What Should Economist Do Buchanan

What Should Economists Do?
Author(s): James M. Buchanan

Source: Southern Economic Journal, Vol. 30, No. 3 (Jan., 1964), pp. 213-222
Published by: Southern Economic Association
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The SOUTHERN ECONOMIC JOURNAL
VOLUME XXX January 1964 NUMBER 3
WHAT SHOULD ECONOMISTS DO?
JAMES M. BUCHANAN
University of Virginia
"But it is not the popular movement, but the travelling of the minds of men who s
seat of Adam Smith that is really serious and worthy of all attention."
LORD ACTON, Letters of Lord Acton to Mary
Gladstone, Edited by Herbert Paul (Lon-
don: George Allen, 1904), p. 212.
I propose to examine the "travelling of

By proposing to examine critically what
the minds of men who sit in the seat of economists do you will note that I am also
Adam Smith," those who try to remain rejecting the familiar proposition advanced
within the "strict domain of science," and by Jacob Viner that "economics is what
to ask the following questions: What are economists do," a proposition that Frank
economists doing? What "should" they be Knight converted into full circle when he
doing? In these efforts to heed the counseladded "and economists are those who do
of Lord Acton, I proceed squarely against economics." This functional definition of
the advice of a modern economist whose our discipline begs the very question that I
opinions I regard with respect, GeorgewantStig-to raise, if not to answer here. Econo-
ler. He tells us that it is folly to become
mists should, I think, face up to their basic
concerned with methodology before the responsibility;
age they should at least try to
know their subject matter.
of sixty-five. As a value statement, Stigler's
admonition can hardly be discussed. But, Let me call your attention to a much-
as a hypothesis, it can be refuted, at neglected
least principle enunciated by Adam
by analogy with an ordinary road map. Smith.
I In Chapter II of The Wealth of Na-
remain notorious for my failure to look tions he states that the principle which gives
quickly enough at highway-route maps, rise to the division of labor, from which so
hoping always that some intuitive direc-many advantages are derived,
tional instinct will keep me along the planned
is not originally the effects of any human wisdom,
pattern of my journey. I learned many years
which foresees and intends that general opulence
ago that "optimal" behavior involves stop-
to which it gives occasion. It is the necessary,
ping soon after one gets "lost," afterthough
un- very slow and gradual, consequence of a
certain propensity in human nature which has in
certainty beyond a certain limit is reached,
view no such extensive utility; the propensity to
and consulting a properly drawn map. Thebarter, and exchange one thing for another.
truck,
analogy with scientific methodology seems
to be a close one. Unless we can, for some
Somewhat surprisingly, it seems to me, the
relevance and the significance of this "pro-
reason, accept the ever-changing activities
of economists as being always a part of the to truck, barter, and exchange" has
pensity
been overlooked in most of the exegetical
necessary evolution of the discipline through
time, as being "on the highway," ittreatments
is es- of Smith's work. But surely here
sential that we look occasionally at theis map
his answer to what economics or political
economy
or model for scientific progress that each of is all about.
us surely carries around, consciously or Economists
un- "should" concentrate their
consciously, in his head. attention on a particular form of human
213
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214 JAMES M. BUCHANAN
activity, and upon the various institutional scientific progress. You are, of course, all
arrangements that arise as a result familiarof
with the Robbins statement of the
this
form of activity. Man's behavior in the definition of the economic problem, the one
market relationship, reflecting the propen- that has found its way into almost all of
sity to truck and to barter, and the manifold our textbooks. The economic problem in-
variations in structure that this relationship volves the allocation of scarce means among
can take; these are the proper subjects for alternative or competing ends. The problem
the economist's study. In saying this, I am, is one of allocation, made necessary by the
of course, making a value statement that fact of scarcity, the necessity to choose. Only
you may or may not support. Consider this since The Nature and Significance of Eco-
paper, if you will, as an "essay in persua- nomic Science3 have economists so exclusively
sion." devoted their energies to the problems raised
The elementary and basic approach that by scarcity, broadly considered, and to the
I suggest places "the theory of markets"necessity for the making of allocative de-
and not the "theory of resource allocation"cisions.
at center stage. My plea is really for the In Robbins vision, our subject field is a
adoption of a sophisticated "catallactics," problem or set of problems, not a character-
an approach to our discipline that has been istic form of human activity. We were better
advanced earlier, much earlier, by Arch- off, methodologically speaking, in the less
bishop Whately and the Dublin School, bydefinitive Marshallian world when econo-
H. D. Macleod, by the American, Arthur mists did, in fact, study man in his ordinary
Latham Perry, by Alfred Ammon and stillbusiness of making a living. In his attempt
others.1 It is not my purpose here, and it isto remain wholly neutral as to ends, Rob-
not within my competence, to review the bins left economics "open-ended," so to
reasons for the failures of these men to con- speak. Search him as you will, and you will
vince their colleagues and their descendants. not find an explicit statement as to whose
I note only that the view that they ad- ends are alternatives. His neutrality extends
vanced, and one which has never been wholly to the point of remaining wholly silent on
absent from the main stream of thinking,2 is the identity of the choosing agent, and few
perhaps more in need of stress now than it economists seem to have bothered with the
was during the times in which they worked. difficult issue of identifying properly the
In a brief treatment it is helpful to make entity for whom the defined economic prob-
bold charges against ideas or positions taken lem exists. It is thus by quite natural or
by leading figures. In this respect I proposenormal extension that the economic problem
to take on Lord Robbins as an adversary moves from that one which is confronted by
and to state, categorically, that his all-too- the individual person to that facing the
persuasive delineation of our subject field larger family group, the business firm, the
has served to retard, rather than to advance, trade union, the trade association, the church,
the local community, the regional or state
1 For a review of this approach in terms of the
government, the national government, and,
doctrinal history, see, Israel Kirzner, The Eco-
nomic Point of View (New York: D. Van Nostrand, finally, the world.4
1960), Ch. 4. This book provides a good summary
of the various approaches to the "economic point 3 (London: Macmillan, 1932).
of view." 4 In his presidential address to the American
2 For a recent paper in which the exchange Economic Association delivered in 1949, Howard
basis for economic analysis is plainly accepted, S. Ellis criticized the arbitrariness with which
see, Kenneth E. Boulding, "Towards a Pure ends may be selected under the Robbins' defini-
Theory of Threat Systems," American Economic tion. Ellis' whole approach has much in common
Review, May 1963, pp. 424-434, especially pp. with 424- that taken in this paper. In my view, how-
426. ever, Ellis, through his overemphasis on the
WHAT SHOULD ECONOMISTS DO? 215
To illustrate the confusion that this lack a supplementary or an additional step in

