James Buchanan's Liberal Theory of Political Economy: A Valiant But Failed Effort to Square the Circle

Abstract

The bulk of James Buchanan’s contributions to political economy occupy 20 volumes in Liberty Fund’s collection of his works. Reading those works shows both that Buchanan injected new strands of thought into that tradition and that his oeuvre contains points of apparent incoherence. To speak of a tension in someone’s body of work is typically to locate incongruent elements within that body. In this respect, tension is identified relative to the logic of non-contradiction, which is suitable for closed schemes of thought. For open schemes of thought, which Buchanan often though not invariably supported, thought must be dialectical, where what appears to be tension is the necessary operation of the parts that generate the phenomena being examined. Buchanan’s political economy reflects both forms of tension, as this essay examines. In short, Buchanan wanted to develop a political economy for an open and creative system of liberal political economy; however, he never fully escaped the hold of closed-form theorizing. In this failure to fully achieve his aspiration, he resembled his bete noire John Maynard Keynes who asserted much the same thing in his Preface to the General Theory.