[An updated version of this biography can be found at James M. Buchanan in the 2nd edition.]
James Buchanan is the cofounder, along with Gordon Tullock, of public choice theory (see Public Choice Theory). Buchanan entered the University of Chicago's graduate economics program as a "libertarian socialist." After six weeks of taking Frank Knight's course in price theory, recalls Buchanan, he had been converted into a zealous free marketer.
Buchanan's next big conversion came while reading an article in German by Swedish economist Knut Wicksell. The obscure 1896 article's message was that only taxes and government spending that are unanimously approved can be justified. That way, argued Wicksell, taxes used to pay for programs would have to be taken from those who benefited from those programs. Wicksell's idea contradicted the mainstream forties' view, still the mainstream view, that there need be no connection between what a taxpayer pays and what he receives in benefits. But Buchanan found it persuasive. He translated the essay into English and started thinking more along Wicksell's lines.
One of the products of his thinking was a book, coauthored with Gordon Tullock, titled The Calculus of Consent. They showed that the unanimity requirement is unworkable in practice. They then considered modifications to the rule, what they called "workable unanimity." Their book, along with Anthony Downs's An Economic Theory of Democracy, helped start the field of public choice and is now considered a classic. Together, Buchanan and Tullock also started the academic journal Public Choice.
Perhaps Buchanan's most important contribution to economics is his distinction between two levels of public choice—the initial level at which a constitution is chosen, and the postconstitutional level. The first is like setting rules of a game, and the second is like playing the game within the rules. Buchanan has proselytized his fellow economists to think more about the first level instead of mucking about as political players at the second level. To spread this way of thinking, Buchanan has even started a new journal called Constitutional Economics.
Buchanan also believes that because costs are subjective, much of welfare economics—cost-benefit analysis, and so on—is wrongheaded. He spells out these views in detail in Cost and Choice, an uncommonly impassioned economics book. Yet Buchanan has not persuaded most of his economist colleagues on this issue.
Buchanan was awarded the 1986 Nobel Prize in economics for "his development of the contractual and constitutional bases for the theory of economic and political decision making." Buchanan is a southerner and proud of his heritage. He was born in Murfreeboro, Tennessee, and has spent most of his academic life in Virginia, first at the University of Virginia, then at Virginia Polytechnic Institute and State University, and most recently, at George Mason University. In 1969 Buchanan became the first director of the Center for the Study of Public Choice. He was president of the Southern Economic Association in 1963 and of the Western Economic Association in 1983 and 1984, and vice president of the American Economic Association in 1971.
(With Gordon Tullock.) The Calculus of Consent: Logical Foundations of Constitutional Democracy. 1962.
Cost and Choice. 1969.
Freedom in Constitutional Contract. 1977.
(With Robert P. Tollison.) The Limits of Liberty. 1975.
(With Geoffrey Brennan.) The Power to Tax. 1980.