Customer Reviews

Calculus of Consent, The (Selected Works of Gordon Tullock, The) (v. 2)

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Some reviewers comment that this book has "a conservative bias." Nothing could be further from the truth. This book is written in the great classical-liberal tradition that motivated the American revolution and the drafting of America's 1787 Constitution. Buchanan and Tullock saw themselves as putting into modern economic language the insights and wisdom of James Madison and Co. The book does indeed counsel skepticism of big government, and it is no great fan of unlimited democracy. But the authors come to this position because they understand that even democratic governments can be tyrannical and that a depoliticized society -- governed largely by private property rights -- promises peace, prosperity, and cultural flourishing. Few books on economics are as original and insightful as is The Calculus of Consent -- and it remains as fresh in 1999 as it was when first published in 1962.

This is probably one of the most rewarding books anyone can read. If you care about government and what it does (or doesn't) do to (or for) you, read this book. It requires patience and concentration, but it's well worth the effort. The authors succeed in showing how it is wrong to assume that government has always the best of intentions. They put a human face on politics and explain with impressive reasoning why government and politics produce unreasonable outcomes. The explanatory power of this book is unmatched. Anyone who cares about what this country is and what it could be should read it. Despite what you may have heard, their agenda is not conservative, it is individualistic, treating each person with dignity. The outcomes may surprise you, but you can't help but be moved by the force of their logic.

The Calculus of Consent, written by James M. Buchanan and Gordon Tullock, is one of the founding publications of what has since become known as the subdiscipline of public choice, which is the application of tools of economic analysis to the domain of political decision making. In theory, political decisions are made by elected officials in their pursuit of the "general interest" or the "common good", however defined. In reality, however, political decisions reflect the outcome of the workings of a number of interested parties, which includes voters, politicians, career government officials (bureaucrats), special-interest groups, lobbyists, etc., each of whom have their own agendas and interests. When someone appeals to the public interest while making a political argument, more often than not the underlying motive is a matter of self-interest (e.g. teachers' unions angling for larger teacher salaries under the pretext of improving public education). Public choice theory does not mean to be critical or cynical about this. Instead, it is merely intended to be descriptive: that's simply the way the political decision-making process works, and we need to understand this first before we try and improve the world through politics. For his central role in the development of public choice theory, professor Buchanan would go on to earn the 1986 Nobel prize in economics.

The book's main contribution lies in its development of the analysis of political behavior, particularly so-called logrolling (i.e. vote-trading, or political exchange). The Founding Fathers set up our political system in order for the general interest to be served rather than interests that only benefit specific groups at the expense of the rest of the population. But elected officials have learned to circumvent that intent by happily trading their vote on issues on which they don't care one way or the other in exchange for votes on issues about which they do care. All members of the legislature end up voting for each other's pet projects, which all get enacted at taxpayers' expense.

The authors propose that one solution would be to distinguish between legislative rules and constitutional rules. Legislative (statutory) rules may be adopted by simple majority coalitions pursuing their own interests. Constitutional rules, on the other hand, are supposed to be decided on without regard for short-term individual consequences ("what is right in the long run?" instead of "what's good for me today?"). Legislative rules are substantive, constitutional rules are procedural. Constitutional rules are meant to restrict abuse of the legislative process by majority coalitions. The difference between legislative and constitutional rules is perhaps somewhat idealistic. After all, what's to prevent people from voting for or against constitutional rules based on their short-term interest. In theory, people are thought to realize that "what's right" will also benefit them, as everyone else will be bound by the same rules, but in practice it doesn't always quite work that way (e.g. people may be aware that a constitutional balanced budget amendment is the morally right thing to do to prevent saddling their descendants with public debt, but as of yet no such amendment has been enacted). Still, the legislative-constitutional distinction is at least helpful as an analytical device.

As the authors acknowledge, in real life things aren't always quite as black-and-white as they have here been described. Sometimes people--yes, even some politicians--vote according to their conscience rather than according to their own self-interest. But the insights and analysis offered by the book and by public-choice theory more often than not do apply. The book is highly persuasive in demonstrating that democracy's simple-majority voting rule (50 percent plus one vote) does not inherently lead to superior decisions. For example, it offers a convincing explanation for why even in majoritarian democracy, taxes and government spending, whether on public services or on redistribution, are clearly "too large", i.e. larger than the vast majority of Americans would agree to if they were to redesign and rebuild government all over again from scratch today.

Stylistically, the book is light on math and the authors have an elegant writing style. But it is somewhat on the academic side and rather heavy on preliminaries. More comprehensive and more easily digestible treatments of issues of political decision making in a democratic context do exist, but even now, some four decades after its initial publication, the book is still considered a classic work in the history of economics and political organization. Its central section is "a simple logrolling model" (pp. 136-142 in the Buchanan Collected Works edition).

