• A Liberty Classic Book Review of The Reason of Rules: Constitutional Political Economy, by Geoffrey Brennan and James M. Buchanan.1

Originally published in 1985, Geoffrey Brennan and James Buchanan’s The Reason of Rules extends Buchanan’s previous work, notably The Limits of Liberty2 and, with Gordon Tullock, The Calculus of Consent.3 “Constitutional political economy,” the subtitle of The Reason of Rules, is the analysis of “the workings of alternative political institutions so that choices among such institutions (or structures of rules) can be more fully informed.”

James Buchanan was awarded the 1986 Nobel Prize in economics for his work in constitutional political economy. Geoffrey Brennan, a close collaborator of Buchanan, was an economist and philosopher who taught at Virginia Tech, George Mason University, and the National Australian University among other places.

Why Constitutional Rules?

One reason for personal rules lies in the temporal dimensionality of choice. An individual may want to constrain his current choices in order to reach what he considers to be preferred situations in the future. Commitments to moral principles or other self-imposed rules act as constraints. Ulysses asked to be tied to his mast to avoid the temptation of the sirens’ songs.

Rules are even more necessary at the social level, where “social dilemmas” may lead individuals to a situation that many, if not all, individuals judge inferior to their starting point. The “prisoner’s dilemma” of game theory is a paradigmatic case of such perverse outcomes, of which the Hobbesian “war of all against all” is the ultimate example.

Adam Smith’s laws and institutions, including constitutional constraints, are the social-political equivalent of personal rules. The individuals interacting in society typically desire different things and none of them can know what collective decisions might be in the future. The individual will therefore want rules to constrain future collective choices. These include constitutional rules to bind future governments. Constitutional democracy is democracy limited by constitutional rules.

Rules are closely related to ethics. A rule defines a process that is relevant for the ethical evaluation of the resulting outcomes. In ordinary markets, for example, we can presume that two contractual parties both benefit from a voluntary exchange; otherwise, at least one would have declined the trade. The rule of voluntary trade—no coercion and no fraud—defines a process that confers normative value to the outcome.

If government is not constrained by rules, bad outcomes will occur even under democracy, the regime in which we are interested. The social discount rate generated by democratic politics will be higher than the rate of time preference used by individuals to discount the future in their private choices. In other words, an unconstrained government discounts the future too much and is biased toward the short run. For example, the money the government does not raise and spend now will likely be raised and spent by a posterior government, so current taxpayers have an interest in at least getting something in return for their inevitable future taxes; they will thus favor more expenditures now. An unconstrained democratic government will maximize its revenues and expenditures in the short run, including by borrowing or printing money.

Majoritarian democracy may end up doing what no private individual wants, even those in the majority. A numerical majority can also exploit the minority. We can expect such consequences if the individual is modeled not as an angel, but as homo economicus.

Brennan and Buchanan explain that there are good reasons to use the homo economicus model to explain behavior in politics as well as in market behavior. A symmetric methodology seems warranted as less ad hoc and more prudent. Individuals generally seek to maximize their own private interest—wealth and income, for example. But the maximand may be anything else, even the good or happiness of others (or some others), provided we understand that it is each individual who, in his own mind (there is no other way to do it), subjectively evaluates whoever’s good that he pursues.

Other reasons explain why the pursuit of self-interest in politics is a realistic assumption. If altruistically inclined individuals do not reach a critical mass, they will be incited to start behaving selfishly themselves in order to avoid exploitation by egoists. Moreover, people attracted to political activity will be those who think they can most benefit from it—not necessarily the most altruistic.

More generally, “[t]here is no necessary presumption that simply because markets are imperfect, political processes will work better.” This observation is a signature of the Public Choice school of economics, to which both Buchanan and Brennan have been major contributors.

Justice and the Social Contract

Justice is not an empty concept, but we cannot meaningfully speak about justice without reference to rules. Justice cannot be whimsical. Rules are logically prior to the concept of justice. A just outcome is what emerges when the rules have been followed.

Where do these rules come from? A fundamental component of the contractarian theory defended in The Reason of Rules is that the basic rules of human interaction must be agreed upon unanimously, by all individuals. The social contract is the set of these basic rules. Individuals would have little hope of agreeing on actual outcomes (think about agreeing on the actual distribution of income or other advantages), but they all have an interest in agreeing on the rules of the social game, the general rules that will guide social interactions among individuals each pursuing his own self-interest. They want to avoid social dilemmas detrimental to everyone. And they want rules on which everyone will agree because if some did not, they could not be counted on to follow the rules; and a rule is useless without a general expectation that it will be followed.