of identification introduces, let me mentionour basic definitional process before we break
my most respected of all professors, Frank down the societal language into its mean-
Knight, who has taught us all to think ingfulin individual components. This amounts
terms of the five functions of "an economic to locking the barn door without being sure
system," presumably, "any economic sys- that we have ever had or will have a horse
tem." In the Knightian introduction to our inside. Somewhat more technically, this
subject we talk about the "social organiza- procedure assumes that there is meaningful
tion" that performs these five familiar content in economics for "social welfare";
"social" functions. For whom? This is the it prejudges the central issue that has been
question to which I return. Presumably, debated in theoretical welfare economics,
the answer is for the whole of the relevant and comes down squarely with the utili-
collective group, for society. To be some- tarians. This seems to be a clear case where
the basic conceptual apparatus has not yet
what more explicit, let me cite Milton Fried-
man who says, if I remember his classroom been brought into line with modern develop-
introduction correctly, "economics is ments.
the But this conceptual apparatus is
study of how a particular society solvesextremely
its important, especially when most
economic problem." practitioners are too busy to bother with
Knight and Friedman are good examples methodology. The definition of our subject
for my purposes, since both of these men, makes it all too easy to slip across the bridge
despite their own differences on many par-between personal or individual units of de-
ticulars of economic policy, are men with cision and "social" aggregates. In principle,
whom, broadly and generally, I agree onthis bridge is most difficult to cross, as most
principles of political-philosophical order.
economists fully recognize when put to it.
In their introductions to economics, both And, in one sense, my whole plea here is
of these men seem to identify "society" as summarized by saying to economists, "get
the entity that confronts the economic prob-back or stay on the side of the bridge where
lem about which we, as professional econo- you belong."
mists, should be concerned, the entity, The utilitarians tried to cross the bridge
presumably, whose ends are to count in the by summing utilities. Robbins quite properly
appropriate calculus of margins. If they told them to cease and desist. But in re-
should be explicitly questioned, I am sure maining what I have called "open ended,"
that both Knight and Friedman, and Rob- in emphasizing the universality of the alloca-
bins as well, would say that "society," as tion problem without at the same time
such, must always be conceived in terms of defining the identity of the choosing agent,
its individual members. Hence, when refer- Robbins' contribution to method has tended
ence is made to a particular society solving to promote a proliferation of the very con-
its economic problem, this is really only fusion that he had hoped to prevent. Econo-
shorthand for saying "a particular group of mists, paying heed to Robbins, now know
individuals who have organized themselves when they cross the bridge; they explicitly
socially solving their economic problem." state their own value judgments in the form
The important point is, however, that we of "social welfare functions." Once having
do, in ordinary and everyday usage, require done this, they feel free to maximize to their
own heart's content. And they do so within
"choice" aspects of economics, failed to make his the bounds of methodological propriety, a
critique of Robbins as effective as it might have la Robbins. They have, of course, abandoned
been. See, Howard S. Ellis, " The Economic
Way of Thinking," American Economic Review,
his neutrality-of-ends position, but they
March 1950, pp. 1-12. have been straightforward about this. And,
by the very fact of this neutrality, contributions

