By Donald J. Boudreaux

Published: Wednesday, January 23, 2013, 9:00 p.m.
Updated: Monday, February 4, 2013

James M. Buchanan died on Jan. 9. Regrettably, most Americans have never heard of him. Jim Buchanan — my George Mason University colleague — was one of the most profound social and political philosophers in American history. For his work, Jim won the 1986 Nobel Prize in economics.

No relation to America's 15th president, this James Buchanan was born in 1919 and raised on a farm in Tennessee. After serving in the Navy during World War II, Jim earned a doctorate in economics at the University of Chicago, where he learned the power of free markets and the practice of challenging sacred cows. And challenge he did!

Yet he challenged with enormous creativity. He revolutionized the way serious economists and political scientists think about the relationship of individuals to the collective, and especially to the collective as represented by government.

Almost all of Jim's creative challenging of sacred cows was done in Virginia — first at the University of Virginia, then at Virginia Tech, and finally (and longest) at George Mason University. The intellectual tradition that Jim launched, along with his longtime co-author Gordon Tullock, is today called “public-choice economics,” although Jim often called it simply “the Virginia School.”

Jim chose the reference to Virginia because he thought of his work as building upon the insights of those brilliant Virginians who were at the forefront of America's founding: Thomas Jefferson, George Mason and, especially, James Madison. Madison and his colleagues completely rejected the notion that government is ever anything grander than a collection of ordinary, flawed mortals.

Whether the government be a monarchy of the sort Americans discarded in 1776 or a republic of the sort we have now, Jim Buchanan insisted that economists and political scientists recognize that all people who make political decisions — voters, bureaucrats, politicians — are just as self-interested and mistake-prone as are business executives and other folks in the private sector.

Perhaps Jim's point here seems trivial. It is not, for two reasons.

First, when he began pressing it upon scholars in the 1950s, there really was a rosy, romantic notion that most democratically chosen leaders were a bit more brilliant, brave and selfless than the grubby profit-seekers in the private sector. (Indeed, this rosy, romantic notion hasn't gone away entirely, as a perusal of most New York Times treatments of President Obama and other Democrat officials in Washington will prove.)

Second, Jim's analysis didn't end with this realistic assessment of the motives and abilities of politicians. His analysis started with this assessment. Building on this foundation of greater realism about politics, Jim Buchanan made major contributions to the way we understand the formation and function of clubs, the role of constitutions, the influence of special-interest groups and many other features of our society.

An especially timeless contribution made by Jim is his exposure, in 1958, of a dangerous error at the center of the then-dominant Keynesian economics orthodoxy. That orthodoxy held that government debt owed to fellow citizens is no burden on the country as a whole because “we owe it to ourselves.” If true, deficit spending poses no problem as long as the debt is held internally. As I explained in my column of Jan. 25, 2012, Jim revealed this Keynesian notion to be nonsense.

Too bad that Jim's wisdom on this front — and many others — is today ignored.

Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.

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