal) would encourage the formation of individuals’ constitutional
attitude in practice.
We argue that Buchanan’s liberal contractarianism needs an empirically informed theory of
moral learning. In this regard, we discuss to what extent a broadly neo-Aristotelian account of
virtue can enrich Buchanan’s framework. In many of his writings (see, e.g., 1979, 1989, 1994),
Buchanan embraces notions such as habitual learning, commitment, and processes of individual
betterment. In his 1994 book on work ethic, Buchanan asks why people are better off when they
work harder, save more, and deal honestly in markets and in politics. Hence, we think that
Buchanan’s thinking is actually quite compatible with virtue ethical ideas. In the context of this
paper, virtues can be understood as qualities of mind and character that enable an individual to
stand back from her preferences, and to evaluate what the provision of general rules in a
community seems to require from her, and to use her skills in order to implement those rules.
1
By ‘constitutional choice’, Buchanan understands a choice situation whereby agents think, discuss and establish
the rules that constrain their own and their peers’ future actions. Buchanan considers the term ‘constitutions’ in a
very broad sense. Although he primarily means the rules of the political game, i.e., state constitutions, he wanted
the logic of constitutional choice to be also applicable to families, sports games, firms, public institutions, etc.
2
In the moral-justificatory part of Buchanan’s contractarianism, the veil of uncertainty plays an important heuristic
function that creates a sense of other-regardingness when individuals think about rules that regulate their future
social interactions: individuals do not know where they will end up in the social game so they favor rules that are
in line with the principles of fairness or generality (Buchanan and Congleton 1998). However, this thought
experiment presupposes that individuals are already taking part in the constitutional exercise. The point of our
paper is more fundamental: if people live in a large-scale society with existing social rules, what will motivate
them to take part in the constitutional exercise? In this context, we think Buchanan (1989) is right to point to the
necessity of citizens’ moral motivation – i.e., their constitutional attitude – to engage in rulemaking activities.
However, and this is central for our argument, Buchanan does not sufficiently flesh out what this constitutional
attitude is and what type of institutional thinking is needed to address the important issues of moral learning and
crowding out of moral motivation.

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Although some individuals will fail to grasp what is morally required of them, the virtues allow
them to at least consider reasons for action other than his or her own self-interested preferences.
3
Paired with empirical evidence on the interplay between institutions, preference formation, and
moral learning, we argue that neo-Aristotelian ideas on virtue can contribute to a more robust
motivational foundation of Buchanan’s contractarian project and lead to insightful policy
implications.
In the last couple of decades many scholars have successfully reintegrated the notion of
virtue at the intersection of economics and philosophy (e.g., Sen and Nussbaum 1993; Brennan
and Hamlin 1995; Bruni and Sugden 2013). Furthermore, there is a rapidly expanding empirical
literature on the systematic interplay between institutions, economic incentives and moral
behavior in behavioral economics (e.g., Frey 1997; Bowles 1998, 2016; Deckers et al. 2016;
Gintis 2005, Falk and Tirole 2016) that provides novel answers to some of the objections raised
at virtue ethics. In this paper we hope to contribute to this growing field.
The structure of the paper is as follows. In section 2, we discuss how Buchanan struggles
to reconcile the assumption of self-interested agents with the need for a constitutional attitude.
We argue that he cannot solve this conundrum on the level of constitutional choice since his
account misses an institutionally embedded theory of moral learning at the individual level
(‘self-constitution’). In section 3, we outline a broadly neo-Aristotelian account of moral
learning. Section 4 discusses how this perspective leads to novel insights with regard to the
analysis of institutional design. Based on empirical evidence, we argue that citizens’
constitutional attitude is stronger when legislators acknowledge individuals as ‘moral subjects’
who can engage in informal public discussions and have access to formal means of political
participation. Section 5 concludes.
2. Self-interested individuals and constitutional choice: Buchanan’s dilemma
In the moral-justificatory part of his contractarian framework, Buchanan uses a thought
experiment of a two-tiered decision procedure that shall indicate how individuals overcome the
‘Hobbesian jungle’: at the constitutional stage, behind a sufficiently thick veil of uncertainty,
agents are assumed to be unable to identify their narrowly defined self-interests. They agree to
overcome the conflict-ridden state of nature by establishing a constitutional regime in
accordance with some generalizable criteria such as fairness or efficiency. At the post-
3
We are aware of the contrast between this account of the relationship between virtue and reasons for action and
a more ‘Humean’ account of this relationship. We will say more about this in section 3.

5
constitutional stage, the established regime guarantees general basic rights through a rule-based
institutional order within which agents can pursue their individual goals. In Buchanan’s
constitutional contractarianism, some have argued, there is no place for any genuine moral
motivation of the agents; both in the constitutional and post-constitutional stage agents are
assumed to be self-interested “all the way down” (Gaus 2018).
We deem this often-told story – prevalent in much of the public choice literature – to be
an oversimplification which does not cover the depth of Buchanan’s analysis. In fact, Buchanan
sees the need for morally motivated individuals in real-life constitutional choice (Buchanan
1989). However, he also recognizes that there can be more or less severe obstacles to
constitutional thinking (Brennan and Buchanan 1985: 140ff.). In real-world situations, agents
do not, and in fact cannot, make constitutional choices behind a perfect veil of uncertainty. To
some residual extent, real-world individuals would always be able to predict the distributional
implications of any proposed change in rules and therefore be constrained by their self-interest
at the moment of constitutional choice. This situation is aggravated in situations of uncertain
political property rights when agents do not know how much they would gain from a potential
constitutional reform. Moreover, even if there are general welfare gains from potential political
cooperation, there can be a deeper impediment to constitutional reforms in large-scale
democracies: the single individual might lack the rational incentive to engage in the provision
of the public good of general rules (free-rider problem). Buchanan (1979a, 1989) acknowledges
that this problem of ‘rational ignorance’ is persistent when individuals lack a ‘constitutional
attitude’.
In this section, we do not address the problem of the status quo entitlements or the effects
of political uncertainties that limit the effectiveness of the veil of uncertainty heuristics in
regular politics, but focus on the more severe motivational issue: how can we expect
individuals’ willingness to engage in constitutional decision-making if our behavioral
assumption is that of self-interest? Buchanan is fully cognizant of this tension. For example, he
(1989: 370) states that in “games with effectively large numbers of participants, there may exist
little or no incentive for any single player to participate actively in any serious evaluation of the
rules.” From a rational choice perspective,
4
we expect an inevitable free-rider problem since
4
We are well aware of the fact that ‘rational choice’ does not necessarily presuppose self-interest in the sense of
selfishness, but only complete and transitive preferences. However, Buchanan himself used a narrow model of
rational choice as it was common in the economics and public choice literature of his time. The rationale for this
rather narrow account of human behavior is, from Buchanan’s point of view, philosophical. Buchanan doesn’t
deny the limitations of this model, and he accepts that for empirical research sometimes it is useful to use a broader
account of human motivation. However, Buchanan distinguished between behavioral assumptions used in applied
or empirical work (‘positive economics’) and those used in constitutional analysis (see Brennan and Buchanan