In this landmark work, Buchanan and Tullock work through the basic principles of public choice theory. They reject the political scientists' conception of the political process in which policy decisions are viewed as a private interest vs. public interest struggle. They replace that with a theory that the public interest is simply the aggregation of private decision makers. They further point out that in the political science view, the "public interest" is always the correct choice with the same appeal to all voters, which may or may not be thwarted by "special interests", when in fact most choices appeal to many different "law consumers" with different strengths.
That is to say, given a choice to fund road improvements or not, some voters will have very strong feelings for, some strong feelings against, but many voters may not have strong feelings either way. In a market transaction, the voters strongly desiring the road could purchase the acceptance of the opposition and uninterested voters with concessions, resulting in an efficient allocation of resources (everyone is happy). The analog to this in the political realm is that politicians buy the votes of other politicians by promising to vote for their issues. Thus, in the Buchanan/Tullock view, such log-rolling is to be expected, while in the traditional political science view, it is anomalous. Their model explains things that the standard view of politics previously could not.

They also make distinctions between constitutional rules and voting made in the context of existing constitutional rules. As part of the constitution making process, they point out that the traditional political science approach views simple majority voting as the standard, and question why unanimity is not. There is a tradeoff to be considered: a unanimity-based system results in no external costs, but considerable decision-making costs, whereas a simple majority-based system imposes some of both. They conclude that many more decisions should be made on at least a super-majority system, especially those decisions that potentially impose significant external costs.

The biggest problem I had with this book is that the prose is somewhat dense, though not as bad as Ricardo. They tend to write almost exclusively in the passive tense. One description I have seen of this work is that it essentially applies the science of economics to the ideas described in Federalist X. It would be nice to see an update of the contents in a more user-friendly style; their ideas would find a much broader audience and a better understanding of Madison's thesis on majority rule and the "violence of faction".

The Calculus of Consent was a pioneering book when it was first published in 1962. While this book does have some overlap with the slightly earlier work of Anthony Downs and Duncan Black, Buchanan and Tullock took the economic analysis of democracy into new territory: constitutions. Chapter six is the core of this book. Here the authors specify the logic behind cost minimizing constitutional rules concerning public choices. The ensuing chapters sort out many details regarding the workings of democracy. This book is highly abstract, but it also contains much common sense and realism.

Buchanan and Tullock make a strong case for constitutionally limited government. In some respects this is an uncontroversial assertion. Who wants unlimited government in the strict sense? Who wants totalitarianism? Well, nobody does, when you put it that way. However, many people do want to disregard constitutional limitations when it suites them (both welfare state liberals and conservatives are guilty of evading American constitutional laws). Buchanan and Tullock make you think about where "we" should draw the line between the private and public sectors. Buchanan and Tullock make you think about how "we" can draw a line between the private and public sectors. These are the big questions of political economy. Whether you agree with them or not, they will make you rethink your position (provided you keep an open mind).

My main beef with this book concerns `political opportunity costs'. How do we know the value of forgone political alternatives? Can we know the value of forgone political alternatives? My own take on this last question is rarely. I was lucky enough to take classes with Buchanan and Tullock, so they have read my work on political opportunity costs (and commented on it favorably). Well, enough self promotion (my policy conclusions differ little from theirs anyway). The Calculus of Consent is a classic in modern political economy. All political science students should read it, especially at the graduate level.

Buchanan and Tullock (BT) wrote The Calculus of Consent: Logical Foundations of Constitutional Democracy in 1962, but their analysis is still worth considering.

Although the book is written for academics, it is not hard to read. Reasonable concentration and patience is all that's required to understand BT's exposition.*

Here's their big point: Constitutions should be designed from the perspective of individuals seeking their own interest, not a society seeking the greatest good for the greatest number.** They say this not because they think that people are selfish bastards, but because governments of/by/for the people need to be designed for the choices that individuals make. It's a question of "appropriate technology."

Here are a few notes that I made while reading:

* Economics "works" because people are different. That means that they can trade -- one man's trash is another man's treasure. The same holds for politics, where people have different needs and interests, and these change over time.

* Political choice is subject to uncertainty (NOT risk) over time, over multiple decisions. That means that a constitution should be designed to maximize "average" benefits (wins less losses) across many decisions (ex-ante unknown), allowing for trades in votes over many issues (logrolling). Decisions are made on two levels: At the ex-ante constitutional stage, general rules for making decisions are decided. On the current-event legislative stage, particular decisions are made. An individual may approve a constitution that allows him to be overruled, knowing that he will still gain net benefits from constitutional protections over time. On individual issues, the individual will vote for his own interest -- or trade his votes for other issues of greater importance.

* There are three ways to make policies: Private individual decisions, private group decisions, and public group decisions. Private groups need unanimous agreement; public groups do not. The most-efficient decision mechanism recognizes two costs: The cost to the individual of the mechanism (i.e., where the majority tells the minority what to do) and the cost of making a decision (i.e., the larger the majority required, the larger the cost). There is a sweet spot in the aggregate of these costs, where the cost to the individual and the cost of making a decision are minimized. You want to design a constitution to hit that spot.

* Note that a rule of unanimity has the lowest cost to the individual, since no individual will allow a policy that hurts himself. Unanimity has a high decision cost, since it requires that everyone agree on a policy.

