A Presidential Tribute to James M. Buchanan: In Appreciation of the Man, His Work, and His Example

Abstract

[Author Affiliation]Dwight R Lee, * O'Neil Chair of Global Markets and Freedom, Cox School of Business, Southern Methodist University, Dallas, TX 75275, USA; E-mail: leed@smu.eduJR Clark, [dagger] Probasco Chair of Free Enterprise, The University of Tennessee at Chattanooga, 313 Fletcher Hall, Department 6106, 615 McCallie Avenue, Chattanooga, TN 37403, USA; E-mail: j-clark@utc.edu ; corresponding author1. IntroductionEveryone presenting an article in this session has been a student of Jim Buchanan, either through privilege of sitting in his classes, being a colleague of his, or through his influence on how we thought about a wide range of economic issues. Many of us would agree that without Jim's example and encouragement when we were young and struggling economists, we would not have followed him as president of Southern Economic Association (SEA). In order to express appreciation for Jim, his work, and his example, and using his 1963 SEA Presidential Address as a starting point, we hope to illustrate some of his connections with, and influence upon, our own published work and careers. Some of my more direct connections to Jim's influence arise from jointly authored work with J.R. Clark, Secretary/Treasurer of SEA; thus, I have enlisted his able assistance in this effort.Jim's SEA Presidential Address (Buchanan 1964) is a methodological piece making case that study of economics is best approached by concentrating on and coordination that arises spontaneously when people pursue their interests subject to market constraints. Jim contrasts his position to that of Lionel Robbins (1932) who saw economics as science of choices necessitated by scarcity. Jim's sharp contrast with Robbins fomented rise of two major economic methodologies widely discussed in literature today as and exchange paradigm. But, roots of contrast, according to Wagner (2007), find seed as far back as Leon Walras and Karl Menger. More importantly, however, both Kohn (2004, 2007) and Douglass (2012) provide evidence that Robbins' value paradigm is increasingly being replaced in contemporary economics by paradigm advocated by Jim Buchanan. Boettke, Fink, and Smith (2012, p. 1219) rename distinction as between mainline (exchange economists) and mainstream (choice-necessitated-by-scarcity economists) offering significant evidence that over period 1970 to 2007 mainline [exchange] economists had more of an impact than mainstream economists.We find this increasing appreciation for, and impact of, methodology rewarding since it has been lens through which much of our own work has been developed. After discussing Jim's position on in his Presidential Address, we relate it to a few of his comments on broader nature of from work that both preceded and followed his address. Finally, we see this work as segueing into some of our own published work.2. It Takes at Least Two to Make an EconomyBuchanan argues that economists have relegated themselves to doing nothing more than solving engineering problems by accepting Lionel Robbins' view that economics is about allocating limited resources to achieve a clear objective (maximizing a utility function), subject to specified constraints. Instead, Buchanan sees economics as study of Adam Smith's (1759) invisible hand, or how markets coordinate actions of individuals pursuing their own interests by making genuine choices. The problem with Robbins' approach to economics, in Buchanan's view, is that it has led economists to begin with assumption that the utility function of choosing agent is fully defined in advance (Buchanan 1964, p. 217). But this means thatno decision, as such, is required; there is no weighing of alternatives. On other hand, if utility function is not wholly defined, choice becomes real, and decisions become unpredictable mental events. …