Morality, Political Economy and American Constitutionalism

Morality, Political Economy and American Constitutionalism

To Haley Elise, Jacob Conrad, Alexandra Roth and Grant Michael

Morality, Political Economy and American Constitutionalism

Timothy P. Roth, Ph.D. The University of Texas at El Paso, USA

Edward Elgar Cheltenham, UK • Northampton, MA, USA

© Timothy P. Roth 2007 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical or photocopying, recording, or otherwise without the prior permission of the publisher. Published by Edward Elgar Publishing Limited Glensanda House Montpellier Parade Cheltenham Glos GL50 1UA UK Edward Elgar Publishing, Inc. William Pratt House 9 Dewey Court Northampton Massachusetts 01060 USA

A catalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Roth, Timothy P. Morality, political economy, and American constitutionalism / Timothy P. Roth p. cm. Includes bibliographical references and index. 1. Republicanism—United States. 2. Public interest—United States. 3. Free enterprise—United States—Moral and ethical aspects. 4. Social eithics—United States. I. Title. JA84.U5R674 2007 306.20973—dc22

2006033809

ISBN 978 1 84542 524 1 Typeset by Manton Typesetters, Louth, Lincolnshire, UK Printed and bound in Great Britain by MPG Books Ltd, Bodmin, Cornwall

Contents vi x

Preface Acknowledgments 1. 2. 3. 4. 5. 6. 7. 8.

The Founders’ ‘republican cause’ The commercial republic Autonomy ascendant The public philosophy of modern America The economic analogue A failed public philosophy The decline of political economy ‘Auxiliary precautions’ in our time

167 187

References Index



1 53 64 74 84 94 106 135



Preface The eminent American historian Forrest McDonald is perhaps best known for his powerful rebuttal of Charles A. Beard’s 1913 book, An Economic Interpretation of the Constitution of the United States. But McDonald’s work also contemplates an exploration of the intellectual origins of the American Constitution. It is not surprising, therefore, that the Appendix to his recent Memoir is styled ‘The Intellectual World of the Founding Fathers’. For McDonald, ‘the formation of the Republic was a product of America’s Golden Age, the likes of which we shall not see again’. He attributes the ‘Golden Age’ to Americans’ ability to ‘pick and choose among the institutions of the mother country’, to their ‘habit of reading’, to their ‘understanding of history’, to their study of ‘the newly devised “science”’ of political economy, to their ‘understanding of the workings of the human psyche’ – informed, in part, by the work of ‘the Scottish Common Sense philosophers’ – and to their understanding that ‘The vital – which is to say life-giving – principle of republics was public virtue’. While each of these ideas finds expression in the argument developed below, I emphasize that, for McDonald and, I should say, for me, ‘The Constitution is primarily a structural and procedural document, specifying who is to exercise what powers and how. It is a body of law, designed to govern, not the people, but government itself’ (McDonald, 2004, p. 185; emphasis mine). My title, Morality, Political Economy and American Constitutionalism, is stimulated by the idea that the Founders’ republican self-government project (Chapters 1 and 2) was animated by a Smithian/Kantian conception of the twoperson self. Inter alia, the Founders understood that man, as a social creature, is ‘formed by society’ and that, whereas he possesses what Jefferson, like Adam Smith, called a ‘moral sense or conscience’, respect for the moral law must be cultivated. From the Founders’ perspective, respect for the imperative to treat others impartially, a sine qua non for self-government, is contingent upon a reciprocal relationship between morality and society’s institutional structure. On this logic, the perspective of the ‘impartial spectator’, the first-person self, can be achieved only by the agent’s, the third-person self’s, immersion in a ‘web of social attachments’. So it is that examples of ‘sympathy and benevolence’, and of impartial fundamental and statutory law, can both reflect and cultivate the perspective that Madison and Jefferson urged. For Madison, because ‘the perfect equality of mankind … is an absolute truth’, it follows that ‘that alone is a just

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government which impartially secures to every man, whatever is his own’. For his part, Jefferson averred that, ‘Whenever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the world looking at you, and act accordingly.’ Given their prior ethical commitment to a conception of the right, the moral equivalence of persons, the Founders were not, and could not be, utilitarians (Chapter 3). For the Founders, the imperative was not to promote ‘good ends’. I argue that they shared, with Kant, the understanding that the imperative to treat morally equivalent persons impartially requires that man ‘should promote his happiness not from inclination but from duty, and by his conduct first acquire true moral worth’. The Founders were concerned, therefore, not with preference satisfaction, but with the specification of permissible ends, and with the promotion of just, in the sense of impartial, institutions. From this perspective, the distinctive features of the American Constitution, its Madisonian ‘auxiliary precautions’, are intended to set ambition against ambition and so to minimize the effects of narrowly self-interested, intendedly discriminatory ‘factious’ behavior. The Founders’ procedurally based, consequence-detached moral and political philosophy was, in turn, conjoined to a political economy whose focus was not the intendedly value-free maximization of ‘social welfare’. Rather, the Founders engaged in an explicitly normative evaluative process based, not upon economic efficiency or first-best Pareto optimality, but upon what constitutional political economists today call political efficiency. In effect, the Founders sought, in the manner of modern-day constitutional political economists, to assess ‘the efficacy of differing institutions in reducing or eliminating the incentives for participants to invest resources in rent seeking aimed to secure discriminatory advantage through majoritarian exploitation’ (Buchanan and Congleton, 1998, p. 40). A recurring theme of the book is that none of this finds expression in modern liberalism, a public philosophy that imagines that the citizen–agent is a transcendental autonomous self, ‘outside nature and outside the “empirical conditions”’ that characterize path-dependent contingent circumstance (Chapters 3 and 4). If this is irreconcilable with the Founders’ view of man as a ‘social creature’, it is consistent with an institutional skepticism that finds expression in the question ‘Why should I do that?’ In this account, ‘equal treatment’ requires that the transcendental autonomous self be given ‘moral and political space’, and that ‘government be neutral on what might be called the question of the good life’. While the logical, empirical, ontological and other problems attendant to this construal are developed in the text (Chapters 4 and 6), it is sufficient for the moment to emphasize that, if it is inconsistent with what James Buchanan has called ‘moral community’, it would certainly be alien to the Founders’ imagination. Equally important, whereas utilitarianism found no place in the Founders’ moral and political philosophy, it is instrumentally im-

