Wealth’s Political Stealth

A new biography of James Buchanan, a founder of economist’s public choice theory, suggests he was not only anti-democratic but was working with others to revoke democracy in America.

The work of economist and social philosopher James Buchanan (1919-2013) came to prominence in the mid-1980s when he was awarded the Economics Prize in honour of Alfred Nobel and when his thinking was impacting on Rogernomics (more of that next week).

So I eagerly read the just published Democracy in Chains by Duke University historian Nancy McLean which is based on Buchanan’s extensive papers. As its subtitle – The Deep History of the Radical Right’s Stealth Plan for America – implies, it turns out to be more than a biography but also an account of how private wealth has been used to influence American thinking and affect the course of American politics.

McLean starts with the 1954 US Supreme Court decision which outlawed racial segregation in schools. The elite of the state of Virginia, which had triggered the case by dumping blacks in inferior institutions, mounted rearguard actions which were to delay the effective implementation so that another generation of blacks grew up poorly educated.

Virginia had ben restricting voter registration so that a small rich white elite dominated its government. They said ‘state rights’ had been over-ruled by the Supreme Court but the principles they were seeking were not of subsidiarity – the principle that decisions should be taken at the lowest possible level – but about the rights of capital to rule untrammelled by human rights.

Buchanan is among those who place the rights of capital ahead of human rights. Freedom for property, they argue, is a better means of achieving human objectives. It is a very seductive vision if you are wealthy; much less so if you are broke. It can be very dismissive of common people. Buchanan wrote that those people who fail to foresee and save for their future needs ‘are to be treated as subordinate members of the species, akin to ... animals which are dependants.’

His first significant work was to argue for the privatisation of schools. One solution to the Virginian’s elite’s dilemma was to establish private schools which were not subject to the anti-segregation ruling. I have long been aware of the American right-libertarian’s aim to dismantle public schooling because it reflects and promotes the public values of American life I so much admire. But I had not realised that the Charter Schools, which we imitate, in part came out of racism.

Later Buchanan would publish jointly Academia in Anarchy which argued for a roll back of publicly spirited tertiary education, much like what has happened but not, I am sure he would say, far enough.

For Buchanan had a wider objective. He wanted to reduce the role of government substantially – across the board – and was closely involved in various attempts to do this, including the failed privatisation of US social security. (The attempt to prevent the introduction of Obamacare is another example, although Buchanan was too old to be deeply involved.)

Buchanan’s key work is The Calculus of Consent, published with Gordon Tullock in 1962. They show that under certain assumptions, democracy leads to poor quality outcomes. A later work, The Limits of Liberty, concluded chillingly that ‘despotism may the only organizational alternative to the political structure we observe.’

I am with Winston Churchill, among others, who said that ‘democracy is the worst form of government except for all those other forms’. Even benign despots can be oppressive – think of racial segregation in Virginia – and they are more likely to makes mistakes by being intolerant of the alternatives. (Buchanan was very intolerant of anyone who disagreed with him and stacked the institutes he ran with acolytes; his students were not particularly liberal thinkers either.)

His analysis led him to conclude that politicians could not be relied upon to deliver the outcomes he desired. (Among those who let him down were Goldwater and Reagan, each of impeccable right-wing credentials.) Instead rules which limit the democratic process have to devised. McLean says he was deeply involved in the development of Pinochet’s Chilean constitution (there is a despot for you).

Buchanan’s contributions to economics are not without value. As someone who welcomes insights from debate, I can live with them (although, as I shall explain next week, I disagree with some of their basic assumptions) while disagreeing with his political objectives. This liberal democrat tolerates diversity. What is disturbing is the political approach he took.

Throughout his life he was generously funded by private foundations and people with a right-libertarian zeal which disguises their primary concern of protecting their wealth. Again in principle I do not find this unhealthy except democracy really requires that private funding should reflect a diversity of philosophies and not be biased towards a handful. Because the poor cannot easily fund their preferred thinktanks, practically private funding screws the intellectual debate in favour of the rich.

Buchanan’s funders eventually included the billionaire Koch brothers, who fund right-libertarian causes (and sympathetic politicians) by over $US100m a year. (Dark Money by Jane Mayer is a recent exposé; the oil magnates are particularly notorious as climate-change deniers and funding compatible pseudo-scientists,) They gave the James Buchanan Centre $10m with the promise of more if it delivered.

It is said, perhaps exaggeratedly, that Trump got the Republican presidential nomination because he was the only candidate not in thrall to the Kochs and their allies. However he has populated the White House with right-libertarian ideologues, not all of whom have been dismissed. (The vice-president is a committed right-libertarian.) Their difficulty is that, even with Congress heavily funded by right-libertarian interests, the electorate is not so enthralled. When it came to Obamacare Congress buckled.

It is this unwillingness of the public to pursue policies antipathetic to the right-libertarian cause which has led the American believers into a strategy of undermining confidence in democracy – something which helped Trump. The strategy was deeply cynical – one strategist wrote they should focus on men who are more likely to think like economists than women who tend to anticipate the downside of economic liberty and so support government intervention. (Note by ‘economics’ is meant their particular ideology.)

The aim has been to capture the power by stealth, after undermining faith in good government, and introduce constitutional changes which would favour wealth and be difficult to reverse (as occurred in Chile). The effect would be to empower the rich minority against everyone else. Perhaps this could be the outcome of the Trump administration, which is testing severely the checks and balances in the US constitution.

Buchanan and Charles Koch became joint chairs of the centre. One should sup with the devil with a long spoon. Koch took over the centre turning it from an academic venture to a lobbying group. Buchanan said he was ‘pissed off’ and faded away. Koch did not attend his funeral.

Ironically then, Buchanan got trapped by the rich in exactly the same way as less ideological thinkers expect and as the general population fears. His freedom was significantly curtailed by those with more wealth than he had.

Bob Dylan said ‘money doesn’t talk; it swears.’