their to applied mathematics, to
explicitly stated personal version managerial science if you will, but not to
of "social"
value is as acceptable as any other. They our chosen subject field which we, for better
continue to work on an economic problem, or for worse, call "economics."
as such, and this problem appears super- Let me illustrate with reference to the
ficially to be the one that is generally re- familiar distinction, or presumed distinction,
ferred to in the definitional introduction to between an economic and a technological
our subject. These "social" economists areproblem. What is the sophomore, who has
wholly concerned with the allocation of completed his "principles," expected to
scarce resources among competing ends or reply to the question: What is the difference
uses. between an economic and a technological
I submit that theirs is not legitimate problem? He ac-might respond something like
tivity for practitioners in economics, as I "An economic problem arises
the following:
want to define the discipline. In hastening
when mutually conflicting ends are present,
to explain my heresy, I should when choices must be made among them.
emphasize
that my argument is not centeredAon technological
whether problem, by comparison, is
or not economists explicitly introduce characterized
valueby the fact that there is only
judgments into their work. Thisone end to be maximized. There is a single
important
issue is a wholly different one best from that solution." We conclude that
or optimal
which I am trying to advance here. the sophomore
I want has read the standard text-
economists to quit concerning themselves books. We then proceed to ask that he give
with allocation problems, per se, us with
practical
theexamples. He might then say:
problem, as it has been traditionally "The consumer finds that she has only $10
defined.
The vocabulary of science is important to spend in the supermarket; she confronts
here,
and as T. D. Weldon once suggested, the an economic problem in choosing among
very word "problem" in and of itself implies the many competing products that are avail-
the presence of "solution." Once the formatable for meeting diverse ends and objectives.
has been established in allocation terms, By contrast, the construction engineer has
some solution is more or less automatically $1,000,000 allotted to build a dam to certain
suggested. Our whole study becomes one of specifications. There is only one best way to
applied maximization of a relatively simpledo this; locating this way constitutes the
computational sort. Once the ends to be technological problem." Most of us would,
maximized are provided by the social wel- I suspect, be inclined to give this student
fare function, everything becomes compu- good grades for such answers until another,
tational, as my colleague, Rutledge Vining, erratic and eccentric, student on the back
has properly noted. If there is really nothing row says: "But there is really no difference."
more to economics than this, we had as well I need not continue the illustration in de-
turn it all over to the applied mathema- tail. In the context of my earlier remarks, it
ticians. This does, in fact, seem to be the seems clear that the second student has the
direction in which we are moving, profes- proper answer, and that the orthodox text-
sionally, and developments of note, or book reply is wrong. Surely any difference
notoriety, during the past two decades con- between what we normally call the economic
sist largely in improvements in what are problem and what we call the technological
essentially computing techniques, in the problem is one of degree only, of the degree
mathematics of social engineering. What I to which the function to be maximized is
am saying is that we should keep these specified in advance of the choices to be
contributions in perspective; I am urging made.
that they be recognized for what they are, In one sense, the theory of choice presents
a paradox. If the utility function of the begin in dictionaries. Should I have my say,
choosing agent is fully defined in advance, I should propose that we cease, forthwith,
choice becomes purely mechanical. No "de-to talk about "economics" or "political
cision," as such, is required; there is no economy," although the latter is the much
weighing of alternatives. On the other hand,superior term. Were it possible to wipe the
if the utility function is not wholly defined, slate clean, I should recommend that we
choice becomes real, and decisions become take up a wholly different term such as
unpredictable mental events. If I know what"catallactics," or "symbiotics." The second
I want, a computer can make all of my of these would, on balance, be preferred.
choices for me. If I do not know what I Symbiotics is defined as the study of the
want, no possible computer can derive association