6
investment in constitutional decision-making is costly (e.g., in form of time and transaction
costs) and the likelihood for each individual to ultimately influence the choice among regimes
is infinitesimal. It is therefore not rational to become informed about institutional alternatives
or to participate actively in constitutional choice. Rational individuals forgo investment in the
public good of constitutional choice in favor of more immediate gratification of private goods.
If we stay within the narrow framework of rational self-interest, Buchanan thinks that changes
in basic institutions could only be imposed by non-democratic, violent means or by slow and
unconscious processes of social-cultural evolution that can have all kinds of bad, unintended
outcomes (Brennan and Buchanan 1985: 149).
Being aware of this conundrum, Buchanan admits that the self-interest assumption of the
homo economicus, as powerful as it is in explaining and yielding predictions in market
relationships within given rules, cannot readily be applied to choices among rules that are
necessarily public in scope. A utility-maximizing agent can play the market game successfully
without concerning herself with potential changes in the rules of the game (Buchanan 1989:
369). Accordingly, Brennan and Buchanan ask (1985: 145): “Why should anyone do ‘good’?
There is no way that economists who stay within the strict limits of the discipline can respond
to such a question; they cannot manipulate utility-maximizing actors so as to offer a satisfying
response.”
Buchanan’s (partial) answer: Integrating ethical precepts into moments of constitutional
choice
Buchanan thinks that it is meaningless to talk about constitutional change unless individuals are
motivated to think about how existing legal-political rules affect their lives. According to
Buchanan (1989), individuals must not simply accept the existing constitutional order as a
‘relatively absolute absolute’, but need to take responsibility for the rules under which they live.
For this reason, he suggests that “each one of us, as a citizen, has an ethical obligation to enter
directly and/or indirectly into an ongoing and continuing constitutional dialogue that is distinct
from but parallel to the patterns of ordinary activity carried on within those rules that define the
existing regime” (ibid.: 369, emphasis added). This ‘ethic of constitutional citizenship’ is
distinct from ordinary morality, since individuals who fully comply with a given set of rules,
might still miss the necessary civic responsibility to also think about and influence the rules
1981, 159). Buchanan’s justification for the use of a rather narrow version of rational choice in the latter case is
Humean, namely, we assume that power will be abused and therefore we assume that politicians will behave as
‘knaves’. We shall say more on this point in section 4. For a detailed analysis, see Kirchgässner (2014).

7
themselves. If individuals do not concern themselves with the rules that govern them, “the
constitutional regime that we inherit must be vulnerable both to non-principled exploitation and
to the natural erosion of historical change” (ibid.: 372). In other words, if people do not have a
constitutional attitude, one of the key ingredients for the liberal social order, viz., citizen’s
engagement with rules that govern them, is missing and the liberal character of the overall social
order will not be robust and stable.
In order to retain hope for individuals’ willingness to invest in constitutional dialogue and
design, Buchanan motivates the introduction of individuals’ ethical principles into
constitutional choice (1989: 371). He knows that this violates the – narrowly defined – self-
interest postulate. He asserts that “becoming informed about, and participating in the discussion
of, constitutional rules must reflect the presence of some ethical precept that transcends rational
interest for the individual” (ibid.). But what do persons actually do when they “transcend
rational interest” and act according to their “ethical precepts”? We only find a partial and
abstract answer in Buchanan’s writings. Ethically motivated individuals “place positive private
value on ‘public good’ for the whole community of persons, over and beyond the value placed
on their own individualized or partitioned shares” (Brennan and Buchanan 1985: 147).
Accordingly, individual choice can be modeled by a two-part utility function,
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Buchanan points out that the sole assumption of moral motivation does not guarantee that
‘public regardingness’ will be salient in moments of constitutional choice (Brennan and
Buchanan 1985: 146f.). Firstly, the stability of constitutional thinking depends on how much
weight – symbolized by parameter
*,
– the individual places on the public good relative to her
private good. Secondly, the relative weight the individual places on the public good depends on
her expectation about the degree in which her fellow citizens share this inclination, i.e.,
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regardingness over a large number of individuals is necessary for this ‘new’ theory of
constitutional choice to be operationally useful: “If individuals differ widely in their
conceptions of ‘good,’ attempts by each to ‘do good’ amount to little more than random
deviations from behavior modeled on self-interest postulates” (Brennan and Buchanan 1985:
146). Put differently, if the integration of individuals’ moral motivation is to carry predictive
weight in moments of constitutional choice, individuals must share a conception of what public
regardingness is (e.g., aiming at a maximal sum total of individual utilities 0
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8
hold a similar inclination
𝜃
to act accordingly. In a nutshell: the relative cost of public
regardingness in moments of constitutional choice decreases with the existence of pre-
constitutionally ‘shared norms’ (ibid.: 148).
5
Institutions that mitigate generalized public goods dilemma: limited government and education
The crucial question remains: how can we ensure a pre-constitutionally shared constitutional
attitude in a large-scale society? Despite his convincing argument in favor of integrating
individuals’ ethical concerns into constitutional choice, Buchanan only vaguely explicates what
kind of institutions would foster this constitutional attitude. Yet, he makes it very clear that he
does not believe in a Hayekian solution. In his opinion, “great damage has been and is being
done by modern economists who argue, indirectly, that basic institutional change will somehow
spontaneously evolve in the direction of structural efficiency” (Brennan and Buchanan 1985:
149). In other words: evolutionary (market) mechanisms alone do not suffice to induce a
constitutional attitude.
6
Buchanan (1978) argues that the public goods dilemma of constitutional choice can only
be mitigated if there is a correspondence between the external (formal) institutional and the
internal (moral) constraints of individual behavior. This would be the case if an individual’s
moral attitude, e.g., for inter-generational equality of opportunity, corresponds to the legal-
political constraints she faces, e.g., in form of high taxes on wealth inheritance. However,
Buchanan points out that developments in the twentieth century drove these two sets of
constraints apart:
“[…] population increase has been accompanied by increasing mobility over space, by
the replacement of local by national markets, by the urbanization of society, by the shift
of power from state-local to national government, and by the increased politicization of
society generally. Add to this the observed erosion of the family, the church, and the
law – all of which were stabilizing influences that tended to reinforce moral precepts –
5
Brennan and Buchanan (1985: 148) give the following illustration: “An individual might voluntarily agree to a
tax-transfer scheme that imposes a net individual cost of one hundred dollars, if he knows that all other, similarly
situated persons will also bear net costs of one hundred dollars each. The same individual, however, may contribute
only fifty dollars, or less, to privately organized schemes having the same purpose in the absence of the political
program.”
6
Whether this was Hayek’s own understanding of this problem is not our concern here. We simply use ‘Hayekian’
to describe the idea Buchanan is referring to, partly because Buchanan thought this was the case. Buchanan (1985:
13) notes: “Some modern social analysts (notably Hayek and his followers) display and apparent faith in the forces
of social and cultural “evolution” to generate efficient rules.”

