The Calculus of Consent

The Calculus of Consent: Logical Foundations of Constitutional Democracy is a book published by economists James M. Buchanan and Gordon Tullock in 1962. It is considered to be one of the classic works from the discipline of public choice in economics and political science. This work presents the basic principles of public choice theory.

Overview

The analytical approach of the authors is based on methodological individualism - collective action is composed of individual actions and on the rejection of any organic interpretation of the state.[1] A purely individualistic conception of collectivity is maintained: the state is an artifact, created by men and thus subject to change and perfection. Buchanan and Tullock maintain that only constitutional changes, which can be shown to be in the interest of all interested parties can be judged as "improvements" and therefore consider conceptual unanimity as the only legitimate decision-making rule.

The authors analyze the traditional political science approach to voting systems, including majority voting as the standard as opposed to the unanimity rule. They show that none of those systems is perfect, since there is always a tradeoff:

• a simple majority-based system imposes varying amounts of both external costs and decision-making costs
• a unanimity-based system has little or no external costs, but considerable decision-making costs.

They conclude that decisions with potentially high external costs should require unanimity or at least supermajority systems.

While many political scientists define the political process as a system in which the policy decisions are viewed as a private interest vs. public interest struggle, Buchanan and Tullock suggest that the public interest is simply the aggregation of private decision makers.

They show that in classical political science theory, the "public interest" is always the correct choice with the same appeal to all voters, which may or may not be opposed by "special interests". But that theory ignores the fact that most choices appeal to many different "law consumers" with varying strengths. An illustrative example is a choice whether to increase funding for health care. Some voters will strongly support or oppose it, but many may not care at all.

They compare this to a market transaction, where the voters strongly desiring better health care could purchase the acceptance of the opposition and uninterested voters with concessions, resulting in an efficient allocation of resources, increasing the happiness of all parties (Pareto optimality). However the equivalent of this in the political realm is that politicians buy the votes of other politicians (or groups of special interest) by promising to vote for their issues. In the authors' opinion such log-rolling is to be expected, but in the traditional political science theory, it is anomalous. Thus their model explains certain things that the previous models of politics could not.

Employing the theoretical concepts of game theory and Pareto optimality, Buchanan and Tullock show that symmetry in benefits sharing may be at most a necessary, but never a sufficient condition for the attainment of a Pareto optimal position. The introduction of side payments is the crucial element, which would lead to optimality. In a sense the introduction of side payments creates marketable property rights of the individual political vote (Chapter 12).[2]

Table of contents

Part I. The Conceptual Framework

• 1. Introduction
• 2. The Individualistic Postulate
• 3. Politics and the Economic Nexus
• 4. Individual Rationality in Social Choice

Part II. The Realm of Social Choice

• 5. The Organization of Human Activity
• 6. A Generalized Economic Theory of Constitutions
• 7. The Rule of Unanimity
• 8. The Costs of Decision-Making

Part III. Analyses of Decision-Making Rules

• 9. The Structure of the Models
• 10. Simple Majority Voting
• 11. Simple Majority Voting and the Theory of Games
• 12. Majority Rule, Game Theory, and Pareto Optimality
• 13. Pareto Optimality, External Costs, and Income Redistribution
• 14. The Range and Extent of Collective action
• 15. Qualified Majority Voting Rules, Representation, and the Interdependence of Constitutional Variables
• 16. The Bicameral Legislature
• 17. The Orthodox Model of Majority Rule

Part IV. The Economics and the Ethics of Democracy

• 18. Democratic Ethics and Economic Efficiency
• 19. Pressure groups, Special interests, and the Constitution
• 20. The Politics of the Good Society
• Appendix 1 Marginal Notes on Reading Political Philosophy
• Appendix 2 Theoretical Forerunners

References

1. Ludwig, Van den Hauwe (1999). "Public Choice, Constitutional Political Economy and Law and Economics". Encyclopedia of Law and Economics.
2. Buchanan, James M., Tullock, Gordon (1962). The Calculus of Consent: Logical Foundations of Constitutional Democracy.

Further reading

• Kenneth Arrow, Social Choice and Individual Values (1963), p. 120 (source for Arrow's defense of transitivity over unanimity).