my between dissimilar organisms,
utility function since it does not really and the connotation of the term is that the
exist.
But the distinction to be drawn here is association
surely is mutually beneficial to all part-
that about the knowledge of the utility ies. This conveys, more or less precisely,
function. The difference is analogous to the idea that should be central to our disci-
driving on a clear and a foggy highway. pline. It draws attention to a unique sort of
It is not that between economics and tech- relationship, that which involves the co-
nology. Neither the consumer in the super- operative association of individuals, one
market nor the construction engineer faces with another, even when individual interests
an economic problem; both face essentially are different. It concentrates on Adam
technological problems. Smith's "invisible hand," which so few non-
The theory of choice must be removedeconomists properly understand. As sug-
from its position of eminence in the econo- gested above, important elements of the
mist's thought processes. The theory of theory of choice remain in symbiotics. On
choice, of resource allocation, call it what the other hand, certain choice situations
you will, assumes no special role for the that are confronted by human beings re-
economist, as opposed to any other scientist main wholly outside the symbiotic frame of
who examines human behavior. Lest you reference. Robinson Crusoe, on his island
get overly concerned, however, let me hasten before Friday arrives, makes decisions; his is
to say that most, if not all, of what now the economic problem in the sense tradi-
passes muster in the theory of choice will tionally defined. This choice situation is not,
remain even in my ideal manual of instruc- however, an appropriate starting poinlt for
tions. I should emphasize that what I am our discipline, even at the broadest con-
suggesting is not so much a change in the ceptual level, as Whately correctly noted
basic content of what we study, but rather more than a century ago.5 Crusoe's problem
a change in the way we approach our ma- is, as I have said, essentially a computa-
terial. I want economists to modify their tional one, and all that he need do to solve
thought processes, to look at the same phe- it is to program the built-in computer that
nomena through "another window," to use he has in his mind. The uniquely symbiotic
Nietzsche's appropriate metaphor. I want aspects of behavior, of human choice, arise
them to concentrate on "exchange" rather only when Friday steps on the island, and
than on "choice." Crusoe is forced into association with an-
The very word "economics," in and of other human being. The fact of association
itself, is partially responsible for some of 5Richard Whately, Introductory Lectures on
the intellectual confusion. The "economiz- Political Economy (London: B. Fellowes, 1831),
p. 7;in
ing" process leads us to think directly the same point is made by Perry. See, Arthur
Latham Perry, Elements of Political Economy
terms of the theory of choice. I think it was
(New York: Charles Scribner & Company, 1868),
Irving Babbit who said that revolutions p. 27.
petition
requires that a wholly different, and wholly is not its lack of correspondence
new, sort of behavior take place,withthat of
observed reality; no model of predictive
"exchange," "trade," or "agreement."value exhibits this. Its flaw lies in its con-
Cru-
soe may, of course, fail to recognize version of individual choice behavior from
this
new fact. He may treat Friday simply a social-institutional
as a context to a physical-
computational one. Given the "rules of the
means to his own ends, as a part of "nature,"
so to speak. If he does so, a "fight"market,"
ensues, the perfectly competitive model
and to the victor go the spoils. Symbiotics
yields a unique "optimum" or "equilibrium,"
does not include the strategic choicesa single
thatpoint on the Paretian welfare sur-
are present in such situations of pureface.con-
But surely this is nonsensical social
flict. On the other extreme, it doesscience,
not in-and the institutionalist critics have
been
clude the choices that are involved in broadly on target in some of their
purely
attacks. Frank Knight has consistently
"integrative" systems, where the separate
individual participants desire identical re- that, in perfect competition, there
stressed
sults.6 is no competition. He is, of course, correct,
Crusoe, if he chooses to avoid purebut, and for the same reason, there is no
con-
"trade," as such.
flict, and if he realizes that Friday's interests
are likely to be different from his own, A will
market is not competitive by assump-
recognize that mutual gains can betion or by construction. A market becomes
secured
through cooperative endeavor, that is,
competitive, and competitive rules come to
