Economists' Interest in Collective Decision After World War II: A History

Abstract

This paper tracks economists’ rising, yet elusive and unstable interest incollective decision mechanism after World War II. We replace theirexamination of voting procedures and social welfare functions in the 1940sand 1950s in the context of their growing involvement with policy-making.Confronted with natural scientists’ and McCathythes’ accusations ofideological bias, positive studies emphasizing that collective decisionsmechanisms were unstable and inefficient, and normative impossibilities,economists largely relied on the idea the policy ends they worked withreflected a “social consensus.” As the latter crumbled in the 1960s,growing disagreement erupted on how to identify and aggregate thoseindividual values which economists believed should guide applied work, inparticular in cost-benefit analysis. The 1970s and 1980s brought newapproaches to collective decision: Arrow’s impossibility was solved byexpanding the informational basis, it was showed that true preferencescould be revealed by making decision costly, and experimentalists andmarket designers enabled these mechanisms to be tested in the lab beforebeing sold to those public bodies looking for decision procedures thatemulated markets. In this new regime, the focus paradoxically shifted tocoordination, revelation and efficiency, and those economists studyingcollective decision processes were marginalized.

From ‘What Is New Political Economy’ to ‘Why Is Everything New Political Economy?’

“…There are other reasons for this separation: Mueller (2015, p. 386) lamented that researchers avoided the term "public choice" due to political correctness, because its founders were often associated with the libertarian ideology. The editors of the Journal of Economic Literature refused to adopt the name "public choice" fearing an association with Tullock and Buchanan's ideology (Cherrier, Fleury, 2017). Gamble (1995, p. 530), on the other hand, wrote that "the liberation of public choice from a laissez-faire straitjacket has important implications for political economy, since rational choice techniques can supply the microfoundations which many schools of political economy have lacked in the past."…”

“…Public choice and related areas were seen by other economists, however, as a subfield of microeconomics. The issues that arose when assigning a JEL code for what we know today as code D7 for "Collective Decision-Making" are reported by Cherrier (2017) and Cherrier and Fleury (2017). D7 is a subfield of code D, for "Microeconomics", even though it encompasses macroeconomic analysis of the Tabellini-Alesina type, for example.…”

James Buchanan, Gordon Tullock, and the “Radically Irresponsible” One Person, One Vote Decisions

“…Tennessee and Virginia were defendants in the 1962 and 1964 reapportionment cases, respectively, and both of their legislatures were reshaped by the Court's decisions. 6 Buchanan and Tullock's analysis of reapportionment can also be thought of as a case of economists' postwar interest in collective decision-making (Cherrier and Fleury, 2017) and an early application of constitutional economics to practical policy issues, like Buchanan's application of constitutional economics to education (Fleury and Marciano, 2018). Finally, this paper provides historical context to modern work in public choice on bicameralism and apportionment (e.g.…”

Musgrave and the Idea of Community

“…Even if Buchanan and Tullock's radical individualism did not convince all economists in the 1960s, they contributed to the demise of thick conceptions of political agency in social sciences. In the 1960s, the Vietnam war, racial unrest and student protests brought to light increasing cultural divisions in American society (Cherrier and Fleury, 2017). Appealing to shared values would increasingly sound optimistic, if not disconnected from the real world.…”

“… British born, Peggy Musgrave (1924-2017 was herself a distinguished public finance scholar, specialised in the taxation of international investment.…”