BUCHANAN’S NEOLIBERALISM VS. RAWLS’S CLASSICAL LIBERALISM

Comparing John Rawls’s Theory of Justice with James Buchanan’s Limits of Liberty illuminates this significant shift in explaining the nature and emergence of civil society.^[439] Even though Rawls wrote his Theory of Justice to be wholly consistent with the underlying premises of rational choice theory, he split with the rational choice community in 1985 over the reasonableness of “fair play.” In game theory, it is rational for each individual to cheat whenever the calcul­able consequences are superior to the costs of compliance.^[440] The standard game theoretic position holds that the concept of fair play, or upholding a set of behavioral standards to which one personally consented, defies weighing into a instrumental decision-theoretic calculation because it represents a means and not an end state.

The means by which law may be said to be conditioned by “right,” and not solely by “might,” has been a central problem of Western political philosophy at least since Hobbes’s Leviathan, which Buchanan takes to imply “the subjugation of individual men to a sovereign master, with the latter empow­ered to enforce ‘law’ as he sees fit.”^[444] Neoliberalism, in the form advocated by Buchanan, reaches a new adjudication of the problem of social order.

Buchanan acknowledges that he and Rawls share their concerns with this predicament and that although their analyses are similar, each reaches a differ­ent conclusion about the rationale underlying governance.^[446] Buchanan believes that the social anarchy of the American 1960s and 1970s was a function of the lack of will to circumscribe citizens’ rights through punishment. On the other hand, Rawls concludes that “enforcement may not be possible unless the prevail­ing distribution meets norms of justice... notably those summarized in the difference principle.”^[447] For Rawls, individuals’ compliance to social law is not maintained by force, but rather through hypothetical consent to the terms of government, which in his estimation include consideration for society’s least well off members. This hypothetical consent, which serves to acknowledge that most of us do not actually agree to the rules that govern us, must at least be conceivable in principle for one’s government to have a degree of legitimacy, and thus a display of “right” over mere “might.” In the rational choice world, there is no test to differentiate between valid and invalid law because individuals will seek to break the law when it serves their private interest in any and all cases.

This assumption, that all citizens, regardless of their socioeconomic stand­ing, will break the law, eradicates the distinction between wealth generation and distribution, the hallmark of classical liberal theory that correlates to the definition of the perfect duty not to harm others versus the imperfect duties of benevolence and charity.^[448] Classic liberals view legitimate law to be self-recruit­ing because it serves the interests of its members who prefer to live in a peaceful market society rather than in anarchy; they have the burden to show that even members of society without private property will benefit from the status quo property rights system. Even though classical liberals are loath to suggest that individuals without means may need to steal to survive, Locke’s proviso that enough be left in common for those lacking subsistence opens the possibility that under extreme circumstances self-appropriation may be consistent with self-preservation.^[449] Thus, classical liberals recognized that a system of property rights will especially protect the possessions of the well-endowed from those significantly less materially well off and yet gave a slight nod in the direction of recognizing that theft motivated by dire straits is not equivalent to breach of law prompted by avarice.

By contrast, neoliberalism conflates two recognizable forms of criminality: that of those who are excluded from the fruits of the social contract and that of those who already benefit but are preying on the social contract for further enrichment. Consider the difference between Bernard Madoff and a homeless person who shoplifts out of hunger. In the first case, an individual cheats despite the rule of law required to produce fruit in the first place; in the second case, an individual cheats because there is insufficient fruit to be gained by upholding the rule of law. Early modern political philosophers were keen to draw this distinc­tion.

The Prisoner’s Dilemma model of bargaining and the social contract capture this central paradox of neoliberalism: if free trade is obviously in each indivi­dual’s interest, then why the need for paramilitary police, enforcement, and sanctions?^[451] If a system is so obviously in each person’s interest, it should be sufficiently self-enforcing so as not to require microscopic and forceful policing. The paradox arises from the tendency in orthodox game theory to deny the motivational relevance of obligation, commitment, or deontological constraints because they transcend instrumental gain. People are thought to be primarily motivated by tangible rewards reducible to, if not already presented in, mone­tary terms.^[452] These assumptions, which Buchanan and Nash adopt, make it impossible to differentiate between voluntary exchange and extortion because all individuals are presumed to seek asymmetric, unilateral if possible, advan­tage unless held in check by punitive threats.