9
and we readily understand why Homo economicus has assumed such a dominant role
in modern behavior patterns.” (1978: 365).
The consequence is the atomized individual: “Modern man seeks not to live with his neighbor;
he seeks instead to become an island, even when his natural setting dictates moral community”
(ibid., 366). Although Buchanan says that he is not “some agrarian utopian calling for a return
to the scattered villages on the plains” (ibid., 366), he generally favors the “devolution of central
government power” (ibid., 367) that might channel the moral motivation of citizens (and
politicians) toward constitutional thinking. Following the principle of subsidiarity, the problem
of rational ignorance would be diminished since individuals’ single voices matter more. Ceteris
paribus, “the smaller the number of persons with whom a person interacts, the higher the
likelihood …. that he will provide public good in his choice behavior” (ibid., 363). Buchanan
further explicates that ‘history matters’ in this context. If individuals have “long adhered to a
‘constitutional attitude’, fostered by a historical record during which limits on the power of
governments have proved effective at least to a degree” (Brennan and Buchanan 1985: 143),
the willingness of persons to base their constitutional choice on ethical principles and more
inclusive processes of decision-making is increased.
Crucially, Buchanan (1979: 252) argues that the concern for external constraints in form
of social and political institutions, the constitution of public man (“the ‘character’ of society, if
you will”), presupposes an individual’s constitution of private man (“which roughly translates
as ‘character’”). According to Buchanan, individuals form their character when they apply
private constitutional choice, i.e., they implement rules that restrict their future selves in order
to become the person they want to become (Brennan and Buchanan 1985, chapter 5). This
capability to think about private rules can then be extended to the public realm in the form of
political constitutional choice. Respectively, without the incentive and awareness to think about
one’s own character first, individuals lack the necessary prerequisites to successfully think
about the desired ‘character’ of their social environment. Regarding the former, Buchanan
ascribes an important role to education. It can “provide persons with both an array of imagined
prospects and some means of valuation” (1979: 254) that lie at the heart of the capability of
forming own’s own character. Buchanan is convinced that creative imagination acquired on the
first level of self-constitution gradually develops into a more general constitutional attitude
toward the nature of one’s institutional environment. He concludes optimistically (1979: 258):
“If man can envisage himself as a product of his own making, as embodying prospects for
changing himself into one of the imagined possibilities that he might be, it becomes relatively

10
easy for him to envisage changing the basic rules of social order in the direction of imagined
good societies.”
The missing link: A theory of moral learning
Buchanan gives us some ideas on institutions that can foster a constitutional attitude (limited
government, education, historical path dependency). Yet, he does not elaborate on the
underlying processes of individual self-constitution. It remains unclear how the character and
virtues of the individual co-evolve with her socioeconomic environment, i.e., the reflexivity
between the self-constituting individual (agency) and its institutional environment (structure)
is not explained sufficiently. One might ask, for instance, in how far institutions that individuals
did not necessarily choose themselves (e.g., family, community, social norms, religion) do
predefine their ‘idea of betterness’ and thereby the outcome of individual processes of self-
constitution.
In our view, Buchanan underestimates the degree to which individuals are socially-
embedded practical reasoners. In contrast, he stresses the significance of mental processes when
he states that “the idea may be more important than the reality … in exerting influences on
behavior” (1979: 254). Buchanan thinks that the formation of an individual’s character is not
something that passively happens to a person, but it describes a purposeful and self-determined
act, in which a person invests resources deliberately in becoming the person she wants to
become.
7
While Buchanan acknowledges that individuals are externally constrained by their
socio-biological environment (‘the natural world’), they are still able to imagine themselves as
products of their own making and act accordingly – in Buchanan’s terminology, individuals are
‘artifactual beings’ (1979: 247).
In doing so, Buchanan focuses primarily on cognitive prerequisites for self-constitution,
but neglects the motivational and practical underpinning. Buchanan assumes that individuals
develop interest in reflecting upon their own character, feel responsible for their institutional
environment and transcend their self-interest to actively shape both levels by deliberate actions.
This is cognitively and motivationally very demanding for the single individual and might
underestimate that the motivation for constitutional choice depends upon the adequate mixture
of formal institutions, social practices, and individual habituation.
7
For an in-depth discussion of this point, see Dold (2018).

