Individualism and Political Disorder

Individualism and Political Disorder

James M. Buchanan and Yong J. Yoon

Inspired by F.A. Hayek’s Individualism and Economic Order, this book also stands in contrast to the themes of that work, by emphasizing that collective action works differently from the way the market works. The chapters comprise papers written by James M.Buchanan, both with and without Yoon’s co-authorship, after the publication of his Collected Work volumes. These chapters reflect the authors' thoughts on politics, seen through the lens of fiscal policy and the tragedies of the commons and anti-commons in collective action. The pathologies of democratic politics rigorously analyzed in the book prove the relevance of Buchanan's constitutionalism

Chapter 2: Rationality as Prudence: Another Reason for Rules

James M. Buchanan and Yong J. Yoon

Subjects: economics and finance, economic psychology, political economy, public choice theory

Abstract

A person possesses a multidimensional capacity that may be used in different ways. This capacity is modeled analogously to “the commons,” where open access insures value dissipation. Efficiency requires constraint on access, which may be interpreted as a rule for usage. As applied to personal choice, the model suggests that rationality, defined as maximization of whatever standard of value chosen as the objective for choice, is a learned rule rather than a “natural” behavioral attribute. In other words, “maximize utility” is not an empty normative imperative, even if “utility” remains undefined. The discussion offers a means of reconciling descriptive and prescriptive models of rational choice and allows utilization of the explanatory potential of both economics and psychology. The analysis is readily extended from individual to collective choice with numerous familiar applications.

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