Political Entrepreneurs

The Economic Engine of Political Change

In Memoriam: James M. Buchanan

January 9th, 2013 by Wayne Leighton

The tributes will be coming fast and furious in memory of the great James M. Buchanan, who died today.

As president of the Public Choice Society, my co-author Ed López can talk for hours about the contributions of this intellectual giant. For now, I will simply quote two paragraphs about Buchanan and Tullock’s contributions to political economy in general and public choice in particular, as described in Chapter 4 of our book, Madmen, Intellectuals and Academic Scribblers.

Rational self-interest motivates the butcher, the brewer, and the baker as well as the politician, the voter, and the bureaucrat. In other words, public choice begins by adopting a symmetric stance between markets and governments: People are assumed to be rationally self-interested in both settings. Only with this consistency, with this symmetric treatment, can economic science truly compare how government and market institutions perform.

But why also  presuppose that rational individuals exchange in politics? Because in both the market and in politics, as Mick Jagger reminds us, you can’t always get what you want. Adam Smith says that in the market, rational individuals — the butcher, the brewer, the baker, as well as consumers — pursue their own interests and find ways to cooperate via exchange. At least, that’s what happens where there are effective rules, such as those that protect property and allow the price system to work without interference.

Buchanan and Tullock are reminding us that something similar happens in politics. The butcher, the brewer, and the bakers, as well as consumers, have different political interests. These and many more groups of what Buchanan and Tullock call “political tradesmen” have different things they want from government. In a political market based on a democratic-republican form of government, people work together to make decisions about how to allocate resources. They set tax rates, approve construction projects, hire first responders, educate children, and so on. They engage in political trade.

Like so many other scholars, Ed and I owe an enormous debt to James M. Buchanan. Thank you, sir. RIP.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.189, ch.7)

The most successful entrepreneurs know what they do well, they know the market and the opportunities within it, and they choose those activities that create the most value. This is true in economic as well as political markets.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.178, ch.7)

[W]hen the right elements come together at the right time and place and overwhelm the status quo, it is because special people make it happen. We call them political entrepreneurs.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.176. ch.7)

While we started this book with Danny Biasone saving basketball, we end it with Norman Borlaug saving a billion lives. These stories are not that different. Both faced vested interests, which were reinforced by popular beliefs that things should be a certain way—that is, until a better idea came along.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.174, ch.6)

Because there was a general belief that homeownership was a good thing, politicians found the public with open arms.... Everybody was winning—except Alfred Marshall, whose supply and demand curves were difficult to see through the haze of excitement at the time, and except Friedrich Hayek, whose competition as a discovery procedure was befuddled... In short, once politicians started getting credit for homeownership rates, the housing market was doomed.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.166, ch.6)

Everyone responded rationally to the incentives before them. In short, the rules that guided homeownership changed over time, which in turn changed the incentives of these actors. And bad things happened.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.153, ch.6)

They understood the economics. The ideas had already won in ... the regulatory agency itself. All that remained to be overcome were some vested interests and a handful of madmen in authority.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.146, ch.6)

If the idea for auctions of spectrum use rights had been part of the public debate since at least 1959, why didn’t the relevant institutions change sooner? What interests stood in the way?

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.121, ch.5)

When an academic scribbler comes up with a new idea, it has to resonate well with widely shared beliefs, which in turn must overcome the vested interests at the table. Many forces come together to explain political change, even though it may seem like coincidence of time and place.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.120, ch.5)

It’s the rules of the political game that deserve our focus, not politicians’ personalities or party affiliations.

From the Pages of Madmen, Intellectuals, and Academic Scribblers (p.119, ch.5)

In short, ideas are a type of higher-order capital in society. Like a society that is poor in capital and therefore produces little consumer value, a society that is poor in ideas and institutions will have bad incentives and therefore few of the desirable outcomes that people want.

©2024 Wayne A Leighton & Edward López • Web Design by Barrel Strength