* The literature of collective action tends to focus on the cost of not doing something; they miss the cost -- to the individual -- of doing something. This cost is perhaps a "choice externality."

* The more-disaggregated the decision authority, the lower the cost of a decision (subsidiarity).

* A single-issue referendum is inefficient because it does not allow logrolling -- vote trading that takes issue intensity into consideration.

* BT make a major mistake here, I think, in ignoring (or missing) the problem of logrolling a series of bad policies into place.*** Because they assume that voters -- not representatives -- are making decisions, they assume that logrolled-policies are beneficial on net. This assumption falls apart when self-interested representatives trade their votes for policies that benefit special interests. In the resulting circle of value-subtracting, robbing Peter-to-pay-Paul policies, they make everyone worse off, in multiple ways.

* Public projects need only benefit the proportion of votes necessary to get the project enacted. It's clear that these projects can be less efficient than private collective projects.

* BT's theories match observed constitutions and legislative processes.

* Representative voting means that a minority of 1/4 -- 51% of the voters in 51% of the districts -- can make decisions. Beware!

* An individual may accept private costs (e.g., from allowing prostitution to continue) if the alternative (collective control of sex) is worse.

* The best way to allocate a collective good is to give every individual an equal share (adding to 100% of the good) and then allow trading. That's what I have said for all-in-auctions and human rights and water!

* As government has expanded its range and allowed for narrowly-defined programs (remember that this was written in 1962!), the benefits to special interest groups have increased. From this, we can see that special interests will thrive as government's size and scope increases.

* Tullock says that game theory accepts the rules as given while economics allows the rules to change (or be ignored). This useful classification was discarded when GT was merged into economics. I make this point when discussing "conflict theory" -- where rules are endogenous -- but I wonder how many economists fail to consider what scenarios when rules can be broken.

Bottom Line: I give this provocative and useful book FIVE STARS. Every political scientist should read it. Anyone running an organization should read it. Citizens should read it. People upset about BP, or Iraq, or the DMV should read it. (Or maybe just read this review a few times and think about the difference between what you want government to do, what it can do, and what it does do.) * I tried recently to read Keynes's General Theory and got lost in his witty erudition. I left it on the bus.

** Something that Professor Wantrup, my benefactor, also understood.

*** I do not know if they updated their theory in the past 50 years (!) to account for this problem. Help?

The main contribution of this pathbreaking book is by providing a rationale for the "counter-majoritarian difficulty": Why does society tolerate the "dead hand" of the constitutional framers to limit the freedom of choice of living individuals who wish to undo the constitution? The authors muse that in some previous stage, where individuals cannot identify their future preferences, each individual is threatened by two kinds of risk: The first is that others will attempt to take something that belongs to her and achieve their purpose by popular vote. From this prespective each individual desires that such a popular vote will not be made effectual unless supported by the largest number of participants. The second concern is that individuals might wish, in the future, to appropriate something that belongs to others, and may be thwarted by a popular vote, inimical to their cause. From this second perspective they wish to institute a rule that allows the appropriation to take place with only a minimal number of supportets. Each one of these two perils can be represented by a cost function, where the cost is a function of the number of voters necessary to carry the proposed measure; adding up the two functions generates an aggregate cost schedule for all rational players. The minimum of the aggregate function indicates the optimal number of individuals, as a portion of the voting population, necessary for carrying the proposed measure. If this number is greater than 50% of the population, this fact justifies the entrenchment of entitlements in a constitution. The grain of salt that must be added to this analysis is that the authors do not provide an explanation why that number might be greater than 50% of the population, or what might be the conditions that must be satisfied for the generation of that number.

The book contains exposition of important insights. Constitutional rules of decision produce political parties as a byproduct. Representative legislatures reduce the cost of collective decision processes. Logrolling is trade in the political context, and so the participants in logrolling benefit from it. When decision authority arises fundamentally from individuals, logrolling will occur. In liberal democracies, the government will tax all persons at a fairly high rate, and the tax law will stipulate numerous special exceptions granting lower rates or exemptions.

On the other hand, the book is difficult to read. The authors mercifully avoid the mathematics that frequently obscures economic thought and creates a facade of ersatz logic. However, wading through the prose is a hard slog, tending to make the concepts unreachable.

We can't be hard on the authors, though. That they articulated the ideas at all is more than the entirety of humanity did in the preceding millenia.

Still one hopes some determined disciple will lucidly render the ideas. Both opportunity and need exist for the story better told.

A few other reviews have dismissed this book somehow as sloppy and even halarious. I would like to just make sure that the credibility of the work put forth by Buchanan and Tullock is realized. This book, along with a number of other great accomplishments, won James Buchanan a Nobel Prize in economics. To view this work as a right wing rationalization is way off base, study the works of Buchanan and Tullock and you will realize that statement is completely ridiculous.

This is truly a fascinating book. Few books have had a greater influence on my political thought. The initial assumptions have a libertarian bent, but the construction of the argument from there is brilliant. As for an overview of the book, I feel that Mr. Templeman's review below was just about perfect.