be established
through exchange or trade. This mutuality of as institutions emerge to place
limits
advantage that may be secured by different on individual behavior patterns. It is
this becoming
organisms as a result of cooperative arrange- process, brought about by the
continuous
ments, be these simple or complex, is the pressure of human behavior in
exchange,
one important truth in our discipline. There that is the central part of our
is no comparable principle, and the im- if we have one, not the dry-rot of
discipline,
postulated perfection. A solution to a gen-
portant place that has been traditionally
assigned to the maximization normeral-equilibrium that is set of equations is not pre-
called the "economic principle" reflects mis- by exogenously-determined rules.
determined
guided emphasis. A general solution, if there is one, emerges
Almost at the other extreme from the as a result of a whole network of evolving
Crusoe models, the refinements in the exchanges, theo- bargains, trades, side payments,
retical model of perfectly competitive agreements, gen- contracts which, finally at some
eral equilibrium have been equally, if point, not ceases to renew itself. At each stage
more, productive of intellectual muddle. in By
this evolution towards solution, there
imposing the condition that no participant are gains to be made, there are exchanges
in the economic process can independently possible, and this being true, the direction
influence the outcome of this process, ofall
movement is modified.
"social" content is squeezed out of individual It is for these reasons that the model of
behavior in market organization. The indi- perfect competition is of such limited ex-
vidual responds to a set of externally-de- planatory value except when changes in
termined, exogenous variables, and his choice variables exogenous to the system are in-
problem again becomes purely mechanical. troduced. There is no place in the structure
The basic flaw in this model of perfect com- of the model for internal change, change
that is brought about by the men who con-
6 Boulding distinguishes threat systems, ex- tinue to be haunted by the Smithean pro-
change systems, and integrative systems of social
order. Cf. Kenneth E. Boulding, "Towards a Pure pensity. But surely the dynamic element itl
Theory of Threat Systens," op. cit. the economic system is precisely this con-
accomplish
tinual evolution of the exchange process, as their own purposes, whatever
Schumpeter recognized in his treatment of may be. And it is about these attempts
these
entrepreneurial function. that our basic theory is exclusively concerned
How should the economist conceive the if we would only recognize it as such. The
market organization? This is a central boundaries are set by the limits of such
question, and the relevance of the differ-cooperative endeavor; unilateral action is
ence in approach that I am emphasizing isnot part of the behavior pattern within our
directly shown by the two sharply conflict-purview. In this conception, there is no
ing answers. If the classical and currentlyexplicit meaning of the term "efficiency" as
renewed emphasis on the "wealth of na- applied to aggregative or composite results.
tions" remains paramount, and if the logic It is contradictory to talk of the market as
of choice or allocation constitutes the achieving "national goals," efficiently or
"problem" element, the economist inefficiently. will look
on market order as a means of accomplishing This does not imply that efficiency con-
the basic economic functions that must be siderations are wholly eliminated in the
carried out in any society. The "market" conception that I am proposing. In fact,
becomes an engineered construction, a the opposite is true. The motivation for
"mechanism," an "analogue calculating individuals to engage in trade, the source of
machine,"7 a "computational device,"8 one the propensity, is surely that of "efficiency,"
that processes information, accepts inputs, defined in the personal sense of moving from
and transforms these into outputs which it less preferred to more preferred positions,
then distributes. In this conception, the and doing so under mutually acceptable
"market," as a mechanism, is appropriately terms. An "inefficient" institution, one that
compared with "government," as an alterna- produces largely "inefficient" results, can-
tive mechanism for accomplishing similar not, by the nature of man, survive until and
tasks. The second answer to the question is unless coercion is introduced to prevent the
wholly different, although subtly so, and it emergence of alternative arrangements.
is this second conception that I am trying Let me illustrate this point and, at the
to stress in this paper. The "market" or same time, indicate the extension of the
market organization is not a means toward approach I am suggesting by referring to a