Even in the hypothetical case in which one (1) is satisfied with one’s original holdings, (2) believes there are no relevant inequalities of bargaining power, and (3) agrees that the terms of the transaction at hand are fair, everyone’s first choice is still presumed to be that of suckering the other and stealing all the goods, unless there are prohibitive sanctions. Every bargain necessarily has a PD structure because each agent most prefers to leave the table with all of the goods, and only goes through with the terms of the exchange if a causal process ensures a quid pro quo structure to the transaction or the imposition of penalties for the failure to comply with terms agreed to.

In Limits of Liberty, the Prisoner’s Dilemma analysis of social order grows in mythopoeic proportions. In developing his Hobbesian-like narrative, Buchanan deviates from Hobbes and other Enlightenment-era thinkers in holding that humans are naturally unequal and that a status quo inegalitarian distribution will result even prior to the establishment of civil society because some are more capable, talented, and stronger than others.^[455] Notwithstanding such observable disparities, trade occurs, supposedly under the traditional economic logic of Pareto optimality: everyone will benefit, regardless of the initial endowment of goods. Buchanan explains, “The gains from trade that are potentially achiev­able by an agreement on rights are realized by all parties through the disinvest­ment in socially wasteful effort devoted to both predatory and defense activity. An agreed-on assignment will not normally be stable in one particular sense.”^[456] Despite the self-evident quality of exchange to achieve mutual gain, “once reached, one or all parties may find it advantageous to renege on or to violate the terms of contract.”^[457] According to Buchanan, even though it is obvious that mutual cooperation is superior, each agent still has the ever-present incentive to rob the other.

Within the setting of an agreed-on assignment of rights, the participants in social interaction find themselves in a genuine dilemma, familiarized under the “prisoners’ dilemma” rubric in modern game theory. All persons will find their utility increased if all abide by the “law,” as established. But for each person, there will be an advantage in breaking the law, in failing to respect the behavioral limits laid down in the contact.^[458]

To make headway with Buchanan’s formulation of the problem of social order, one must be fully aware of the differences between his analysis and Hobbes’s. Recall that for Hobbes, specific rights are a product of government. For Buchanan, as for libertarian philosopher Robert Nozick, rights are prior to civil society, and they therefore provide the point of origin for a “naturally just” initial distribution.^[459] The role of the state is only to objectively referee transac­tions as a matter of protection, and not to adjudicate matters of distribution.^[460]

Although this analysis sounds uncannily similar to classic political economy with its night watchman state, it departs from classic political economy in its inability to locate a normative pole external to the central logic of strategic self­interest. It is true that both Adam Smith and Immanuel Kant advocated a minimal security state. However, for both these philosophers, justice constrained rational self-interest through internalized principles of conscience that recognize that respect for others is foundational for civil society as is upholding the rule of law and maintaining agreements personally made. For Smith, the basis of justice resides in non-utilitarian sympathy; for Kant, it resides in transcendental practical reason.^[461] Even the libertarian Nozick presumes deontological side-constraints with self-evident validity to structure his classical liberal political economy.^[462] Buchanan himself acknowledges that the basic premises on which public choice theory is built make it impossible to locate any source of normativity for so basic a concept as mutual respect, or for treating individuals as ends and not solely as means.^[463] From the perspective of rational choice, the suggestion that individuals could be motivated by a sense of duty, mutual forbearance, or commitment to promises made is naive.^[464] Buchanan is clear that his political philosophy embraces a community of devils and does not optimistically assert or require a community of angels or expect even any well-intentioned individuals for that matter.^[465]