Subjectivism and Law and Economics

James Buchanan has just published a paper that everyone should read -- "Cost, Choice and Catallaxy: An Evaluation of Two Related But Divergent Virginia Traditions," in Charles Rowley and Francesco Parisi, eds., The Origins of Law and Economics (Edward Elgar, 2005). Rowley organized a lecture series over several years which brought to GMU all the founding fathers of law and economics and the current leaders in the field.  These lectures are now published in this wonderful volume.

In his essay Buchanan seeks to explain the similarities and differences between himself and Coase with respect to the economic analysis of the law.  Coase is an opportunity cost thinker, as is Buchanan, but Coase according to Buchanan is an objectivist while Buchanan states that: "I have been, I hope consistently, almost throughout my whole career, a subjectivist, a stance that will not allow me to lay down normative criteria for courts or for anyone else."  Buchanan's position cuts at the core of the cost/benefit analysis that is crucial to standard law and economics.  As might be expected from Buchanan, he directs his subjectivist critique of cost/benefit and equilibrium analysis and argues instead for a subjectivist, process and constitutional perspective.