by Shruti Rajagopalan*
James M Buchanan, who died last week at age 93, was one of the most profound thinkers of our age. Few Indians would be familiar with his academic contributions or even recognize his name. Yet, the insights from his research would strike a chord with every Indian navigating the inefficiencies and excesses of government on a daily basis.
Buchanan, professor emeritus at George Mason University in Fairfax, Virginia, won the Nobel Prize in Economic Sciences in 1986 for his contributions to the economic analysis of political decision-making. By bringing politics back into economics, Buchanan made economics more humane, realistic, interesting, and relevant. He challenged the economics orthodoxy, dared to be different, inspired his students and colleagues, and developed one of the most unique and creative research programs in economics at the Center for the Study of Public Choice at George Mason University.
‘Politics without Romance’, his 1997 article, summarizes one avenue of research from a career spanning over six decades. Buchanan, with his colleague Gordon Tullock, developed the field of public choice by applying economic reasoning to political processes. Buchanan assumed that politicians and bureaucrats act in their own interest and respond to incentives. While this is recognized in our daily lives, economists and policy makers focusing on market failure overlook this insight and advocate government intervention by assuming that political actors will take the optimal action.
Corruption scandals like the 2G and Adarsh Society scam, election manifestos promising freebies from rice to laptops to voters, and the dismal state of public goods and services in India become clear by applying Buchanan’s insights. By eliminating romantic assumptions about the public spirit of political actors, he shed light on how governments operate, and explained why the political process of allocation often intensifies the problems of instead of solving it.
The current disillusionment of the common man with the inefficient and corrupt government in India has prompted many to take to the streets and protest. Yet citizens demand that better and honest politicians and bureaucrats solve the problems created by self-interested political actors. Buchanan’s work however informs that the solution is not hidden in intentions, but in institutional incentives. His analysis is firmly rooted in a more realistic understanding of human nature. Instead of appealing to the goodness and public spirit of politicians and bureaucrats, Buchanan argued for limiting or constraining those holding public office.
To find a way to constrain individuals in public office, Buchanan shifted the analysis from everyday politics to the constitutional level. Buchanan sought different arrangements of constitutional rules that would constrain individuals and minimise opportunistic behavior in everyday politics. This construction of constitutional political economy is best summarized in his 1985 book titled ‘The Reason of Rules’, written with Geoffrey Brennen.
Understanding Buchanan’s constitutional analysis sheds light on the current state of Indian politics. Indians frequently experience a sense of déjà vu in dealing with the government; where the headlines in newspapers change, but the scandal always relates to the corruption, inefficiency, and excess of the government. To escape the problems of everyday politics in India, Buchanan’s work on constitutional rules must be center stage while revisiting the Indian Constitution.
The Indian Constitution has been amended 97 times by the Indian Parliament to relieve itself of constraints. The Constitution has been amended to transfer wealth and privilege to powerful interest groups; infringe on the freedom of speech, association, and trade; and to profit individuals in public office. In India’s darkest moment, Indira Gandhi amended the Constitution to protect her office as Prime Minister; and legitimize the excesses of her government during Emergency. Indian academics would do well in following Buchanan’s lead to rethink constitutional arrangements that would effectively constrain the Indian state.
While Buchanan’s work in public choice may invoke cynicism with politics, it does not leave us without any hope. In his 1965 article titled ‘An Economic Theory of Clubs’, Buchanan explains how private arrangements, or clubs, supply excludable public goods at optimum levels. This lesson is perhaps the most important in the Indian context where goods like potable water, waste disposal, law and order, traditionally poorly provisioned by the state, are now privately available. If government failure is rampant, perhaps the time is ripe for Indians to seek alternative private arrangements to solve public problems.
It is impossible to summarize Buchanan’s extraordinary career spanning 65 years in a few hundred words. John Meadowcroft comes close in his 176-page book published by Continuum, titled “James M Buchanan,” discussing his intellectual biography, ideas, influence, and relevance. To further understand Buchanan, his own words might be even better, as his scholarship remains one of the most thoughtful and accessible writings in economics.
A slightly different version of this article appeared in The Indian Express.
*Ms. Rajagopalan is a doctoral student in economics at George Mason University and a visiting doctoral student at New York University. Her dissertation is an economic analysis of Amendments to the Indian Constitution.