The Reason of Rules: Constitutional Political Economy

by Geoffrey Brennan, James M. Buchanan

In his foreword, Robert D. Tollison identifies the main objective of Geoffrey Brennan and James M. Buchanan’s The Reason of Rules: “. . . a book-length attempt to focus the energies of economists and other social analysts on the nature and function of the rules under which ordinary political life and market life function.”

In persuasive style, Brennan and Buchanan argue that too often economists become mired in explaining the obvious or constructing elaborate mathematical models to shed light on trivial phenomena. Their solution: economics as a discipline would be better focused on deriving normative procedures for establishing rules so that ordinary economic life can proceed unaffected as much as possible by social issues.

In The Reason of Rules, Brennan and Buchanan sketch out a methodological and analytical framework for the establishment of rules. They point out that the consideration of rules has its roots in classical economics and has been hinted at in the work of some contemporary economists. But the enterprise of applying the analytical rigor of modern economics to the establishment of effective rules is the little-traveled road that bears the most promise.

In fact, the basic idea of the importance of rules is a thread that runs through virtually the whole of Buchanan’s distinguished career, and it is one of his signal contributions to the contemporary discipline of economics. The Reason of Rules is an elaboration of the potential for rules and the normative process by which they can best be devised.

James M. Buchanan is an eminent economist who won the Alfred Nobel Memorial Prize in Economic Sciences in 1986 and is considered one of the greatest scholars of liberty in the twentieth century.

The entire series will include:

Volume 1: The Logical Foundations of Constitutional Liberty
Volume 2: Public Principles of Public Debt
Volume 3: The Calculus of Consent
Volume 4: Public Finance in Democratic Process
Volume 5: The Demand and Supply of Public Goods
Volume 6: Cost and Choice
Volume 7: The Limits of Liberty
Volume 8: Democracy in Deficit
Volume 9: The Power to Tax
Volume 10: The Reason of Rules
Volume 11: Politics by Principle, Not Interest
Volume 12: Economic Inquiry and Its Logic
Volume 13: Politics as Public Choice
Volume 14: Debt and Taxes
Volume 15: Externalities and Public Expenditure Theory
Volume 16: Choice, Contract, and Constitutions
Volume 17: Moral Science and Moral Order
Volume 18: Federalism, Liberty, and the Law
Volume 19: Ideas, Persons, and Events
Volume 20: Indexes

Genres: Economics, Philosophy

192 pages, Hardcover

First published January 31, 1986

Reviews

[Otto Lehto · Rating 4 out of 5]

This book is probably one of the most important and (somewhat) accessible introductions to Buchanan's constitutional political economy perspective. It is a mature restatement and reworking of the material found in his own previous book The Limits of Liberty: Between Anarchy and Leviathan and, of course, in his co-authored classic book with Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy. It also presages the material on "nondiscriminatory democracy" that is worked out in more detail in his and Congleton's Politics by Principle, Not Interest: Towards Nondiscriminatory Democracy.

It is hard to gauge Brennan's precise contribution here (as is often the case) but the collaboration seems to work well and the chapters feel unified enough (with the exception of chapter 3 where the divergent ontological and ethical assumptions of the authors lead to confusion). The writing is crisp, precise, and concise. The first half of the book (chapters 1-4) are an elegant summary of the importance of rules, constitutions, contractarianism, and the pragmatic value of the Homo Economicus assumption. Chapters 5 and 6 deal with the element of time (preference, expectation, and planning) in framing the rules of political and economic decision making. These time elements are perhaps the most unique contribution of this book in comparison to some of Buchanan's previous books. The latter third of the book (chapters 7-9) deal with various ways in which, according to Buchanan and Brennan, the absence of constitutional rules creates welfare losses and political "traps." (Including "the high tax trap", "the inflation trap", and "the public debt trap.") The conclusion offers some suggestions for modest constitutional reforms while cautioning against excessive optimism.

Buchanan and Brennan's analyses have a distinctively conservative ring to them that sometimes goes beyond the mere neutrality of the science and into ideology. For example, in their discussion of deficit spending or Keynesianism, they effectively bypass several commonly entertained (and, to many, plausible) arguments or, at best, dismiss them with a shrug. Another more striking example is when they use the example of light sentences for criminals as an example of a narrow time horizon. They do not attempt to prove the point since they take it for granted that harsher punishments would be to the mutual benefit of all parties concerned. (In fact, there is arguably little evidence that tougher sentences correlate with lower crime.) However, their ideological position is not reducible to libertarian conservatism. For example, in their discussion of distributive politics, they entertain the theoretical possibility of a constitutional "demogrant" (a type of Universal Basic Income in today's parlance) which would open the door for massive redistribution. The proper conclusion is that the constitutional political economy perspective is mostly value neutral in its methods - whatever the ideological proclivities of its founders and lodestars. Its only commitment is to constitutional democracy as an open-ended decision making procedure.

Overall, I highly recommend The Reason of Rules as a coherent and mature statement of the constitutional political economy and public choice perspective. It does not reinvent the wheel, so it cannot have the same impact as The Calculus of Consent or some of his earlier books. Stylistically, it is mostly very good, but its coherence occasionally suffers from the mutually conflicting views of its two authors. At the same time, the libertarian-conservative bias of its authors occasionally conflicts with its neutrality. But as a distillation of decades of hard work and thinking, The Reason of Rules is a worthy entry in the annals of political economic and institutionalist theorizing.

[Liberté · Rating 4 out of 5]

This book is a useful introduction and overview to Buchananite constitutional political economy. It lays out the principles of Buchanan's system, including methodological individualism, the unanimity rule, and contracting behind a veil of uncertainty, in a manner approachable to the economics layperson. Buchanan also addresses some concerns regarding his system which provide some context for the system outline, and speculates on the applicability of the system to the real world.

[Nikhil Mahadea · Rating 1 out of 5]

Sounds like a great title. But this book is very dry, super old and it doesn't get to the point! There's a much better book, "The Cost of Rights"--which I gave a 4-star.