The Calculus of Consent was co-authored by Buchanan with Gordon Tullock, with whom Buchanan collaborated on many books and academic enterprises throughout their careers. As Robert D. Tollison states in the foreword, “[this book] is a radical departure from the way democracies conduct their business. The Calculus is already a book for the ages.”
This classic work analyzes the political organization of a free society through the lens of the economic organization of society. The authors acknowledge their unease as economists in analyzing the political organization, but they take the risk of forging into unfamiliar territory because they believe the benefits of their perspective will bear much fruit.
As the authors state, their objective in this book is “to analyze the calculus of the rational individual when he is faced with questions of constitutional choice . . . .We examine the [choice] process extensively only with reference to the problem of decision-making rules.”
The authors describe their approach as “economic individualism.” They believe that economists have explored individual choice extensively in the market sector while social scientists have largely ignored the dynamics of individual decision-making in the dynamics of forming group action in the public sector.
Written in the early 1960s, The Calculus of Consent has become a bulwark of the public choice movement for which James M. Buchanan is so justly famous.
The Costs of Decision-Making
In this chapter we shall examine more carefully the second cost relationship which was introduced in discussing individual constitutional choice. This relationship connects the expected costs of organizing decision-making itself with the proportion of the total group required for decision. This aspect of the constitutional-choice problem has perhaps been neglected to an even greater extent than that discussed in Chapter 7. Few scholars, to our knowledge, have explicitly analyzed decision-making costs. As a result, the only rational economic justification for constitutional selection of less-than-unanimity rules for collective action has tended to be overlooked, although, of course, the fundamental ideas have been implicitly recognized.
Individual and Collective Decisions
Professor Frank H. Knight has often posed the question: When should an individual rationally stop considering the pros and cons of an issue and reach a decision? This question itself suggests that purely individual decisions involve costs. For this reason the individual typically “routinizes” many day-to-day choices that he makes: that is to say, he adopts or chooses a “rule” which dictates his behavior for many single choices. This method reduces the costs of individual decision-making since it requires conscious effort, investment, only when an existing behavior rule is to be broken or modified in some way. Presumably the rational individual himself goes through a “constitutional” choice process when he chooses this basic behavior pattern, and this process can in one sense be regarded as analogous to the more complex one examined in this book. The individual may be assumed to try to extend investment in decision-making to the point where the marginal benefits no longer exceed the marginal costs.
James M. Buchanan
In 1986 James M. Buchanan (1919-2012) was awarded the Alfred Nobel Memorial Prize in Economic Sciences. Universally respected as one of the founders of the “public choice” school of economics, he is the author of numerous books and hundreds of articles in the areas of public finance, public choice, constitutional economics and economic philosophy. He is best known for such works as The Calculus of Consent, The Limits of Liberty, The Power to Tax, and The Reason of Rules. Buchanan has devoted himself to the study of the contractual and constitutional basis for the theory of economic and political decision making.
See also at Econlib: the Concise Encyclopedia of Economics entry on Buchanan