A REPORT TO THE COMMITTEE ON THE NOBEL PRIZE IN ECONOMIC
SCIENCE, 1985: THE CONTRIBUTIONS OF JAMES M. BUCHANAN TO
ECONOMICS AND POLITICAL ECONOMY
Thomas E. Borcherding*
Buchanan’s contributions through 1984 are surveyed in six areas: (A) debt, fiscal illusion, and
Keynesian criticisms, (B) London School of Economics cost approach, (C) methodological
individualism and the economics of politics, (D) welfare price theory, (E) rent-seeking and polity
failure, and (F) political economy and constitutions. A comprehensive bibliography of ten books,
four monographs, forty-three refereed articles, thirty essays in books, ten short papers, thirty-three
papers in collected works, and a translation is offered.
*Professor of Economic and Politics, Claremont Graduate University, Claremont, CA. 91711-6165.
His email address is firstname.lastname@example.org. He wishes to thank his research assistant Portia
DiGiovanni Besocke, a PhD candidate in Economics at Claremont Graduate University, for help in
accurately reproducing the original report. Borcherding is wholly responsible for any misinterpretations or
working papers in economics
Claremont Graduate University • Claremont Institute for Economic
Policy Studies • Claremont McKenna College • Drucker Graduate
School of Management • Harvey Mudd College • Lowe Institute •
Pitzer College • Pomona College • Scripps College
A Note to the Reader
A version of this report was given November 25, 1985 as a paper on a Southern Economic
Association (SEA) panel in Dallas devoted to the contributions of James M. Buchanan to economics,
politics, and moral philosophy. When SEA president-elect Bill Breit solicited this paper, I readily
agreed since, in fact, the essay was already written early in 1985 in the form of a confidential report to
the Nobel Prize in Economic Science Committee. I was not permitted to reveal this at the SEA
meetings, but with Buchanan’s Noble Prize award in fall 1986 that constraint was removed. Thus,
this paper is offered as an historical document1.
The reader should note that the report does not cover the period 1985 to the present. Such an
updating would have required a much longer paper, and one that would not have changed the tenor
of my analysis, which holds that Buchanan’s life’s work—besides creating a field along with several
able colleagues who founded the Public Choice Society—has centered around a very simple but
profound intellectual program: to wit, institutions matter in shaping social behavior. Buchanan
argues that not only do institutions shape human behavior in markets, politics, and in social life, but
more importantly they evolve in predictable ways as key exogenous variables such as factor supply,
information and technology, law and constitutional life, and social attitudes change. This
neoinstitutionalist perspective is as prevalent in Buchanan’s writings before 1985 as after.
Finally, before I reveal the original Nobel report, let me offer my good wishes to James Buchanan for
more decades of productive life, and continued honor from several academic professions that would
be the poorer without his prolific and original insights.
1 Minor changes from the original have been made to correct various citation and, alas, stylistic and
This is not the first review of the work of James Buchanan, nor probably the last. Mueller (1981) and
Locksley (1981) offered two admirable interpretative, but narrow, essays, and Blaug (1971) has
written a short biography with a soupçon of criticism. That leaves me some maneuvering room and
one in which I will present as subjective a critique as I dare, with the accompanying hope that I will
treat issues in a slightly different manner than those aforementioned authors.
Before I commence perhaps I should say a bit about my own credentials, else the reader may
question my scrutiny of that massive list at the paper’s end, the “Key Works of James. M.
Buchanan2.” I was, as the reader should know, an unofficial student of Buchanan. In spring 1962 I
was introduced to his writings by my advisor David Davies in a Duke graduate seminar on public
finance and his works featured in my thesis written in 1963-1965. In 1965-1966, I was a Thomas
Jefferson Center post-doctoral fellow at University of Virginia and studied under Buchanan.
Between 1971 and 1973, I served with him as a colleague on the faculty at Virginia Polytechnic
Below, I have broken Buchanan’s voluminous work into six areas, but the reader is forewarned that I
have not devoted a separate part to examine his contributions to moral philosophy because of my
own limitations in that area. Nonetheless, I have briefly alluded to his contributions in this area in
the last area surveyed on constitutional economics, a topic which Buchanan- following David Hume
and Adam Smith- sees as closely related to moral philosophy. Following this descriptive-
interpretative section is a short set of conclusions.
2 Selection of “Key Works” was based entirely upon my judgment.
2. EVALUATIONS OF BUCHANAN’S WRITINGS
A. Debt, Fiscal Illusion and Keynesian Criticisms
Buchanan is a sort of Keynesian, though I doubt he would accept this title. In his writings on debt
(B1, B5, B8, B9, M2, M3, A35, A39, C5, C6, C10, S4, S8) he clearly indicates a disbelief in the
Ricardian equivalence theorem, i.e., the view that voters perceive the burden of the public debt as a
claim on future taxes. This and his belief in “tax illusions” (B3, B9, C3, C11, C18, C27, S1, O4) place
him among the severe skeptics about the role that rational expectations play in politics. Here he is at
the opposite end of the spectrum from Robert Barro (1978) who holds (but offers exceedingly flimsy
evidence) that government debt is just an efficient means of spreading public sector costs over time,
lowering the real costs of fiscal actions in the process. To Barro public debt is just another tax
instrument in the optimal taxation process.
