Bound by the Economic Constitution: Notes for “Law and Political Economy” in Europe

Constitutional economics examines the individual's choice-between-rules rather than their choice-within-rules. It is, according to James M. Buchanan, a restatement of the classical political economy of Adam Smith. One of its primary normative implications is the need for a fiscal constitution. Given the late eighteenth century intellectual basis for such fiscal constitutions it appears, at first glance, a little strange that the research program does not consider Edmund Burke's 1780 economic constitution worthy of consideration. The most obvious reason for Burke's exclusion from constitutional political economy is that the methodological basis of Buchanan's twentieth century constitutional economics seems almost the polar opposite of Burke's eighteenth century legislator's attempt to introduce a fiscal constitution. However, both methodologies suffer from internal inconsistency in their cases for a fiscal constitution. One of the primary reasons for this inconsistency is that each needs to appeal to ideas more at home in the methodology of the other. Buchanan adapts a quasi-Burke approach by the introduction of ethical norms not consistent with the self-interest postulate, while Burke adopts a quasi-Buchanan approach by appealing to the principle of consent to justify his reform of institutions that have been formed by custom and tradition. Ultimately, the methodological difference is not as great as it appears at first. The purpose of this paper is to demonstrate that Burke's work deserves recognition in the broader constitutional economics research program because to exclude him on the grounds of methodology is to fail to understand the logical implications of Buchanan's work.

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Market and state: the perspective of constitutional political economy

Journal of Institutional Economics ◽

10.1017/s1744137405000032 ◽

2005 ◽

Vol 1 (1) ◽

pp. 23-49 ◽

Cited By ~ 60

Author(s):

VIKTOR J. VANBERG

Keyword(s):

Political Economy ◽

Research Program ◽

Welfare Economics ◽

The Political ◽

Constitutional Political Economy ◽

Political Arena ◽

Consumer Sovereignty ◽

Voluntary Exchange ◽

Economic Constitution ◽

Rules Of The Game

The paper approaches the ‘market versus state’ issue from the perspective of constitutional political economy, a research program that has been advanced as a principal alternative to traditional welfare economics and its perspective on the relation between market and state. Constitutional political economy looks at market and state as different kinds of social arenas in which people may realize mutual gains from voluntary exchange and cooperation. The working properties of these arenas depend on their respective constitutions, i.e. the rules of the game that define the constraints under which individuals are allowed, in either arena, to pursue their interests. It is argued that ‘improving’ markets means to adopt and to maintain an economic constitution that enhances consumer sovereignty, and that ‘improvement’ in the political arena means to adopt and to maintain constitutional rules that enhance citizen sovereignty.

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