the accomplishment of anything. It is, familiar and simple example. Suppose that
instead, the institutional embodiment of the local swamp requires draining to elimi-
the voluntary exchange processes that are nate or reduce mosquito breeding. Let us
entered into by individuals in their severalpostulate that no single citizen in the com-
capacities. This is all that there is to it. munity has sufficient incentive to finance
Individuals are observed to cooperate with the full costs of this essentially indivisible
one another, to reach agreements, to trade. operation. Defined in the orthodox, narrow
The network of relationships that emergesway, the "market" fails; bilateral behavior
or evolves out of this trading process, the of buyers and sellers does not remove the
institutional framework, is called "the nuisance. "Inefficiency" presumably results.
market." It is a setting, an arena, in which This is, however, surely an overly restricted
we, as economists, as theorists (as "on- conception of market behavior. If the
lookers"), observe men attempting to market institutions, defined so narrowly,
7Paul A. Samuelson, "The Pure Theory of will not work, they will not meet individual
Public Expenditure," Review of Economics and objectives. Individual citizens will be led,
Statistics, November 1954, p. 388. because of the same propensity, to search
8 Takashi Negishi, "The Stability of a Competi-
tive Economy: A Survey Article," Econometrica, voluntarily for more inclusive trading or
October 1962, p. 639. exchange arrangements. A more complex
level,
institution may emerge to drain thethis can be brought under the frame-
swamp.
work
The task of the economist includes theofstudy
a voluntaristic exchange process.
of all such cooperative trading arrangements The contract theory of the state, and most
which become merely extensions of of
the markets
writing in that tradition, represents
as more restrictively defined. the sort of approach to human activity that
I have not got out of all the difficulties I think modern economics should be taking.9
yet, however. You may ask: WillI propose it reallyto extend the system of human
be to the interest of any single citizen to
relationships brought within the economist's
contribute to the voluntary program of
scope widely enough to include collective as
mosquito control? How is the "free rider"organization. This being so,
well as private
problem to be handled? This spectre you mayof ask,
thehow are "politics" and "eco-
"free rider," found in many shapes and nomics" to be distinguished? This is a
forms in the literature of modern public proper question, and it helps me to illustrate
finance theory, must be carefully examined.the central point of the paper in yet another
In the first place, there has been some confu- way. The distinction to be drawn between
sion between total and marginal effects economics and politics, as disciplines, lies
here. If a pretty woman strolls through the in the nature of the social relationships
hotel lobby many tired convention delegatesamong individuals that is examined in each.
may get some external benefits, but, pre- In so far as individuals exchange, trade, as
sumably, she finds it to her own advantage freely-contracting units, the predominant
to stroll, and few delegates would pay her to characteristic of their behavior is "eco-
stroll more than she already does. Neverthe- nomic." And this, of course, extends our
less, to return to the swamp, there may be range far beyond the ordinary price-money
cases where the expected benefits from nexus. In so far as individuals meet one
draining are not sufficiently high to warrant another in a relationship of superior-in-
the emergence of some voluntary coopera- ferior, leader to follower, principal to agent,
tive arrangement. And, in addition, the the predominant characteristic in their
known or predicted presence of free riders behavior is "political,"10 stemming, of
may inhibit the cooperation of individuals course, from our everyday usage of the
who would otherwise contribute. In such word "politician." Economics is the study
situations, voluntary cooperation may of the whole system of exchange relation-
never
produce an "efficient" outcome, for the ships.
in- Politics is the study of the whole
dividual members of the group. Hence, system
the of coercive or potentially coercive
"market," even in its most extended sense, relationships. In almost any particular
may be said to "fail." What recourse is social
leftinstitution, there are elements of
to the individual in this case? It is surely
both types of behavior, and it is appropriate
that of transferring, again voluntarily, thatatboth the economist and the political
scientist study such institutions. What I
least at some ultimate constitutional level,