11
In summary, Buchanan does not provide us with a convincing theory of moral learning,
i.e., he does not explain the process whereby individuals evaluate and shape their preferences
through a process of reflection upon their reasons for action. We take Buchanan’s notion of
constitutional attitude to mean precisely this reflective character trait applied to the choice of
social rules. Buchanan hints at the importance of individual cognitive capabilities (such as
imagination and valuation) for constitutional choice, but it remains an open question how
individuals actually acquire the necessary motivation for the formation of the constitutional
attitude. His framework lacks a convincing narrative about the relationship between an agents’
constitutional attitude (her perceived responsibility to reason about the public good) and her
constitutional choice (her revealed preferences for the ‘rules of the game’). If one wants to avoid
any ad hoc rescue of his account, this relationship must be elucidated. We argue that to
understand this relationship we need a (broadly defined) neo-Aristotelian account of virtue,
precisely because it is in this tradition that the connection between institutions and moral
learning has been forcefully emphasized (on this point see Schofield 2006, 310-18).
8
3. Buchanan meets neo-Aristotelian virtue ethics
In this section, we outline a broadly neo-Aristotelian account of virtue and moral learning
which, in our view, can be fruitfully combined with Buchanan’s philosophical framework. It
would be impossible, in the context of this paper, to do justice to the richness and variety of
neo-Aristotelian moral philosophy. The account of moral learning we advance in this section
draws upon some neo-Aristotelian insights, but we are aware that some of the thinkers we draw
upon might disagree on whether this account of moral learning can be fruitfully combined with
Buchanan’s thought.
9
By moral learning we understand a process whereby an agent is capable
of evaluating her reasons for action and to stand back from her desires and preferences in such
a way that she is able to judge what the pursuit of the good here and now demands of her. This
notion of moral learning is Aristotelian in three senses. First, it departs from contemporary
Humean accounts of reasons for action by claiming that desires are, can, and should be
evaluated by agents in their practical reasoning whereas in a broadly Humean account of
practical reason evaluations and expressions of desire are normally conflated (see Thompson
2008, 97-119). Second, it assumes that the ability of moral learning depends at least in part on
8
Some argue that recurring to neo-Aristotelianism, and to virtue ethics in particular, is a rejection of modernity.
Gerald Gaus, for example, suggests that “neo-Aristotelian virtue ethics is a rejection of modernity rather than a
solution to its problems” (2012: 8). An adequate response to this charge falls beyond the scope of this paper. We
take for granted that there is nothing ‘anti-modern’ about neo-Aristotelianism.
9
For an overview of virtue ethics see Russell (2013) and Snow (2018).

12
an agent’s character traits, which is to say that there are certain character traits that allow an
agent to stand back from his or her desires. Thirdly, it assumes that the development of those
character traits is a social process whereby different institution might foster/undermine our
ability of moral judgment.
We think there are at least three reasons that make this synthesis between neo-Aristotelian
moral philosophy and Buchanan’s thought potentially fruitful. First, we think that neo-
Aristotelian moral philosophy provides a robust account of the connection between what
Buchanan calls a constitutional attitude and practical reasoning. In turn, the neo-Aristotelian
account of practical reason sketched below provides a robust foundation for Buchanan’s
account of the desire that individuals have of becoming the ‘agents they want to become’, by
making more explicit the connection between practical reason and human flourishing. Thirdly,
neo-Aristotelian moral philosophy is quite explicit about the connection between social
institutions and character formation, a connection that – as we have argued – is underdeveloped
in Buchanan’s thought. In fact, we think that neo-Aristotelianism not only acknowledges, but
fully considers the reflexivity between the self-constituting individual and the institutional
environment in which moral agents find themselves in.
Before proceeding a few caveats are in order. First, it is important to note that some
approaches to virtue ethics, especially in economics, tend to stress a specific constellation of
virtues (see, for example, McCloskey, 2006; Bruni and Sugden 2013). Our approach is different
since we are trying to explain how agents develop character traits rather than what the relevant
character traits are. In other words, we are more interested in what makes an agent to engage in
a process of moral learning rather than in specifying a particular constellation of virtues that are
deemed to be desirable from a particular normative standpoint. This latter question is still
relevant, but it lies beyond the scope of this paper to address it systematically.
10
The account of
virtue and moral learning sketched below is compatible with various specifications of what the
relevant virtues for developing a constitutional attitude are.
Second, we assume that moral perfectionism is not incompatible with value pluralism,
which was a central concern for Buchanan. In this regard, it is important to distinguish between
perfectionism in moral philosophy and perfectionism in politics. Both are related but they
answer different questions. We stand firmly with Buchanan in defending value pluralism and
state neutrality (which is what proponents of political perfectionism reject), but at the same time
10
This is not to say that we reject either MacCloskey or Bruni and Sugden’s arguments. It is rather that we are
focused on a different question: the development of moral character. And we think that question is prior to defining
the type of character traits needed for the stability of the liberal order.

13
we emphasize the need for a more robust account of the moral foundations of the liberal order.
Some might object that moral perfectionism is alien to liberalism, and that is more at home in
communitarian political theory, which is generally presented as an alternative to the liberal
order that Buchanan sought to defend.
11
In effect, thinkers such as Alasdair MacIntyre and
Michael Sandel share a deep interest in neo-Aristotelian moral philosophy and communitarian
political theory and both were important participants in the so-called liberal communitarian
debate (see Mulhall and Swift, 1996). We think that this objection, while plausible, misses the
mark for two reasons. First, there is no intrinsic connection between a neo-Aristotelian account
of virtue and either liberal or communitarian political theory. In effect, the influence of neo-
Aristotelian ideas in contemporary liberalism is not marginal, and various scholars have tried
to develop an account of the liberal order that emphasizes its capacity to foster virtue (see, for
example, Galston 1991, Rasmussen and Den Uyl 2005, Kramer 2017). In addition, we think
that, even if the connection between virtue ethics and communitarian political theory were
strong, Buchanan would have been willing to engage in a systematic dialogue with
communitarian political theory. In effect, Buchanan described the arguments of some
communitarians and various strands of liberalism as “intersecting and partially complementary”
(Buchanan 1997).
12
Developing a constitutional attitude: the task of practical reason
As we have explained in the previous section, Buchanan thinks that agents should engage in
the development of their own character if they aspire to engage in constitutional reform, but he
doesn’t offer an explicit account of moral learning. From a neo-Aristotelian standpoint, the
development of our character is the task of practical reason, understood as the ability to
deliberate about our goals and actions according to different criteria of what is good for us as
human beings.
13
A reflective or virtuous practical reasoner is someone capable of evaluating
her reasons for action and to stand back from her desires and preferences in such a way that she
is able to judge what the pursuit of the good here and now demands of her.
14
This process of
deliberation involves the individual qua individual and qua member of a community, insofar as
11
We thank one of the anonymous reviewers for raising this potential objection.
12
In a similar vein, see McCann (2002).
13
Most neo-Aristotelian accounts of practical reason are incompatible with expressivist/Humean accounts. The
latter would claim that reasons for action are always determined by an agent’s desires, so there is no way in which
we can ‘stand back from’ them (our desires).
14
For some, the term desires is interchangeable with the notion of preferences. For others (ourselves included),
preferences are more complex than desires because of their comparative nature. On this point, see Hausman 2012.

