Page 41 - Global Political Economy_Understanding The International Economic Order

CHA PTER T WO
cost, and opportunities are themselves universally applicable and can
be used effectively to explain both individual behavior and social out-
7
comes. As we shall note many times in this book, the belief that there
is only one universal social science, namely economics, is a powerful
dogma embraced by many, if not most, economists.
At least three different schools of economists employ an economic
approach to human behavior: neoclassical institutionalism, the pub-
lic-choice school, and what is sometimes called the “new political
economy.” Neoclassical institutionalism attempts to explain the ori-
gin, evolution, and functioning of all types of institutions (social, po-
litical, economic) as the result of the maximizing behavior of rational
individuals. The public-choice school is also interested in applying the
methods of formal economics to analysis of political behavior and
8
institutions, especially to the political organization of free men. The
new political economy is interested primarily in the political determi-
nants of economic policy. Although I shall make only occasional ref-
erences to these schools of political economists, their insights have
influenced the argument of this book.
The public-choice approach is most closely associated with Nobel
9
Laureate James Buchanan and his co-author, Gordon Tullock. Using
the framework of conventional economics, Buchanan and Tullock in
their highly influential The Calculus of Consent (1962) promoted the
10
important subfield of public choice. For most economists in the pub-
lic-choice school, the subject matter is the same as that of political
science; they believe that they are applying superior methods of eco-
nomic science to political affairs. 11 What defines the public-choice
school more than anything else, however, is its political coloration.
With certain important exceptions, such as Nobel Laureates Kenneth
Arrow and Paul Samuelson, both of whom have made important con-
tributions to the subject of public choice, this school of political econ-

7
Jack Hirshleifer, “The Expanding Domain of Economics,” American Economic Re-
view 75, no. 6 (December 1995): 53.
8
Wright, “Competing Conceptions of Political Economy,” 71.
9
A useful overview of the public-choice literature is Dennis C. Mueller, The Public
Choice Approach to Politics (London: Edward Elgar, 1993).
10
James M. Buchanan and Gordon Tullock, The Calculus of Consent (Ann Arbor:
University of Michigan Press, 1962). The relevance of the public-choice approach to
the international economy is set forth in Thomas D. Willett, The Public Choice Ap-
proach to International Economic Relations (Charlottesville: University of Virginia,
Center for Study of Public Choice, 1996).
11
The term “positive political economy” is frequently applied to this position. An
example is James E. Alt and Kenneth A. Shepsle, Perspectives on Positive Political
Economy (New York: Cambridge University Press, 1990).
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