I find about half of Buchanan’s writing on debt unhelpful. Although he spends many pages
distinguishing objective costs (the putative social cost) from subjective costs (what the voter “feels”),
I glean no operational delineation of these early exercises, and, worse yet, I find myself confused by
them. I have noted, however, that in recent years with his joining forces with Richard Wagner (M2,
O4) he seems to be taking a very sensible (and potentially operational) position that the “veil of
ignorance” in politics is difficult for the average citizen (or marginal voter) to pierce and debt can
make informed choice difficult. Here Buchanan is quite Downsian, arguing that there is ample room
for bias in voter ignorance, because political entrepreneurs have incentives to make tax-costs look
small relative to expenditure-gains. This fraud is accentuated by the short time-horizons of the
politicians as well as voters’ (optimal) ignorance. George Stigler (1982) and Gary Becker (1976a,
1976b) seem to deny this putative principal-agent misallocation, but Buchanan is quite mainstream in
his belief that such asymmetries in information are part and parcel of public choice, a position in the
received wisdom of political economy from the time of Adam Smith.
C12. “An Efficiency Basis for Federal Fiscal Equalization.” With Richard E. Wagner. In
J. Margolis (ed.), The Analysis of Public Output. New York: National Bureau of
Economic Research, 1970, pp. 139-56.
C13. “Before Public Choice.” In Gordon Tullock (ed.), Explorations in the Theory of
Anarchy. Blacksburg: Center for Study of Public Choice, 1972, pp. 27-37.
C14. “The Political Economy of Franchise in the Welfare State.” In Richard T. Selden
(ed.), Capitalism and Freedom: Problems and Prospects Charlottesville: University of
Virginia Press, 1975, pp. 52-77.
C15. “Inflation and Real Rates of Income Tax.” With James Dean. Proceedings of the 67th
Annual National Tax Association on Taxation. Columbus: National Tax Association,
1975, pp. 343-49.
C16. “Gold, Money, and the Law: The Limits of Governmental Monetary Authority.”
With Nicholas Tideman. In Henry G. Manne and Roger L. Miller (eds.), Gold,
Money, and the Law. Chicago: Aldine Press, 1975, pp. 9-70.
C17. “Political Constraints on Contractual Redistribution.” With Winston C. Bush. In
Arthur Denzau and Robert Mackay (eds.), Essays on Unorthodox Economic Strategies.
Blacksburg: Center for the Study of Public Choice, 1976, pp. 57-64.
C18. “Political Equality and Private Property: The Distributional Paradox.” In G.
Dworkin et al. (eds.), Market and Morals. Washington, D.C.: Hemisphere Publishing,
1977, pp. 69-84.
C19. “Why Does Government Grow?” In Thomas E. Borcherding (ed.), Budgets and
Bureaucrats: the Sources of Government Growth. Durham: Duke University Press, 1977,
C20. “Public Goods and Natural Liberty.” In Thomas Wilson and Andrew Skinner
(eds.), The Market and the State: Essays in Honor of Adam Smith. Oxford: Oxford
University Press, 1978, pp. 271-86.
C21. “The Justice of Natural Liberty.” In Fred Glahe (ed.), Adam Smith and the Wealth of
Nations. Boulder: Colorado Associated University Press, 1978, pp. 61-82.
C22. “From Private Preferences to Public Philosophy: Notes on the Development of
Public Choice.” In Buchanan, et al., the Economies of Politics. London: Institute for
Economic Affairs, 1978, pp.1-20.
C23. “The Economic Constitution and the New Deal.” In Gary Walton (ed.), Regulatory
Change in an Atmosphere of Crisis. New York: Academic Press, 1979, pp. 13-26.
C24. “A Hobbesian Interpretation of the Rawlsian Difference Principle.” In Karl Bruner
(ed.), Economics and Social Institutions. Boston: Martinus Nijhoff, 1979, pp. 59-78.
C25. “On Some Fundamental Issues in Political Economy: An Exchange of
Correspondence.” With Warren Samuels. In W. Samuels (ed.), the Methodology of
Economic Thought. New Brunswick, N.J.: Transaction Book, 1980, pp. 517-40.
C26. “Rent Seeking and Profit Seeking.” In James M. Buchanan, Robert Tollison and
Gordon Tullock (eds.), Toward a Theory of the Rent-Seeking Society. College Station:
Texas A&M University Press, 1980, pp. 3-15.
C27. “The Domain of Subjective Economics: Between Predictive Science and Moral
Philosophy.” In Israel M. Kirzner (ed.), Method, Process, and Austrian Economies: Essays
in Honor of Ludwig von Mises. Lexington: D.C. Heath, 1982, pp.7-20.
C28. “Constitutional Contract in Capitalism.” In Sveotar Pejovich (ed.), Philosophical and
Economic Foundations of Capitalism. Lexington: Lexington Books, 1983, pp. 65-69.
