Economics Dictionary of ArgumentsHome
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| Economics: Economics is the study of how people make choices under scarcity. It is a social science that focuses on the production, distribution, and consumption of goods and services. Economics also studies the behavior and interactions of economic agents and how economies work. See also Economy, Markets, Trade, Exchange._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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James M. Buchanan on Economics - Dictionary of Arguments
Boudreaux I 79 Economics/Buchanan/Boudreaux/Holcombe: In one of his earlier papers, “Economics, Welfare, and Political Economy,” published in 1959, Buchanan identified two distinct yet related roles that the economist can legitimately play. The first is that of the “economist” as such; the second is that of the “political economist.” The sole role of the economist per se is to improve humankind’s understanding of the workings of the economy, including how economic activity is likely to be altered when changes in the economic environment occur. Boudreaux I 80 Politics: These might be policy changes, such as changes in tax rates or new regulations, but these might instead be changes in other factors, such as adverse weather that cuts crop yields. Economists pursue this goal through research and analyses that permit them to make predictions about the effects of such changes in the economic environment. Political economics: In contrast, when the economist steps into the role of political economist, the reason for doing so is to help citizens choose better rules under which they live. Nevertheless, like the economist, the political economist’s task is not to impose his or her own values or preferences on others. Political decisions: It is not the job of either the economist or the political economist to recommend, much less insist upon, this policy or that. Such a role, Buchanan believed, is reserved for individuals only in their capacity as citizens. The political economist’s function is merely to propose changes in rules and institutions to which individual citizens can either agree or disagree - accept or reject. Ideally, in Buchanan’s view, agreement would require unanimity, or something very close to it. Politics as exchange: if all, or nearly all, people must agree to a change in rules, then any proposed rule change that is approved by such a vote can confidently be assumed to be one that is truly socially beneficial rather than one that benefits some individuals at the expense of others. >Agreement/Buchanan. That is the essence of the idea of politics as exchange. likely to be altered when changes in the economic environment occur. These might be policy changes, such as changes in tax rates or new regulations, but these might instead be changes in other factors, such as adverse weather that cuts crop yields. Economists pursue this goal through research and analyses that permit them to make predictions about the effects of such changes in the economic environment. Political economics: In contrast, when the economist steps into the role of political economist, the reason for doing so is to help citizens choose better rules under which they live. Nevertheless, like the economist, the political economist’s task is not to impose his or her own values or preferences on others. It is not the job of either the economist or the political economist to recommend, much less insist upon, this policy or that. Such a role, Buchanan believed, is reserved for individuals only in their capacity as citizens. The political economist’s function is merely to propose changes in rules and institutions to which individual citizens can either agree or disagree - accept or reject. Ideally, in Buchanan’s view, agreement would require unanimity, or something very close to it. If all, or nearly all, people must agree to a change in rules, then any proposed rule change that is approved by such a vote can confidently be assumed to be one that is truly socially beneficial rather than one that benefits some individuals at the expense of others. That is the essence of the idea of politics as exchange. >Social Contract/Buchanan, >Society/Buchanan. Boudreaux I 96 Economics/Buchanan/Boudreaux/Holcombe: Def Economics/Samuelson: „Economics is the study of how men and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses, to produce various commodities and distribute them for consumption, now or in the future, among various people and groups in society” (Samuelson, 1973)(2). Def Economics/Robbins: “Economics is a science which studies human behavior as a relationship between ends and scarce means which have alternative uses” (Robbins, 1932)(3). BuchananVsSamuelson/BuchananVsRobbins: Buchanan saw two problems with this approach to economics. 1) The first problem is that in the twentieth century economists came to assume that each individual has a set of preferences, what economists call a “utility function,” that is fixed and fully known to him or her. Choices: But, Buchanan noted, if this assumption accurately describes reality, then individuals would not truly choose. If you know with 100 percent certainty that eating the peach will give you greater satisfaction than eating the pear, “choosing” the peach over the pear is a purely mechanical act. Popular language recognizes this fact with the phrase, “It’s not much of a choice,” as in, for example, saying “It’s not much of a choice” when confronted with the “choice” to pay $5 for a glass of beer or $6 for that same glass of beer. For Buchanan, the act of human choice necessarily involves some uncertainty about the merits of one option over another. As he concluded: “If I know what I want, a computer can make all of my choices for me. If I do not know what I want, no possible computer can derive my utility function since it does not really exist” (Buchanan, 1964(4): 217). Buchanan emphasized the open-endedness of choice even further by insisting that human preferences do not exist independently of the very choices that individuals make. >Rational Choice/Buchanan. Boudreaux I 97 2) A second problem with the standard textbook approach to economics is more serious. It judges how well or poorly resources are being used as if society itself is a sentient creature with its own preferences. That is, economists treat society as an individual with preferences, and then they ask if society uses (“allocates”) its resources in ways that best satisfy its preferences. >Society/Buchanan, >Agreement/Buchanan, >Decision-making/Buchanan, >Unamity/Buchanan. 1. James M. Buchanan. (1959). “ Positive Economics, Welfare Economics, and Political Economy ” The Journal of Law & Economics, Vol. 2 (Oct., 1959), pp. 124-138. 2. Samuelson, Paul A. (1973). Economics, 9th ed. McGraw-Hill. Smith, Adam. (1776/1937). An Inquiry into the Nature and Causes of the Wealth of Nations. Modern Library Edition. 3. Robbins, Lionel (1932). The Nature and Significance of Economic Science. Macmillan. 4. Buchanan, James M. (1964). “What Should Economists Do?” Sothern Economic Journal (January)._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
EconBuchan I James M. Buchanan Politics as Public Choice Carmel, IN 2000 Boudreaux I Donald J. Boudreaux Randall G. Holcombe The Essential James Buchanan Vancouver: The Fraser Institute 2021 Boudreaux II Donald J. Boudreaux The Essential Hayek Vancouver: Fraser Institute 2014 |
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