There is also a normative justification of unanimity. The “critical normative presupposition” of Brennan and Buchanan’s vision is that individuals are the source of all value. There is no philosopher-king entitled to define “the good” or “the public good” outside of the preferences of the several individuals. A footnote in The Reason of Rules leaves the door open to the possibility that “the good” may exist “at some deeper philosophical level,” perhaps in liberty itself. The basic point remains (so it is argued) that since all individuals are moral equals, their unanimous consent is required for the social contract.

“At the social-contract level, politics is exchange and thus closer to economics than generally believed.”

At the social-contract level, politics is exchange and thus closer to economics than generally believed. Individuals are involved in a multilateral trade to create a set of rules that will benefit them all.

The rules consented to define property rights and other individual rights, as well as creating an agency—the state—to enforce them. They are the constitutional rules. In ordinary day-to-day politics—so-called post-constitutional or “in-period” politics—rules don’t need to meet unanimous consent, provided they are adopted under the meta-rules of the social contract (or under other rules derived from the latter). The constitutional perspective clearly distinguishes the rules of the game from the outcomes of specific plays of the game.

Previous works of Buchanan and Tullock mentioned that, depending on what the parties in the social contract want, some income insurance (like a minimum guaranteed income) available to everyone may be adopted at the constitutional state. The only rule is unanimity. Note that a uniform income insurance for all is not the same as redistribution of income in favor of specific individuals or groups to be paid by others.

In a parlor game or competitive sport, “the mere fact of participation obligates each participant, as if by an explicit promise, to abide by the rules.” For Brennan and Buchanan, it is the same in a society: every participant is deemed to have given his tacit consent to the rules of the social contract “even if there is no effective option to not playing and participation is involuntary in that sense”—a rather strong contention to which I will come back.

To make sense of the problem of voluntary agreement to an implicit social contract, Brennan and Buchanan also invoke the Rawlsian “veil of ignorance.”4 The idea is that when he gives his consent to the social contract, an individual doesn’t know—or it is as if he did not know—what his social position is, which eliminates the temptation of bending the rules in his own favor. This is why all can agree on general rules. And all have a strong incentive to agree on some package of rules because a forced (or partial) agreement would not establish a moral obligation to respect the social contract.

A notable difference between the Brennan-Buchanan-Tullock social contract and the Rawls sort is that, in the former, individuals are less abstract and less ignorant of who they are than in the latter. They are merely uncertain of what will be their future position in society. The veil of ignorance becomes a “partial veil of uncertainty,” but it still “mitigates substantially” any purely distributional temptation in the choice of rules. It mitigates an individual’s desire to bend the rules toward a redistribution in his favor. But mitigating is not abolishing, and some self-interested bargaining will take place at social-contract level.

A Radically Different Theory

Brennan and Buchanan emphasize how the contractarian approach radically differs from non-contractarian views. In a contractarian perspective, politics is the search for what every individual wants. In the non-contractarian view, “the good” is something external to individuals and politics becomes a search for it, analogous to the search for truth in science. In the best case, “[t]hose who disagree with the definition of the ‘good’ are misinformed and in error.” In the worst case, the supposed “good” is imposed by a benevolent despot, democratic or not. Democracy is deemed effective at discovering the “public good,” while the contractarian defense of democracy lies in its “ability to facilitate the expression of individual values.” Politics as such has no other objective than to allow individuals to pursue each his own good as he conceives it—an idea reminiscent of Friedrich Hayek’s theory of a spontaneous order.5

The theory of justice implied by contractarian theory is very different from the standard conception of “social justice.” “Just conduct,” write Brennan and Buchanan, simply “consists of behavior that does not violate rules to which one has given prior consent.” Ultimately, “[j]ust conduct is conduct in accord with promises given.”

Brennan and Buchanan also argue that the contractarian-constitutionalist position is “almost certainly” deontological instead of consequentialist. This may look surprising, for aren’t the beneficial consequences of rules what counts for individuals? The authors make room for this objection by admitting that “[p]atterns of outcomes generated under particular processes or rules may be such as to make the processes themselves unacceptable.” Yet, they argue, these patterns of outcomes cannot be reduced to comparing the costs of certain individuals with the benefits of others, for “there is no means of evaluating any end state, because there is no external standard or scale through which end states can be ‘valued.'” In other words, as economists know, interpersonal comparisons of utility are impossible. Each individual will, at least ex ante, only accept a social contract that satisfies his own interest, that is, in which his own benefits exceed his own costs in his own evaluation.

Constitutional Revolution

Can we get there from here? Can a defective constitution be reformed so as to meet unanimous consent? The last chapter of The Reason of Rules explores the “major barriers” to modifying the “basic rules of political order.” The authors call “constitutional revolution” the modification of a constitution through the democratic process with a view to make it unanimously acceptable.

Compensation may have to be paid to those who expect to be disadvantaged by the new rules. This is much more likely to happen in the concrete case of constitutional reform than in a more abstract original social contract. Brennan and Buchanan recognize that constitutional reform may require “various compromises, side payments, compensations, bribes, exchanges, trade-offs.”