activities of the swamp-clearing sort to the stress is the potentiality of exchange
should
community as a collective unit, with in those socio-political institutions that we
deci-
sions delegated to specifically designated
rules for making choices, and these decisions 9 In our recent book, The Calculus of Consent
coercively enforced once they are made. (Ann Arbor: University of Michigan Press, 1962),
Gordon Tullock and I develop the theory of the
Therefore, in the most general sense political
(per- constitution in the manner sketched out
haps too general for most of you to accept),here.
the approach to economics that I am ad- 10 This distinction has been developed at some
length by Gordon Tullock. See, his, Politics in
vancing extends to cover the emergence of a Bureaucracy: A General Theory of Administrative
political constitution. At the conceptual Hierarchies (to be published).
normally consider to embody primarily wholly confused about all of this. I, too,
applaud and admire the ingenuity of the
coercive or quasi-coercive elements. To the
extent that man has available to him applied mathematicians who have helped,
alternatives of action, he meets hisand are helping, choosers to solve more
associates
as, in some sense, an "equal," in other complex
words,computational problems. But I
in a trading relationship. Only in those
shall continue to insist that our "purpose,"
situations where pure rent is the soleif element
you will, is no more that of providing the
in return is the economic relationshipsocial engineer with these tools than it is
wholly
replaced by the political. of providing the monopolist with tools to
As I have noted, almost all of the institu-
make more profits, or Wicksteed's housewife
tions and relationships that economists with instructions how better to divide out
currently study will remain subject to the mashed potatoes among her children.
examination in the disciplinary frame that The
I proper role of the economist is not
propose to draw around "economics." providing the means of making "better"
The same basic data are central to the choices, and to imply this, as the resource
allocation approach and the exchange allocation-choice approach does, tends to
approach. But the interpretation of theseconfuse most of us at the very outset of our
data, and even the very questions that we training.
ask of them, will depend critically on the I want to note especially here that I am
reference system within which we operate.not, through rejecting the allocation ap-
What will the shift in reference systemproach, decrying the desirability, indeed the
produce? The most important single resultthe necessity, for mathematical competence.
will be the making of a sharp and categorical
In fact, advances in our understanding of
distinction between the discipline to whichsymbiotic relationships may well require
our theory of markets applies and that considerably more sophisticated mathe-
which we may call "social engineering," matical tools than those required in what I
for want of any better term. Note that I am have called social engineering. For example,
not here saying that social engineering is not we need to learn much more about the
legitimate endeavor. I am suggesting only theory of n-person cooperative games. It
that the implications concerning the uses ofseems but natural that the mathematics
finally required to systematize a set of
individuals as means to non-individual ends
be explicitly recognized. My criticismrelationships
of involving voluntary behavior
the orthodox approach to economics is on the part of many persons will be more
complicated than that required to solve
based, at least in part, on its failure to allow
such implications to be, appropriately made. even the most complex computational
If the economic problem is viewed as the problem where the ends are ordered in a
general means-ends problem, the socialsingle function.
engineer is a working economist in the full Although this will, of course, be chal-
sense of the term. Thus it is that we now lenged, the position that I advance is neutral
observe him developing more and more
with respect to ideological or normative
complicated schemata designed to maximize content. I am simply proposing, in various
more and more complex functions, under ways, that economists concentrate attention
more and more specifically-defined con- on the institutions, the relationships, among
straints. We applaud all of this as "scien-individuals as they participate in voluntarily
tific" advance, and consider the aids that organized activity, in trade or exchange,
we may provide to the practicing social broadly considered. People may, as in my
engineer in these respects as our "social" swamp-clearing example, decide to do things
purpose. There is, I submit, something collectively. Or they may not. The analysis,
as such, is neutral in respect to theextreme

