Quotation of the Day…

(Don Boudreaux)

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… is from page 235 of my late Nobel-laureate colleague Jim Buchanan’s 1985 paper “Political Economy and Social Philosophy,” as this paper is reprinted in Moral Science and Moral Order (2001), Vol. 17 of The Collected Works of James M. Buchanan:

We now know that neither market nor political institutions match up to the performance of their conceptually idealized models, a simple truth of course, but one that social scientists and philosophers have so often failed to recognize.

DBx: Indeed, of course, a simple truth. Yet the real-world fate of this simple truth is anything but simple.

Recognition of the imperfections of market institutions is far more common than is recognition of the imperfections of political institutions. Among the vast majority of economists, the attitude has long been – and remains – this one: identifying the many ways that real-world markets differ from ideal, textbook markets is central to the economist’s scientific mission, while identifying corresponding imperfections in real-world political institutions is ideologically driven and, hence, unscientific.

The economist who writes a paper showing, for example, that real-world labor markets are not as “perfect” as are labor markets in a perfectly competitive hypothetical world is hailed as a disinterested scientist; the economist who writes a paper showing various reasons why government officials charged with “correcting” the corresponding labor-market failures are likely to make matters even worse is scorned as a ideologue.

Likewise, the economist who writes a paper identifying far-fetched theoretical conditions under which a tariff imposed just-so will increase some measure of national welfare is applauded for his scientific chops, while the economist who writes a paper identifying realistic theoretical conditions that prevent government officials from possessing the knowledge and the incentives to use tariff-imposing powers in any such productive way is dismissed because of her alleged unscientific turn of mind.

Exceptions, of course, exist to the general pattern that I here describe, but the general pattern holds.

There is absolutely no justification for this difference in the treatment of political from market institutions. It is unscientific.