The more difficult obstacle to overcome, they believe, is that—contrary to agreeing to an original social contract—reform requires more than mere self-interest. A serious free-rider problem shows up: while everybody is to benefit from the reform (by construction), there will be no individual incentive to bring it about because every individual‘s balance of costs and benefits is unfavorable. Purely self-interested individuals will not assume the cost, in time and other resources, that is necessary to “seek out, design, argue for, and support” constitutional change. The necessary collective action will not happen.

Constitutional reform thus requires “to resort to some version of ‘general interest’ or ‘public interest'”—expressions generally proscribed by Buchanan. To help limit government while recognizing its beneficial activities, the last lines of the book argue for a sort of “civic religion,” a disquieting idea.

Some Questions About Contractarianism

The impressive contractarian theory of The Reason of Rules is not totally waterproof. A central problem, which is even more obvious in other social contract theories, remains: How can we say that all individuals in a society voluntarily give their consent to the social contract? As we have seen, Brennan and Buchanan end up claiming that every individual who plays by the established rules can be presumed to consent to them even if he has no other alternative, even if it is “the only game in town.” Another way to ask the question: How can we really say that a “general agreement” meets the benchmark of a “conceptually possible” unanimous agreement?

How does this conservative-looking constitutionalism differ from Friedrich Hayek’s presumption in favor of established traditional rules resulting mainly from social evolution? The question is especially relevant as Hayek did apparently introduce in his theory an external normative criterion revolving around individual liberty, as well as invoking Rawls and Immanuel Kant, which suggests some kinship with Brennan-Buchanan-Tullock.6 It is tempting to ask whether Hayek’s shortcut isn’t more realistic than an elaborate contractarian construction.

Buchanan’s thinking was quite obviously influenced by the American constitutional experience. It is worth nothing, however, that nothing like a unanimous social contract presided over the founding of the United States: the non-consenting loyalists had to flee the new country. Perhaps Brennan and Buchanan would have replied that this event illustrates, not hurdles in agreeing on an original and abstract social contract, but rather the problem they emphasized, as we saw above, of legally (that is, constitutionally) modifying an existing social contract. Would this reply answer the objection?

Another question is the extent to which a contractarian conception of the state can perversely serve to justify and fuel political authoritarianism. Don’t complain about oppression because you have consented to the social contract; your submission is of your own making! The social-contract ideology could disarm mistrust toward the state, a danger that Anthony de Jasay saw in any self-imposed limit on sovereign power.7

For more on these topics, see

To conclude this short review, the classical liberal contractarianism elaborated in The Reason of Rules presents a big challenge to both the anarchist, who thinks that the state cannot be beneficial to everybody, and the statist, who believes that it must be run by some enlightened elite, numerical majorities, or populist movements. Somewhere in between, Brennan and Buchanan argue, the reason for constitutional rules is that they are necessary for individuals to live in peace, harmony, and prosperity.


[1] Geoffrey Brennan and James M. Buchanan, The Reason of Rules: Constitutional Political Economy (Cambridge University Press, 1985; Liberty Fund, 2000). Also available at the Liberty Fund Book Catalog: https://www.libertyfund.org/books/the-reason-of-rules/.

[2] James M. Buchanan, The Limits of Liberty: Between Anarchy and Leviathan (University of Chicago Press, 1975; Liberty Fund, 2000). See also my review: “Lessons and Challenges in The Limits of Liberty,” Library of Economics and Liberty, November 5, 2018.

[3] James M. Buchanan and Gordon Tullock, The Calculus of Consent: Logical Foundations of Constitutional Democracy (University of Michigan, 1962; Liberty Fund, 1999). See also my review: “The State Is Us (Perhaps), But Beware of It!” Library of Economics and Liberty, January 3, 2022.

[4] See John Rawls, A Theory of Justice (Harvard University Press, 1971).

[5] See F. A. Hayek, Law, Legislation, and Liberty (1973-1978), edited by Jeremy Shearmur (University of Chicago Press, 2022).

[6] See my review of volume 2 of Friedrich Hayek’s Law, Legislation, and Liberty, “Social Justice as a Tribal Remainder.” Library of Economics and Liberty, Oct. 1, 2022.

[7] See Anthony de Jasay, The State (Basil Blackwell, 1985; Liberty Fund, 1998); and my review of this book, “An Unavoidable Theory of the State,” Library of Economics and Liberty, June 4, 2018.

*Pierre Lemieux is an economist affiliated with the Department of Management Sciences of the Université du Québec en Outaouais. He blogs on EconLog. He lives in Maine. E-mail: PL@pierrelemieux.com.

For more articles by Pierre Lemieux, see the Archive.

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