properfor me to think that I could, through
individual
private sector-public sector mix. I am persuasion such as this, or in
concert with a few others who might agree
stating that economists should be "market
economists," but only because I think they
broadly with me on such matters, change the
should concentrate on market or exchange
drift of a whole social science. Economics, as
a well-defined
institutions, again recalling that these are subject of scholarship, seems
to be conceived in the widest possible
to sense.
be disintegrating, and for the reasons I
This need not bias or prejudice themhave
foroutlined,
or and realistic appraisal sug-
against any particular form of social order.
gests that this inexorable process will not be
Learning more about how markets workNevertheless, it is useful, or so it
stopped.
means learning more about how marketsseems to me, to stop occasionally and look
work. They may work better or worse, at the in
road map.
terms of whatever criteria that might be
I may conclude by recalling a little adage
imposed, than uninformed opinion leads
that one
Frank Ward, of the University of
to expect. Tennessee, had clipped on his office door
To an extent, of course, we must all follow
when I first met him in 1940, when I was a
along the road that is functionally deter-
very green, beginning graduate student.
mined by the behavior of our disciplinary
The adage said: "The study of economics
colleagues. The growth and development of
won't keep you out of the breadline; but at
a discipline is somewhat like language and,
least you'll know why you're there." I can
despite the fact that we may think that the
current direction of change is misleading and paraphrase this to apply to methodology:
"Concentration on methodology won't solve
productive of intellectual confusions, we
must try to continue communicating one any of the problems for you, but at least
with another. It would be naive in the you should know what the problems are."

What Should Economist Do Buchanan

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What is the author's view on what economists should focus their attention on?

What analogy does the author use to explain the need to periodically examine methodology?

What Should Economists Do?

Author(s): James M. Buchanan

VOLUME XXX January 1964 NUMBER 3

WHAT SHOULD ECONOMISTS DO?

I propose to examine the "travelling of

To illustrate the confusion that this lack a supplementary or an additional step in

by the very fact of this neutrality, contributions

as such, is neutral in respect to theextreme

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