The Calculus of Consent
- Monday, June 28, 2004
Many readers will notice that the title atop this essay also graced the cover of one of the watershed books of the 20th Century.
Published in 1962, its full name was The Calculus of Consent: Logical Foundations of Constitutional Democracy. Despite the opaque title, this joint work by James Buchanan and Gordon Tullock changed the world of academia. And today—as the research program known as public choice—it continues changing the world of politics.
Its insights, as we’ll see below, are also highly relevant to the major public policy questions currently facing the people of Nevada.
To describe the academic success of The Calculus is easy. Almost immediately the book began producing a profound change in the way scholars analyzed politics.
At mid-century, unchallenged socialist ideology saturated U.S. campuses, often in the guise of supposedly neutral research. A pervasive program was “theoretical welfare economics,” which purported to identify cases of “market failure” that necessitated “governmental solutions.” Real-world markets—often suffering from politicized controls, actually—were compared against theoretically perfect and nowhere-existing ideals. Not surprisingly, the real world always came up guilty. In this way, ever-increasing government control over free men and women found constant academic justification.
Into this situation toddled out the new research program called public choice. And like the little boy beholding the naked emperor strutting down the street, the public choice analysts quickly demonstrated that welfare economics, so beloved by academia, was little more than romantic nonsense.
For instance, welfare economists for many decades had flogged the subject of “external diseconomies.” These are situations where the economic actions of one party produce costs for one or more other parties—costs “external,” as it were, to the activities of the latter. A classic example is a polluting smokestack.
Such “externalities,” went the chant, were cases of “market failure,” necessitating collectivistic government “cures.”
Yet, as Buchanan and Tullock pointed out in The Calculus:
To our knowledge little or nothing has been said about the external costs imposed on the individual by collective action. Yet the existence of such external costs is inherent in the operation of any collective decision-making rule other than that of unanimity. Indeed, the essence of the collective-choice process under majority voting rules is the fact that the minority of voters are forced to accede to actions which they cannot prevent and for which they cannot claim compensation for damages resulting. Note that this is precisely the definition previously given for externality. (Emphasis added.)
Welfare economics was never the same.
In 1986 Buchanan received the Nobel Prize; Tullock today remains a prospect for a future prize, not only for The Calculus but also for his groundbreaking work on government rent seeking. That term can be roughly defined as “seeking special state-granted privileges for the easy money (rents) one can then rake off.” Because modern governments, scornful of constitutional limitations, relentlessly sell such “favors” at the expense of taxpayers (or other statutorily designated losers), potential beneficiaries are drawn—and potential victims forced—into this competition.
Public choice researchers have demonstrated that, for the entire community, this is a massively wasteful zero-sum game: Since only the winning rent-seekers end up with the “rents,” the resources spent by the losing parties—including parties merely trying to avoid being looted—are wasted. In the end, the real costs will be borne by parties who are the least politically powerful—consumers and taxpayers.
Classic pork-barrel politics is only the most obvious example of these discriminatory transfers of wealth that politicians perpetrate. Here in the Silver State, as nationally, most of the functional growth of state and local governments over the last 40 years reflects organized rent seeking. For example, the power of Nevada’s teacher union has bought it de facto control of public schools, brought parents and students systemic exploitation, and brought taxpayers ever-escalating, non-productive costs.
In essence, Buchanan and Tullock have provided modern, scientific support for the system of limited government first given us by America’s founding fathers—a system where numerous super-majority safeguards protect the people from government. Here in Nevada, of course, that’s precisely what the current Supreme Court last year chose to nullify.
Which brings us, finally, to the meaning of the term, “calculus of consent”: When rational individuals see the officers and representatives of a constitutional system no longer honoring that system’s rules, those rational individuals begin recalculating their consent, asking: “If they ignore the law, why shouldn’t I?”
Which quickly leads societies into—as the euphemistic Chinese curse puts it—“interesting times.”
Steven Miller is policy director for the Nevada Policy Research Institute.