Chapter 3: Unanimous consent and constitutional economics
Buchanan (1990) describes constitutional economics as analyzing the choice of the institutional arrangements within which individuals interact. Economics has focused its attention almost exclusively on the effects of individual choices made within exogenously given constraints, but constitutional economics is based on the premise that individuals can choose collectively the institutional constraints within which they interact. That premise is, on the surface, far from obvious. Most people have little input in the design of the institutions within which they interact. A broad and positive approach to constitutional economics would look at the way those institutions actually came into existence and evolve over time. Some examples of this line of constitutional analysis are found in Holcombe (2002), North et al. (2009) and Congleton (2010), but these studies fall outside the primary subject matter of this chapter because they do not utilize the framework of unanimous consent to evaluate constitutional rules. The benchmark of unanimity gives Buchanan’s approach to constitutional economics a normative orientation. He is looking for a framework that can be used to evaluate constitutional rules and design desirable constitutional rules: rules that enable those who live under them to further their individual and collective goals. The institutions Buchanan favors are those that would be chosen by the people who live within them. This chapter offers a critical analysis of Buchanan’s research program in constitutional economics.
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