14
the presupposed account of human agency is one of a socially embedded practical reasoner. We
think that this is precisely what a constitutional attitude seems to require: individual agents
should be willing to examine their reasons for action and to evaluate those reasons according
to criteria that sometimes go beyond the mere satisfaction of their self-interested preferences.
In Buchanan’s terminology, practical reason would imply constitutional deliberation both as a
‘private man’ as well as a ‘public man’. Although practical reason, in the neo-Aristotelian
tradition, does not exclude instrumental reasoning, it cannot be reduced to it. Sometimes acting
well means precisely to use the best means to achieve a particular end, but the deliberation of
our ends is as important as deliberation about the best ways of achieving those ends.
15
More
fundamentally though, a neo-Aristotelian account of practical reason implies that our abilities
to imagine ourselves as different beings will depend on how good we are at educating our
preferences and desires. If this is the case, we might not be able to engage in practical reason
successfully if our desires and our way of thinking about them are not properly educated, such
that we are unable to inquire what is morally required from us in a particular situation. Character
formation, on this view, implies moral learning, a process that allows agents to deliberate about
their actions according to different criteria of what is good for them and for their community.
The connection between character formation and moral learning sketched above rests on
two central theses. The first one refers to the fact that we, as human beings, can act from reasons,
and our reasons for action involve certain characteristics that other living beings do not possess.
Some animals, like chimpanzees or dolphins, also can act on reasons, but that we as human
beings do it in a special and characteristic way. Characteristic of us as rational animals is our
ability to stand back from our initial judgements and to evaluate our reasons for action
according to a great variety of standards. Those standards allow us to imagine ourselves as
being someone different from what we are now.
16
The second central thesis has to do with the
fact that the same ability for acting on reasons allows us to direct, educate, and to some extent
transform our desires, that is, to educate our character.
15
We are aware that, for many contemporary philosophers, there is a clear distinction between acting well (or
according to what is good) and acting rightly (or according to what is right). The political implications of this
distinction are also quite fundamental for contemporary political philosophy (see Rawls 1999: sec. 68). For many
neo-Aristotelians the opposition between the right and the good is highly problematic. We cannot explain here the
way in which neo-Aristotelians deal with this issue; for such an explanation see, for example, Oderberg (2000:
chap. 2). For a ‘rational choice’ account of deliberation about ends, see Schmidtz (1994).
16
Interestingly, Buchanan states that “man does not become less predictable because he uses language” (1979:
247). Instead, ‘[…] a central difference between my dog and any one of us lies in his lack of any sense of becoming
different from what he is“ (ibid.). Buchanan does not elaborate on this, as he is engaged in a discussion with his
fellow economists, but we think there is an implicit theory of practical reason here.

15
Buchanan links the idea of moral learning/constitutional attitude with the notion of human
flourishing. He states that people want to become ‘better persons’ (1979: 248). On a neo-
Aristotelian account of moral learning, the connection between practical reason and human
flourishing is fundamental. It is indeed one of the central tenets of neo-Aristotelian moral
philosophy that the development of our powers of practical reasoning is a necessary condition
for human fulfilment, and indeed it is in some sense constitutive of it. As Daniel Russell argues,
most virtue ethicists, “ancient and modern alike, have believed that we are defined […] by our
capacity for practical reasoning, both in thinking intelligently about what to do and in acting
with emotions that can be intelligently trained” (2013: 13). We think that when Buchanan states
that “persons must recapture an ability to imagine themselves capable of becoming “better””
(1979: 254) he has something like this connection in mind.
It is perhaps useful to contrast this brief sketch of practical reason with contemporary
alternatives. Take for instance Donald Davidson’s (1963) classic account. The crucial
difference between a neo-Aristotelian account of reasons for action and Davidson’s account is
that in the former desires are, can, and should be evaluated by agents in their practical reasoning
whereas in Davidson’s account evaluations and expressions of desire are normally conflated.
Having a framework in which an agent’s desires are distinguished from her expressions of
evaluation is important for explanatory as well as for normative reasons. On the explanation of
reasons for action, we could not, for example, make sense of the transition from childhood to
adulthood, a transition whereby the child moves from acting on her desires in an unreflective
way, to acting on this or that desire and being able to give reasons for her actions and therefore
being able to educate her desires in some way. This transition takes place normally in the
household and in elementary education. But more importantly, what every moral agent has to
do in order to become a reflective practical reasoner is precisely to be able to make those
judgements independently.
17
But how do we learn to make our own moral judgements independently and reflectively?
And more importantly, how do we shape our character according to those judgements? From a
neo-Aristotelian standpoint, moral learning and education is not possible without the cultivation
of the intellectual and moral virtues, that is, those qualities of mind and character that enable
someone both to recognize the relevant goods at stake in a particular situation and to use the
relevant skills in achieving those goods. Moral learning is the practice of the virtues that allows
17
This independence is not that of an ‘isolated moral agent’ but that of a socially embedded one.

16
individuals to become reflective moral agents, capable of deliberating about their own lives and
of the life of the community to which they belong.
Institutions, social practices and moral learning
So far, we have outlined some of the central tenets of a broadly neo-Aristotelian account of
moral learning. However, this account would be incomplete without saying something about
the connection between social institutions and moral learning. As stated previously, one of the
central characteristics of a virtuous or reflective practical reasoner is his ability to stand back
from his desires in such a way to be able to discern whether what he is pursuing is actually good
for him or to the community in which he finds himself. However, the standards that allow
someone to evaluate their preferences are not the standards of an isolated moral agent, but those
provided to her by the social environment in which she finds herself in. If this is the case, it
seems logical to assume that certain sets of social relationships will encourage reflective
practical reasoning and the practice of the virtues, whereas others will not. More fundamentally,
certain social institutions will be more conducive to the execution of virtues than others.
Although neo-Aristotelian virtue ethicists take each person to be responsible for the type of
character they acquire, most thinkers working in this tradition play close attention to the role
that the family and the extended political community play in shaping the moral outlook of their
members. In Richard Kraut’s words, “a city’s mode of organizing itself, its unwritten norms of
conduct, and its legal system have a profound effect on the manner in which its citizens interact
with each other. A certain way of life takes hold in a community […], modes of thought and
emotional response become second nature to the citizens; and these patterns are the product of
their city’s norms, laws and way of government itself” (2002: 96-7).
One important implication of the relationship between social institutions and moral
learning is that the connection between the liberal order and the constitutional attitude, which
is required for the sustenance of such order, runs both ways: on the one hand, a minimum of
civic virtue is required to sustain a liberal order, but on the other hand certain institutions have
the potential to frustrate or ‘crowd out’ the development of virtue. This latter point connects
with Buchanan’s concern about the potential crowding out effects of global markets,
urbanization and centralization mentioned in the previous section. In this regard, we take both
Buchanan’s and the neo-Aristotelian project to be concerned with the comparative analysis of
how different institutional structures can either undermine or foster the development of moral

