The Online Library of Liberty A Project Of Liberty Fund, Inc. James M. Buchanan, The Calculus of Consent: Logical Foundations of Constitutional Democracy [1962] The Online Library Of Liberty This E-Book (PDF format) is published by Liberty Fund, Inc., a private, non-profit, educational foundation established in 1960 to encourage study of the ideal of a society of free and responsible individuals. 2010 was the 50th anniversary year of the founding of Liberty Fund. It is part of the Online Library of Liberty web site http://oll.libertyfund.org, which was established in 2004 in order to further the educational goals of Liberty Fund, Inc. To find out more about the author or title, to use the site's powerful search engine, to see other titles in other formats (HTML, facsimile PDF), or to make use of the hundreds of essays, educational aids, and study guides, please visit the OLL web site. 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Tollison (Indianapolis: Liberty Fund, 1999). Author: James M. Buchanan Author: Gordon Tullock Foreword: Robert D. Tollison About This Title: Vol. 3 of The Collected Works. The Calculus of Consent, is a reprint edition of the ground-breaking economic classic written by two of the world’s preeminent economists - Gordon Tullock and Nobel Laureate James M. Buchanan. This book is a unique blend of economics and political science that helped create significant new subfields in each discipline respectively, namely, the public choice school and constitutional political economy. Another copy of this book can be found in HTML format at our sister website Econlib. PLL v6.0 (generated September, 2011) 2 http://oll.libertyfund.org/title/1063 Online Library of Liberty: The Calculus of Consent: Logical Foundations of Constitutional Democracy About Liberty Fund: Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals. Copyright Information: Foreword, coauthor note, and indexes © 1999 Liberty Fund, Inc. The Calculus of Consent, by James Buchanan and Gordon Tullock © 1962, 1990 by the University of Michigan. Fair Use Statement: This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit. PLL v6.0 (generated September, 2011) 3 http://oll.libertyfund.org/title/1063 Online Library of Liberty: The Calculus of Consent: Logical Foundations of Constitutional Democracy Table Of Contents The Calculus of Consent: Logical Foundations of Constitutional Democracy Part I.: The Conceptual Framework 1.: Introduction Foreword Preface 2.: The Individualistic Postulate 3.: Politics and the Economic Nexus 4.: Individual Rationality In Social Choice Part II.: The Realm of Social Choice 5.: The Organization of Human Activity 6.: A Generalized Economic Theory of Constitutions 7.: The Rule of Unanimity 8.: The Costs of Decision-making Part III.: Analyses of Decision-making Rules 9.: The Structure of the Models 10.: Simple Majority Voting 7 11.: Simple Majority Voting and the Theory of Games 12.: Majority Rule, Game Theory, and Pareto Optimality 13.: Pareto Optimality, External Costs, and Income Redistribution 14.: The Range and Extent of Collective Action 15.: Qualified Majority Voting Rules, Representation, and the Interdependence of Constitutional Variables 16.: The Bicameral Legislature 17.: The Orthodox Model of Majority Rule Part IV.: The Economics and the Ethics of Democracy 18.: Democratic Ethics and Economic Efficiency 19.: Pressure Groups, Special Interests, and the Constitution 20.: The Politics of the Good Society Appendix 1.: James M. Buchanan, Marginal Notes On Reading Political Philosophy 2.: Gordon Tullock, Theoretical Forerunners PLL v6.0 (generated September, 2011) 4 http://oll.libertyfund.org/title/1063 Online Library of Liberty: The Calculus of Consent: Logical Foundations of Constitutional Democracy [Back to Table of Contents] The Calculus Of Consent: Logical Foundations Of Constitutional Democracy James M. Buchanan and Gordon Tullock PLL v6.0 (generated September, 2011) 5 http://oll.libertyfund.org/title/1063 Online Library of Liberty: The Calculus of Consent: Logical Foundations of Constitutional Democracy [Back to Table of Contents] Part I. The Conceptual Framework 1. Introduction Political theory has concerned itself with the question: What is the State? Political philosophy has extended this to: What ought the State to be? Political “science” has asked: How is the State organized? None of these questions will be answered here. We are not directly interested in what the State or a State actually is, but propose to define quite specifically, yet quite briefly, what we think a State ought to be. We shall not pause to argue our case with those who might disagree, nor shall we examine in detail either the existing or some ideal organization of governmental activity. Given an explicitly stated postulate about the objectives of collective action, we shall construct, in an admittedly preliminary and perhaps naïve fashion, a theory of collective choice. This construction will require several steps. Collective action must be, under our postulate, composed of individual actions. The first step in our construction is, therefore, some assumption about individual motivation and individual behavior in social as contrasted with private or individualized activity. Our theory thus begins with the acting or decision-making individual as he participates in the processes through which group choices are organized. Since our model incorporates individual behavior as its central feature, our “theory” can perhaps best be classified as being methodologically individualistic. We shall state here what it will be necessary to reiterate: The analysis does not depend for its elementary logical validity upon any narrowly hedonistic or self-interest motivation of individuals in their behavior in social-choice processes. The representative individual in our models may be egoist or altruist or any combination thereof. Our theory is “economic” only in that it assumes that separate individuals are separate individuals and, as such, are likely to have different aims and purposes for the results of collective action. In other terms, we assume that men’s interests will differ for reasons other than those of ignorance. As we shall demonstrate, more restrictive assumptions are required only when the basic theory is to be employed in developing specific operational hypotheses about the results of collective choice. Any theory of collective choice must attempt to explain or to describe the means through which conflicting interests are reconciled. In a genuine sense, economic theory is also a theory of collective choice, and, as such, provides us with an explanation of how separate individual interests are reconciled through the PLL v6.0 (generated September, 2011) 6 http://oll.libertyfund.org/title/1063 Online Library of Liberty: The Calculus of Consent: Logical Foundations of Constitutional Democracy mechanism of trade or exchange. Indeed, when individual interests are assumed to be identical, the main body of economic theory vanishes. If all men were equal in interest and in endowment, natural or artificial, there would be no organized economic activity to explain. Each man would be a Crusoe. Economic theory thus explains why men co-operate through trade: They do so because they are different. Political theorists, by contrast, do not seem to have considered fully the implications of individual differences for a theory of political decisions. Normally, the choice- making process has been conceived of as the means of arriving at some version of “truth,” some rationalist absolute which remains to be discovered through reason or revelation, and which, once discovered, will attract all men to its support. The conceptions of rationalist democracy have been based on the assumption that individual conflicts of interest will, and should, vanish once the electorate becomes fully informed. We do not deny the occasional validity of this conception, in which rules of political choice-making provide means of arriving at certain “truth judgments.” However, we do question the universal, or even the typical, validity of this view of political process. Our approach to the collective decision-making processes is similar to that expounded by T. D. Weldon under the term “individualist democracy.” Our assumptions are substantially equivalent to his,8 but Weldon has emphasized the theoretical indeterminacy which such assumptions introduce. Our task, in one sense, is to provide the theoretical determinacy to the “area of human life over which a democratic government ... can exercise control,” even on the purely individualistic postulate, a determinacy that Weldon specifically states to be missing.9 What do we mean by theoretical determinacy here? Economic theory does not explain the organization of private choices sufficiently to enable the professional economist to predict the precise composition of the national product, the exchange ratio between any two goods or services, or the price of any one good in terms of money.