What Should (Knightian) Economists Do? James M. Buchanan's 1980 Visit to Chile

Abstract

Although Milton Friedman and Arnold Harberger became involved with Pinochet's Chile in the mid‐1970s, an increasingly influential body of scholarship argues that James M. Buchanan was similarly eager to provide Pinochet's dictatorship with advice. Buchanan reportedly had a heavy influence on the development of Chile's 1980 Constitution and similarly helped to design Chile's binomial electoral system. Buchanan's seeming willingness to advise Pinochet's dictatorship provides a stark contrast to his longstanding advocacy of Frank Knight's view that democracy is “government by discussion” and Buchanan's oft‐repeated insistence that democratic consensus trumps economic expertise. This article draws upon a wealth of largely ignored archival evidence and Chilean primary source material to engage and evaluate whether Buchanan—a Knightian economist par excellence—abandoned his advocacy of “government by discussion” and provided early 1980s advice that helped Pinochet's regime of “institutionalized terror” (Valdes , p. 30) design a constitution that would chain any subsequent Chilean democracy.

Review of “The Chile Project: The Story of the Chicago Boys and the Downfall of Neoliberalism” by Sebastián Edwards

“…Instead, we are concerned about Hayek because of his repeated indefensible defenses of Pinochet in the international press. Hayek was unwilling to speak up for democracy in Chile the way James M. Buchanan courageously did at the 1981 Mont Pelerin Society meeting (Farrant, 2019;Farrant and Tarko, 2019). That Hayek was isolated from the Chicago Economics Department during his time at the Committee on Social Thought is true, but completely beside the point.…”

Nancy MacLean, Democracy in Chains: The Deep History of the Radical Right’s Stealth Plan for America (New York: Viking, 2017), pp. xxxii + 334, $28 (hardcover). ISBN: 9781101980965.

“…in this context, Buchanan's controversial proposal-that when a democracy is restored, the debts incurred by the dictator should be renounced-takes on considerable importance. Needless to say, this position did not endear him to "free market" bankers (Farrant 2018).…”

“…or his fellow economists and their students? This is now something being explored in the literature (Farrant 2019;Farrant and Tarko 2018). in this context, Buchanan's controversial proposal-that when a democracy is restored, the debts incurred by the dictator should be renounced-takes on considerable importance.…”

Exchanges with and without the sword: slavery, politics-as-exchange and freedom in James M. Buchanan's institutional economics

“…As one of Buchanan's co-authors, Roger Congleton (2014: 54), wrote, ‘If even slavery is conceptually compatible with [Buchanan's] contractarianism’, then it would seem within his theory no social state can ‘be considered illegitimate’. Slavery might also be considered a salient example given Nancy MacLean's (2017) claims that Buchanan advanced a covert racist agenda, although the credibility of MacLean's work has been significantly diminished by subsequent scholarship (Farrant, 2019; Farrant and Tarko, 2019; Magness, 2020; Magness et al ., 2019; Marciano, 2020; Munger, 2018a).…”