The Skeptical Liberal: 08/28/2005 - 09/04/2005

The Skeptical Liberal

How can we live together in peace, prosperity, and harmony, while retaining our liberties as autonomous individuals who can, and must, create our own values? -- J.M. Buchanan


First Week of Classes

The first week of classes are done. That went fast!

My classes this term have an odd way of echoing each other. MC 201 always starts with a reading of Federalist 10 (and a few others, of course); my senior seminar on Constitutional Political Economy starts in much the same place, since we begin by reading Buchanan/Tullock's Calculus of Consent. So all week I have been running through political economy themes that appear in both texts.

Students have various reactions to the first theme, which was stated clearly by Malthus in a letter to Godwin: “I have taken man as he is, with all his imperfections.” Madison makes it clear that he starts from the same position in his discussion of removing the effects of factions rather than their causes. Removing the causes of faction would force us to try to change human beings. Of course, political philosophers, Romantics, Utopians, socialists, neo-Malthusians (for those who've read my summer blogs, I had to throw that in there!) and others think that that's what we should do! In order to improve society, we have to improve humans. Hamilton reminds us that this is one of the "deceitful dreams" that we have to abandon if we are going to achieve the more practical goal of coordinating conflicting interests in a way that protects us from the worst outcomes of government action.

The second theme is the use of the market analogy in the public realm. Of coures, that's the point of Calculus of Consent and we'll see how students respond to the way it is developed in Buchanan's later work. But Madison also uses this analogy in Federalist 10. The "solution" to factions is not to restrict their causes, but to allow them to proliferate and compete. Competition among factions in an institutional setting governed by minimal, yet effective, rules (i.e., a constitution), will generate outcomes that are better than any that could be predicted in advance. An "order" -- policy agreement, for example -- will emerge spontaneously from "deliberative democracy" (even if the deliberation looks fractious!). Political philosophers often miss this point, because they don't recognize the spontaneous order aspect of Madison's thought.

But there's a second economic aspect to Madison: extending the size of the republic will make the competitive forces even more effective. In the same manner that Adam Smith argued that the expansion of a market allows market competition to become more effective, Madison argues that the expansion of a republic allows competition among factions to become more effective. New ideas for solutions to political action are made possible, and more options become available as the republic increases in size. Smith says the same thing about markets (Buchanan has recently been exploring the increasing returns aspect of Smith's argument for expanding markets; perhaps he should also explore its role in expanding republics). (Least one think this a recipe for one world government, read Ron Coase's argument for why we don't have one firm in the market!)

For an argument related to mine, see David Prindle's "The Invisible Hand of James Madison," Constitutional Political Economy 15 (2004): 223-37. Abstract

All this has made it a vibrant week of discussion with students. We'll see what happens from here!