James (“Jim”) McGill Buchanan (1919-2013), surely seemed an unlikely prospect for winning a Nobel Prize in Economics when he was born in rural Tennessee on October 3rd.

Many of the works on Buchanan’s extensive list of publications stemmed from a single insight from early in his career: because neither the state nor society is a singular and sentient creature, a great deal of analytical and policy confusion is spawned by treating them as such. Collections of individuals cannot be fused or aggregated together into a super-individual about whom economists and political philosophers can usefully theorize in the same ways that they theorize about actual flesh-and-blood individuals.

Aggregative thinking lumps together a great many individuals into large categories such as “the nation” or “the government” and then treats each of these categories as if it is a unitary thinking, choosing, and acting individual. Under this approach, “the social welfare” is promoted by “the government,” with the latter treated as if it’s an organism possessing a brain, and as if that brain’s main interest lies not in serving itself but, rather, in serving the nation. Overlooked are the processes—all churning with assorted incentives and constraints—that lead individuals with diverse interests to undertake actions such as forming governments, becoming government officials, and dealing with government both as citizens who receive benefits from it and who incur costs to sustain it and to affect its activities.

From the very start, nearly all of Buchanan’s lifetime work was devoted to replacing this approach with the individualistic one—a way of doing economics and political science that insists that choices are made, and costs and benefits are experienced, only by individuals.

Randall G. Holcombe

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