17
learning.
18
For it is precisely this moral learning what makes possible the salience of a
constitutional attitude, an attitude on which the stability of a liberal social order depends.
Deliberation about the rules of the game, particularly at the constitutional level of analysis, are
therefore not restricted to devising incentive-compatible rules that would allow us to
‘economize on virtue’. On the contrary, we should be asking which set of rules allow incentives
and virtues to work in tandem. This is the question we address in the next section.
19
4. Aristotle’s legislator: Institutions for citizens, not knaves
When analyzing the merits of alternative institutional settings, Buchanan argues that “homo
economicus is a uniquely appropriate caricature of human behavior.” (Brennan and Buchanan
1985: 53). The assumption that individuals are mainly driven by their material self-interest
becomes the behavioral benchmark model for evaluating and designing rules, be it in the market
or in the legal-political realm (‘behavioral symmetry’). In Buchanan’s framework, externally
implemented rules are considered to be universally needed to overcome social dilemmas
stemming from a lack of virtuous, i.e., other-regarding behavior, of citizens. Indeed, Brennan
and Hamlin (1995: 35) identify the search for institutions that ‘economize on virtue’ as one of
the central motivations of Buchanan’s constitutional political economy program.
20
Broadly
speaking, there are two reasons for this position: (1) Individuals act selfishly and abuse power
if not constrained; (2) a more realistic model of individual behavior (e.g., one that acknowledges
other-regarding preferences) is not a robust foundation for institutional design since potential
negative externalities of opportunistic actions loom disproportionally large (Brennan and
Buchanan 1983). The underlying rationale is an argument from prudence: Worst-case scenarios
must be ruled out. This line of thinking captures Hume’s maxim:
18
We leave open the question of whether Buchanan was interested specifically in the philosophical problem of
moral learning. However, he was keen to emphasize the importance of the constitutional attitude for the stability
of the liberal order. Our argument stresses the fact that in order to analyze what makes possible the salience of a
constitutional attitude we need an account of moral learning. This allows us to deal (on a more fine-grained level)
with individual processes of constitutional attitude development.
19
At this point it is important to note that we do not analyze the behavioral disposition of politicians and how to
constrain their self-interest in political interactions. This would be the traditional public choice perspective. In
contrast, we want to motivate a slightly different question: how should institutions that regulate interactions among
citizens be designed if we are aware of the fact that they can lead to the crowding-out of citizens’ constitutional
attitude? We think this question becomes particularly important in cases where institutions are built on the
assumption that citizens are mainly motivated by their rational self-interest.
20
In performing empirical research in positive political economy, Buchanan accepts a more open model of
behavior where a person’s utility function can contain ‘non-economic’ elements: “There is no need to assign net
wealth or net income a dominating motivational influence on behavior in order to produce a fully operational
economic theory of choice behavior, in market or political interaction” (Buchanan 1987: 245). For this model to
work, it is only important that the ‘economic’ elements always play some role in individual choice.

18
“… that in contriving any system of government … every man ought to be supposed to
be a knave and to have no other end, in all his actions, than his private interest. By this
interest we must govern him, and, by means of it, make him, notwithstanding his
insatiable avarice and ambition, cooperate to public good.” – David Hume, Essays:
Moral, Political, and Literary (1742).
21
Buchanan follows Hume’s maxim and affirms that laws and regulations need to be built upon
institutions that “keep governments as well as citizens within limits” (1979b: 58), following the
mantra: good laws are a substitute for good citizens. The problem with this account is that it
does not directly address Buchanan’s conundrum why people should engage in the exercise of
advancing existing rules of the game in the first place (see Section 2). Moreover, there is a rich
literature in behavioral economics that says rules based on (material) punishment and reward
can actually lead to a crowding-out of intrinsic moral motivation under certain circumstances
(for an overview, see Bowles and Polanía-Reyes 2012).
22
The idea of Hume’s maxim can be contrasted with the Aristotelian understanding of the purpose
of the law and indeed of any constitutional order. Aristotle states:
[…] the legislator makes the citizens good by habituating them, and this is the aim of
every legislator; if he fails to do it well he misses his goal. Correct habituation
distinguishes a good constitution from a bad one (EN, 1103b 5-10).
23
Following Aristotle, institutional arrangements should emphasize a process of “inculcating
habits”, i.e., teach and place reliance on individuals’ capability of moral learning. According to
this view, laws can help people become better versions of themselves. While Aristotle
acknowledges that constitutions and laws cannot make people fully virtuous, he still envisages
a role for fostering virtue through the legal order. This is because Aristotle takes for granted
that the written and unwritten laws of any social order shape the moral convictions of its
members. Consequently, a citizenry will only function adequately when individual virtues are
21
Referring to Smith, Hayek (1948: 11) states a similar view: “There can be little doubt . . . that Smith’s chief
concern was not so much with what man might occasionally achieve when he was at his best, but that he should
have as little opportunity as possible to do harm when he was at his worst.”
22
Traditionally, economists assume that when individuals face material incentives, they do not affect the
interaction of the elements in the utility function. For instance, let’s take the standard function of Section 2:
!!
"
#!$ %!
&
' (
!
"
#!
&
) *!+!"%!&
. In this case, a variation in the satisfaction of self-regarding utility
(
!
"
#!
&
,
does not
influence the level of other-regardingness
*!+!"%!&
. The two components are separable and additive. However,
empirical evidence indicates that material incentives affect the interaction between self-interested motives and
moral motivation. Particularly, incentives can have perverse effects on the salience of moral preferences in that
they crowd out intrinsic, non-instrumental motivation (Bowles 2016, Ch. 3).
23
In this and other references to Aristotle we use the standard abbreviations and the Bekker numbers. We follow
closely Terence Irwin’s translation of the Nicomachean Ethics in this passage.

