Tag Archives: Professor Ostrom

Nobel Laureates on Local Governance and the Importance of the Constitution

Last night, the Mercatus Center, among other organizations, hosted a panel discussion on James Buchanan’s contributions to social philosophy and political economy. In addition to Buchanan (the 1986 Nobel laureate in economics), there were two other economic Nobelists on the panel: Elinor Ostrom (2009 Laureate) and Amartya Sen (1998 Laureate).

Professor Ostrom’s closing remarks (at around 32:00 in the video) are particularly germane to this blog. She quoted James Buchanan and Gordon Tullock in their seminal work, The Calculus of Consent:

“Both the decentralization and size factors suggest that, when possible, collective activity should be organized in small rather than large political units. Organization in large units may be justified only by the overwhelming importance of the externality that remains after localized and decentralized collectivization.” (pp. 114-15).

Ostrom then declared:

Boy, if I could get that up on the wall of every university I visit and get it into the textbooks on public policy and urban governance, I would be thrilled. 

Then, she addressed the importance of a constitution:

But somehow, we have forgotten this core idea…A lot of people and students come in and, when asked “what is democracy,” they say, “It is voting; democracy is defined by voting for officials, not by people being engaged in constitutional decision making.” And people have lost the idea of a constitution. Some of my students come in and think “well that’s just a piece of paper written by dead, old white men at a national level.” The idea that citizens would craft their own rules and really struggle with how to get things organized at a local community as well as all the way up, has been lost.

I think that Professor Ostrom’s diagnosis is spot-on. Many—students, journalists, and especially policymakers—almost worship the notion of voting (see professor Holcomb’s From Liberty to Democracy for a nice treatment of the evolution of this idea). To them, if 50 percent + 1 favor X, then X is by definition correct.

And note that this cuts across the political spectrum. On the left, you have a lot of people who are willing to say that if a majority thinks that smoking ought to be banned—even on private property—then it ought to be banned. The right is no stranger to this notion either. A lot of conservatives are willing to say that if the majority favors banning certain bedroom activities, then those activities should be banned. And if a court steps in to overturn the ban, then it is automatically a case of judicial activism (irrespective of what the law does or does not actually say). 

In contrast, Buchanan emphasized the “external costs imposed by collective action.” These are all the burdens that can be imposed on an individual as a result of collective action. Mundane examples are regulation or taxation. But, sadly, horrific examples abound: slavery, subjugation, and racial or sexual discrimination have all been imposed by majority vote at one time or another. In other words, Buchanan took seriously the possibility that democracy might impose costs on individuals.

The founding fathers took this notion seriously too. As Madison put it, “I believe there are more instances of the abridgement of freedom of the people by gradual and silent encroachments by those in power than by violent and sudden usurpations.” And as Franklin is purported to have said (though I understand that he may not have actually said this): “Democracy is two wolves and a lamb voting on what to have for lunch.” 

If democracy can lead to bad outcomes, the solution is not monarchy or despotism. According to Buchanan and Madison, the solution is a Constitution: a document that carefully circumscribes the powers granted to the majority. Yes, the majority rules, but under a constitution, they only possess those enumerated powers that are granted to them (ideally, according to Buchanan, these powers would be granted by unanimous consent). Moreover, powers are distributed across different political units (branches) and levels (federal and state). By organizing collective action in small, dispersed political units, Buchanan argued, we can diminish the expected costs that individuals might bear.

Our particular constitution may, indeed, have been written by a bunch of old, dead white guys. But that hardly diminishes the value of a written constitution. Nor does it mean that it should become a “living, breathing, document,” as some would have it. After all, if its meaning changes with whatever gloss the majority chooses to put on it in any particular time, then what is the purpose of a written constitution anyway?