C29. “Moral Community and Moral Order: The Intensive and Extensive Limits of
Interaction.” In H. Miller and W. Williams (eds.), Ethics and Animals. Clifton, N.J.:
Humane Press, 1983, pp. 95-102.
C30. “The Tax System as Social Overhead Capital.” In Karl Roskamp (ed.), Public Finance
and Economic Growth. Proceedings of the 37th Congress of the International Institute
of Public Finance, Tokyo, 1981; Detroit; Wayne State University Press, 1983, pp.
“Criteria for Government Expenditures,” Journal of Finance (Dec. 1951), 440-42
“Wicksell on Fiscal Reform,” American Economic Review (Sept. 1972), 599-602
“Saving and the Rate of Interest,” Journal of Political Economy (Feb. 1959), 58-61.
“Confessions of a Burden Monger,” Journal of Political Economy (Oct. 1964), 486-88.
“The Icons of Public Debt,” Journal of Political Economy (Sept. 1966), 544-46.
“What Kind of Redistribution Do We Want?” Economica (May 1968), 185-90.
“External Diseconomies, Corrective Taxes, and Market Structure,” American
Economic Review (Mar. 1969), 174-77.
“Barro on Ricardian Equivalence,” Journal of Political Economy (Apr. 1976), 337-42.
“Adam Smith on Public Choice,” Public Choice (Spring 1976), 81-82.
“Monetary Research, Monetary Rubs, and Monetary Regimes,” The Cato Journal
(Spring 1983), 143-46.
OTHER WRITINGS IN BOOKS
EDITED BY BUCHANAN
O1. Theory of Public Choice: Political Applications of Economies. With Robert D. Tollison.
Ann Arbor: University of Michigan Press, 1972.
Chapter 2, “Toward Analysis of Closed Behavioral Systems.”
Chapter 5, “Easy Budgets and Tight Money.”
Chapter 6, “Fiscal Policy and Fiscal Preference.”
Chapter 12, “A Public Choice Approach to Public Utility Pricing.’
O2. L.S.E. Essays on Cost. With G.F. Thirlby. London: Wiedenfeld and Nicholson,
O3. Freedom in Constitutional Contract: Perspective of a Political Economist. College Station:
Texas A&M University Press, 1977.
Chapter 1, “A Contractorian Perspective on Anarchy.”
Chapter 2, “Law and the Invisible Hand.”
Chapter 4, “The Libertarians Legitimacy of the State.”
Chapter 5, “Politics and Science.”
Chapter 7, “Politics, Property, and the Law.”
Chapter 9, “Notes on Justice in Contract.”
Chapter 10, “The Use and Abuse on Contract.”
Chapter 16, “A Contractorian Paradigm for Applying Economic Theory.”
O4. Fiscal Responsibility in Constitutional Democracy. With Richard E. Wagner. Boston:
Martinus Nijhoff, 1978.
Chapter 1, “Contemporary Democracy and the Prospect for Fiscal Control: Initial
Thoughts about and Final Reaction to the Conference.”
Chapter 5, “The Political Biases of Keynesian Economics.”
What Should Economists Do? Indianapolis: Liberty Press, 1979.
Chapter 3, “Professor Alchian on Economic Method.”
Chapter 4, “General Implications of Subjectivism in Economics.”
Chapter 5, “Natural and Artifactual Man.”
Chapter 8, “Foreword to Tullock’s the Politics of Bureaucracy.”
Chapter 9 “Notes on the History and Direction of Public Choice.”
Chapter 13, “Equality as Fact and Norm.”
Chapter 14, “Public Finance and Academic Freedom.”
Chapter 15, “Public Choice and Ideology.”
Chapter 17, “Democratic Values in Taxation.”
Chapter 18, “Taxation in Fiscal Exchange.”
Chapter 19, “Pragmatic Reform and Constitutional Revolution.”
Chapter 20, “Criteria for a Free Society: Definition, Diagnosis and Prescription.”
O6. Towards a Theory of Rent-Seeking Society. With Robert D. Tollison and Gordon
Chapter 10, “Rent Seeking Under External Economies.”
Chapter 22, “Reform in the Rent-Seeking Society.”
O7. Theory of Public Choice-II. With Robert D. Tollison. Ann Arbor: University of
Michigan Press, 1984.
“Politics without Romance: A Sketch of Positive Public Choice Theory and Its
Normative Implications,” pp. 11-22.
“Toward a Theory of Yes-No Voting.” With Robert L. Faith, pp. 90-104.
“The Normative Purpose of Economic ‘Science’ Rediscovery of an Eighteenth
Century Method.” With H.G. Brennan, pp. 383-94.
“Constitutional Restrictions on the Power of Government,” pp. 439-52.
T1. “A New Principle of Just Taxation,” taken, in part, from Knut Wicksell Finanz
theoretische Uter suchugen (Jena, 1896) In R. A. Musgrave and A. T. Peacock,
Classics in the Theory of Public Finance, London: Macmillon, 1958, pp. 72-118.