19
fostered by its constitutional rules. In the Aristotelian tradition, formal and informal institutions
fulfill more than regulatory functions; they have an important effect (positive or negative) on
different forms of social interaction and thus on the capacities of practical reasoning of the
agents that inhabit them.
Institutional elements that foster a constitutional attitude: public discussion and political
participation
Rule-shaping behavior is costly for the individual in terms of time and effort; it is also inherently
an activity with public goods character since there is typically no rivalry in rule consumption
and it is hard to exclude single constituents once a rule is implemented. There is substantial
empirical evidence that citizens’ willingness to overcome the free rider problem and contribute
to the provision of public goods (such as rule-making) is higher when they perceive to be treated
as moral subjects who are invited to participate in an ongoing public discourse (Frey 1997;
Ostrom 2000; Bowles 2016; Hargreaves Heap 2020).
24
This supports the idea that individuals’
constitutional attitude is a resource for rule-making that can be mobilized through informal
discussions and formal participation in political processes. We will explain those two
mechanisms subsequently.
Experimental evidence suggests that discussion facilitates experiential moral learning and
increases cooperation with others in situations where individual and group interests diverge
(Sally 1995, Balliet 2010). As Levy and Peart (2017: 45) explain: “parties may begin as
concerned only with the self or their group, they come to perceive their interconnectedness in
the course of discussion. A well-governed society requires that people enter into the spirit of
laws and cooperate when their material interests urge them in another direction.” Contrary to
the idea that the convergence of expressed values is simply the result of herd behavior or
opinion leadership, Levy and Peart (2017: 32) clarify that public discussion is a means “by
which our imaginative capacity is stretched to include at least partial understanding of the goals
24
We are aware that Buchanan was sympathetic to the idea of “democracy as government by discussion” and
acknowledged that preference can and do change in the course of the political process (Buchanan 1954). However,
we side with Emmett (2020: 305) who claims that Buchanan never systematically incorporated an account of
public reasoning into his constitutional economic thinking but ultimately retained the idea of rational, autonomous
individuals: “Individuals are at the heart of his usage: choosing their values, making up their minds, agreeing, and
eventually voting.” Hence, Buchanan ascribes to a cognitivist model of moral learning; he doesn’t consider public
discussion or political participation as key drivers for the inculcation of civic virtues in individuals. For a defense
of Buchanan, see Levy and Peart (2017, Chs. 2 and 3).

20
and arguments of others.”
25
In other words, public discussions are places of moral learning: “It
is through language, and the exchange of approbation over time, that we come to understand
what is generally approved and we try to act accordingly. To the extent that we succeed, we
become virtuous individuals.” (Levy and Peart 2017: 31; emphasis added).
Besides public discussions, formal channels of participation can enhance individuals’
constitutional attitude. Through active participation in an ongoing democratic process people
acquire the knowledge, aptitudes, and skills for that very same process (Macedo 2006; Barrett
and Zani 2014). For instance, participation can be enhanced by institutionalizing citizens’ rights
to initiate laws that are neglected by legislators and reverse political decisions by means of
qualified referenda (Frey 1997). In addition, the possibility of being engaged in polycentrically
(and not centrally) organized communities can lead to local solutions to collective action
problems which result in higher levels of rule compliance and civic engagement (Ostrom 1998,
2000).
26
Ostrom (2000: 12) clarifies: “The policy of assigning all authority to a central agency
to design rules is based on a false conception that there are only a few rules that need to be
considered and that only experts know these options and can design optimal policies. Our
empirical research strongly challenges this presumption. There are thousands of individual rules
that can be used to manage resources.” Ongoing opportunities of participation are crucial since
individuals are more likely to develop a robust constitutional attitude if they do not only have
access to arenas to discuss political matters but also have means to actually shape the rules
under which they live (Brady 1999).
27
25
In the context of education, empirical evidence suggests that moderated discussions of current, controversial
issues increase students’ interest in politics and their skills at engaging with other people. See, e.g., Kawashima-
Ginsberg and Levine (2014) and Sherrod et al. (2010).
26
The idea of polycentrism entails that citizens are always part of multiple, overlapping, and nested communities.
More generally, Ostrom’s work highlights the crucial role of reciprocity and trustworthiness for the solution of
social dilemmas (see, e.g., Ostrom 2009). While it is true that empirical work suggests the importance of
generalized trust in overcoming free rider problems, trust can be seen as the facilitator but not necessarily as the
key motivational ingredient of mutual, bottom-up rule-making. For instance, one can live in a society with a high
level of generalized trust, but still not feel obliged to engage in any rule-making behavior. For the latter, we argue
in this section, it is crucial to develop a constitutional attitude through exposure to public discussion and political
participation.
27
This is a point J.S. Mill (1859/2003: 169-70) forcefully makes in On Liberty; Mill recommends for citizens to
participate in the political process on an ongoing basis “as a means to their own mental education – a mode of
strengthening their active faculties, exercising their judgment, and giving them a familiar knowledge of the subjects
with which they are thus left to deal. This is a principal, though not the sole, recommendation of jury trial (in cases
not political); of free and popular local and municipal institutions; of the conduct of industrial and philanthropic
enterprises by voluntary associations.” The “mental education” Mill is referring to is “taking [people] out of the
narrow circle of personal and family selfishness, and accustoming them to the comprehension of joint interests,
the management of joint concerns – habituating them to act from public or semi-public motives, and guide their
conduct by aims which unite instead of isolating them from one another.” (ibid., emphasis added).

21
Hirschman (1984: 26) reminds us that moral motivation is a predisposition whose
instantiation may well increase rather than decrease through use; it is also not a resource that
remains intact if it is unused: “Love, benevolence, and civic spirit … atrophy when not
adequately practiced and appealed to by the ruling socioeconomic regime, yet will once again
make themselves scarce when preached and relied on to excess.” This is closely in line with the
neo-Aristotelian account of moral learning outlined in section 3. Aristotle’s dictum that we
become virtuous by performing virtuous acts (see NE 1103a30-1103b5) suggests that virtues
are like moral muscles, and as such, can become atrophied if not exercised.
In Democracy in America, De Tocqueville (1840/2016) makes a similar point when he
argues that the continuous participation in the democratic process is the mechanism through
which individuals nurture their interest in and appreciation of general rules that serve everyone:
“political life makes the love and practice of association more general; it imparts a desire of
union, and teaches the means of combination to numbers of men who would have always lived
apart” (Vol. 2, Bk 2, Ch. 7). In this sense, the art of political participation inculcates the habits
of civic engagement. The development of a constitutional attitude emerges as individuals begin
to see themselves not just as separate individuals but as members of the same political
community.
28
Incentives and moral motivation can work complementarily
Before concluding, we want to emphasize the importance of the second part of Hirschman’s
quote in which he warns that the civic spirit will become “scarce when preached and relied on
to excess.” This indicates that institutions, which rely on individuals’ moral motivation alone,
will also fail. Traditional economic incentives and constraints (e.g., taxes, subsidies, bans) are
feasible policy tools. In fact, empirical evidence suggests that incentives in form of material
payments do not necessarily crowd out intrinsic moral motivation. Bowles (2016: 202) presents
evidence from Ireland where the introduction of a small tax on plastic bags led to a fall in their
use by 94 percent after just two weeks. In this example, the introduction of the tax was
accompanied by a public debate about the environmental influence and social costs of plastic
bag usage. Public discussion and active public involvement led to a broad acceptance of the
intervention. Incentives and morals became complements rather than substitutes.
28
For an illuminating discussion of the link between De Tocqueville and insights from modern behavioral
economics on endogenous preferences, see Hargreaves Heap 2020.

