History of Economic Thought. Public Choice Theory (PCT) by James M. Buchanan (Highlights)

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History of Economic Thought. Public Choice Theory (PCT) by James M. Buchanan (Highlights)

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88. PUBLIC CHOICE THEORY (CTO) by JAMES M. BUCHANAN

James M. Buchanan (b. 1919) - American economist neo-institutionalism. He received international recognition for his research in areas that traditionally belonged to political science, but thanks to him have now become closely linked to economic sciences. Thus, in the TOV he developed, the behavior of individuals (private persons) in the political sphere, i.e., their political roles (voters, lobbyists, members of political parties, government officials, etc.), is associated with results that are manifested in their economic roles ( buyers and sellers, businesses and workers).

The purpose of his analysis was a study not of the concepts of "nation", "state", "party", but the ability of these individuals to make various decisions leading to their common economic benefit and at the same time affecting the political image of the whole society, including the image of the "nation", " states", etc.

WHO IN Buchanan went through the study of a range of problems, to one degree or another related to government functions in the field of economic policy. Even in early work "Prices, income and public policy", "Public principles of public debt" And other Buchanan showed that over the past 150 years of American history, the balance of government revenues and expenditures has been reduced to a negative balance, mainly during periods of wars and economic crises. In the first case, this was caused by an increase in military appropriations, and in the second, by a short-term decrease in tax revenues to the state treasury. In peacetime and favorable economic conditions, the budget balance turned out, as a rule, to be positive, and the surplus of financial resources was used to pay off the state debt.

Buchanan analyzed the question of How can you survive with a huge national debt?, directing surplus financial resources from tax revenues not to repay the debt, but to the development of various social programs, increasing government spending on social budget items that meet the political interests of various types of activities for the sake of new elections.

In his TOV researched:

1) how competition between politicians for votes leads to increased government intervention in the economy;

2) how through state programs there is a redistribution of income from the poorest and richest strata of the population to the middle classes;

3) how small but closely knit political groups can win over a broad but amorphous majority.

On Buchanan, public choice can be compared to the choices people make in any game. First they choose the rules of the game, then they determine the strategy of the game within these rules. Everyday political action is the outcome of the game, striving for an "optimal level" within constitutional rules. And just as the rules of the game determine its probable outcome, constitutional rules establish the results of policy, political action, or make it difficult to achieve them.

Author: Tatarnikov E.A.

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