Cafe Hayek: Buchanan accurate and concise summary.

MD: This is more of the Saint Buchanan worship coming from Cafe Hayek and Don Boudreaux. When you know what money really is, the quote and the comment are silly on their face.

…. is from page 465 of my late colleague Jim Buchanan‘s 1986 Nobel Prize lecture, “The Constitution of Economic Policy,” as it is reprinted in volume 1 of The Collected Works of James M. Buchanan: The Logical Foundations of Constitutional Liberty:

But the political economist may, cautiously, suggest changes in procedures, in rules, that may come to command general assent.  Any suggested change must be offered only in the provisional sense, and, importantly, it must be accompanied by a responsible recognition of political reality.  Those rules and rules changes worthy of consideration are those that are predicted to be workable within the politics inhabited by ordinary men and women, and not those that are appropriate only for idealized, omniscient, and benevolent beings.  Policy options must remain within the realm of the feasible, and the interests of political agents must be recognized as constraints on the possible.

MD: First: As is typical, this is a wordy Mises Monk assertion. Four sentences … 125 words … 26 words per sentence. Let’s examine each of them.

(1) But the political economist may, cautiously, suggest changes in procedures, in rules, that may come to command general assent.

“Political economist”? If you know what money is, you know it is “not” political in any way. “Changes in procedures, in rules”. If you know what money is you know there is only one rule: The money a trader creates he must return and destroy … or it must be immediately reclaimed by interest collection of like amount. “May come to command general assent”. This isn’t something you vote on. It’s how a “proper” MOE process works.

 (2) Any suggested change must be offered only in the provisional sense, and, importantly, it must be accompanied by a responsible recognition of political reality.

A proper MOE process is not open to suggestions or manipulation. In practice, the certification of traders promises would be federated. Each entity with the franchise is bound to (a) authenticate all traders he certifies; (b) make all transactions transparent to all; (c) immediately mitigate all defaults he incurs with interest collections of like amount. That’s it. Other than that, he can run the franchise any way he pleases. If his franchise fails, it must be assumed by the remaining franchises … along with the interest collection deficit that causes the failure. An interest collection deficit is the only thing that can cause a failure and the process detects it immediately. If it is present, that is  counterfeiting. Counterfeiting isn’t tolerated, even for an instant. And again, politics plays no role in the proper MOE process at all.

(3)Those rules and rules changes worthy of consideration are those that are predicted to be workable within the politics inhabited by ordinary men and women, and not those that are appropriate only for idealized, omniscient, and benevolent beings.

See how a proper MOE process simplifies things? Since the process is immune to all political influences, it has no provisions for adapting to them … and has no need for such provisions. It has no need for idealizing (it is ideal). It has no need for being omniscient (it is instantaneously responsive to defaults and anticipates them actuarially and conservatively). It knows there is no such thing as altruism and doesn’t have any way of being altruistic (i.e. benevolent). Some flawed alternate moneys (e.g. Ithaca Hours and Baltimore Green) do try to be altruistic … they think they have a social (political) role to play. They are wrong. They could not compete with a “proper” MOE process.

 (4) Policy options must remain within the realm of the feasible, and the interests of political agents must be recognized as constraints on the possible.

There are no policy options with a proper MOE process. It is a process that enables traders to make simple barter exchanges over time and space. There are no political agents nor constraints. Reliable traders pay zero interest to make time and space spanning trades. Deadbeat traders pay interest commensurate with their propensity to default. That’s it! There is “no monetary policy” involved … or even possible. That is its beauty. That is what makes it the ultimate MOE process.

DBx: These four sentences are about as accurate and concise a summary as is available of the politics of Jim Buchanan.

MD: The Mises Monk saint worship continues.