22
As demonstrated in this example, incentives can enhance moral motivation and increase
the salience of a social matter. In many areas of social life incentives are necessary to create
efficient outcomes (e.g., in the financial market or in the market for consumer goods). These
are situation of choices within given rules in which the pursuit of instrumental preferences leads
to good social outcomes; moral considerations play a minor role. The problem arises if we
create a political order based on the assumption that citizens always free ride if they are not
constrained by external incentives. Such an order will likely produce negative consequences for
citizens’ motivation to engage in choices among rules. Bowles (2008: 1605) concludes that
many of the anti-synergistic effects between incentives and moral motivation occur “… because
people act not only to acquire economic goods and services but also to constitute themselves as
dignified, autonomous, and moral individuals.” When this moral dimension is not
acknowledged and rules are designed for ‘self-interested citizens,’ it becomes plausible that the
pervasive presence of economic incentives may undermine individuals’ constitutional attitude
over time.
5. Conclusion
Buchanan argues that individuals need to develop a constitutional attitude in order to be
motivated to design or uphold the rules of a liberal order. Yet, he also identifies ‘rational apathy’
of people as a constant antagonist to the aforementioned need. Within the framework of his
constitutional contractarianism, Buchanan cannot solve this conceptual conundrum since (a) he
does not have a convincing theory of how individuals can develop a constitutional attitude, and
(b) his recommendation of designing rules and institutions for ‘knaves’ enhances the problem
in many cases. Focusing on the prevention of opportunistic behavior can come at the cost of
crowding out the civic mindedness associated with a constitutional attitude. We argued in this
paper that a neo-Aristotelian perspective which highlights the relationship between social
institutions and moral learning can enrich Buchanan’s political economy. Motivated by the neo-
Aristotelian perspective and based on empirical evidence on moral learning, we identified two
important channels that can contribute to the development of people’s constitutional attitude:
public discussion and political participation.
In Buchanan’s institutional analysis, individuals must be seen as autonomous (and largely
independent) moral agents. In doing so, Buchanan doesn’t sufficiently account for a central
insight of his teacher, Frank Knight (1923: 585), who states that “the economic order does far
more than select and compare wants for exchangeable goods and services: its activity extends
to the formation and radical transformation, if not to the outright creation; of the wants

23
themselves.” In this paper, we discussed evidence that shows how institutionally dependent
moral behavior is. The same person can behave egoistically or socially minded depending on
the social and institutional environment she finds herself in. Incorporating insights on the
reflexivity of moral motivation and institutional structure into Buchanan’s theoretical
framework is necessary to answer the question of how his political economy project can secure
the necessary constitutional attitude of its citizenry.
Evidently, an institutional regime that focuses solely on deliberation, goodwill, and
intrinsic motivation is equally flawed. Incentives do work in many cases. They can lead to
crowding-in effects when individuals have participatory rights and perceive the interventions
as fair and productive. Therefore, we think that a more nuanced approach is needed. One that
escapes the dangers inherent in either extreme: neither a constitution for ‘knaves’ nor ‘saints’
will work. A viable institutional order must strike the right balance between the Humean
deterrence of free riders via economic incentives and the Aristotelian legislator who emphasizes
individual capabilities of moral learning. A neglect of the moral dimension will lead to an over-
optimism regarding the use of legal punishment regimes in producing effective social
cooperation since it does not take the moral motivations of individuals as constraints on legal
solutions seriously (Gaus 2018).
Due to limitations in scope, this paper has only alluded to the practical question about
which institutions and policies could foster citizens’ constitutional attitude. We outlined
conceptually what type of institutional thinking is needed to circumvent some of the pitfalls of
traditional economic policy advice. In this regard, we think that Buchanan’s constitutional
political economy framework can benefit from further studying the relationship between
economic incentives and civic virtues to avoid the danger of formulating institutional
recommendations based on misspecified models. In order to do so, public choice scholars
interested in constitutional political economy need to engage in more untraditional theorizing
and data gathering. Besides the direct price effects of different institutional regimes, economists
have to acknowledge the indirect effects of incentives on intrinsic motivation and moral
preference formation when comparatively analyzing institutions. This will require the careful
study of local moral customs (Kranton 2018, Hoff and Stiglitz 2016). Combining a
sociologically informed neo-Aristotelian account of moral learning with insights from
behavioral economics can provide a fruitful basis to disentangle this complex relationship and
identify institutional regimes that foster individuals’ capability and willingness to develop a
robust constitutional attitude.

24
In this paper, we identified individuals’ capabilities of moral learning and practical
reasoning as proxies for a constitutional attitude. While this interpretation is in line with
Buchanan’s call for ethical precepts (Buchanan 1989), it reveals a tension in his oeuvre: one
the one hand, Buchanan sympathizes with a nonteleological perspective in his analysis of
market processes (see, e.g., Buchanan 1982). On the other hand, he shows elements of a
teleological perspective when it comes to individual processes of character formation (see, e.g.,
Buchanan 1994). Resolving this tension lies beyond the scope of this paper: we simply took
Buchanan’s teleological call for a constitutional attitude seriously and asked what type of
institutional thinking such a perspective would support. We invite future research to address
the important question whether the facilitation of a constitutional attitude comes at the expense
of inhibiting citizens’ freedom to become whom they want to become.
We have argued that Buchanan’s framework would benefit from a neo-Aristotelian
perspective in order to analyze successfully how different institutional structures can either
undermine or foster the development of moral character, and thus the possibility of developing
a constitutional attitude in the context of a free society, an attitude on which the stability of the
liberal social order depends. Indeed, we agree with Brennan and Hamlin (1995: 39) who state
that the “question – whether, to what extent, and how, virtue-economizing institutions
undermine public-interest motivations – is of fundamental interest, and indeed is perhaps the
single most important challenge to the constitutional political economy enterprise.”
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