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portant to modern liberalism’s constitutive political position. On the one hand, its contingent defense of democracy is predicated upon respect for rights – asserted to be antecedent to civil society – against persons’ political, altruistic and moralistic ‘external’ preferences. On the other hand, its equal treatment construal requires that the ‘anti-egalitarian consequences of free enterprise in action’ be remediated. Granting this, and on the presumption that only ‘sanitized’, strictly personal preferences ‘count’, social welfare theory’s first and second fundamental welfare theorems are regarded as instrumentally important to the ‘perfectibility’ of the ‘economic market’. If, as I suggest, modern liberalism’s peculiar, truncated understanding of the Smithian/Kantian two-person self is inconsistent with ‘moral community’ it is, pari passu, inimical to republican self-government. And if, as I argue, institutionless, intendedly value-free and relentlessly utilitarian social welfare theory can be used to rationalize all manner of government ‘market interventions’, its ‘romanticized view’ of politics militates against the specification, let alone the solution, of the procedural questions that animated the Founders’ enterprise. While much of my attention centers on the indeterminacy of social welfare theory’s fundamental theoretical constructs, and on its inability to accommodate either the moral force of rights or any plausible theory of justice (Chapters 5 and 7), I emphasize that the Founders would be confounded by a public philosophy that embraces both values ‘neutrality’ and a teleological conception of the state, and by a ‘political’ economy for which ‘want’ and ‘need’ satisfaction and distributive justice are the ultimate desiderata. The general theme of the book is, then, that both in its public philosophy and in its economics, our republic has strayed far from the Founders’ vision. Preoccupation with preference satisfaction, and with the prerogatives of the transcendental autonomous self, has caused us to ignore, to deny or to forget what the Founders understood. In a letter to James Madison written six months before the Constitution was ratified, Thomas Jefferson averred that ‘The instability of our laws is really an immense evil’. Now, more than two hundred years after the Constitution institutionalized the Founders’ ‘auxiliary precautions’, the metastasization of asserted rights has found expression in an expansion of statutory, common and constitutional law. For its part, the urge to ‘perfect’ the ‘economic market’ has been the catalyst both to a rapidly growing body of tax, regulatory, environmental, labor and other law, and to its concomitant, increased congressional reliance on agency rulemaking. If, as I argue, this has facilitated the discriminatory ‘factious behavior’ that the Founders sought to constrain, it has also undermined both the separation of powers and our federal structure. As Madison feared, the relentless advance of the ‘responsive state’ has been underwritten by ‘the high sanction given to a latitude in expanding the Constitution which seems to break down the landmarks intended by a specification of the Powers of Congress’. We



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have, in short, failed to take account of one of the Founders’ fundamental insights; namely, that constitutional restraints on majoritarian democracy are instrumentally important to the survival of republican self-government. At our peril, we take little or no cognizance of the fact that, if the moral equivalence of persons demands that the greatest possible equal political participation be promoted, the worth or fair value of equal political participation requires that the constitution ‘underwrite a fair opportunity to take part in and to influence the political process’ (Rawls, 1971, p. 224). The imperative, in short, is to prevent the pleadings of the ‘more advantaged social and economic interests’ from receiving ‘excessive attention’ (p. 226). And if this means, as the Founders clearly intended, that the Constitution’s procedural restraints or ‘auxiliary precautions’ must be respected, it is also, I argue, justificatory of what James Buchanan has called a generality or impartiality constraint. These and related issues are the subject matter of Chapter 8.

Acknowledgments My intellectual debt to Professors James M. Buchanan and Eirik G. Furubotn is enormous. While they may not agree with all that I have written, this book reflects their influence. I wish to thank Nancy Vigil for her dedication, patience and effort. Her cheerful demeanor made my work easier.





1. The Founders’ ‘republican cause’ 1.1 REPUBLICAN SELF-GOVERNMENT Novus ordo seclorum. Inscribed on the great seal of the United States, the Latin phrase reflects the Founders’ intention to establish ‘a new order of the ages’. If they were not certain that it would succeed, the Founders knew that their experiment in self-government had no precedent in human history.1 Aware of the ‘rights of Englishmen’, informed by the work of moral and political philosophers, animated by the failures of the Articles of Confederation, cognizant of the dangers of ‘faction’, and conflicted about the tensions between the national and state governments, the Founders had a distinctive republican vision. To paraphrase Dr. Franklin, Americans could keep their republic – provided, first, that the Constitution’s formal institutional constraints were not the ‘parchment barriers’ that Madison imagined state Bills of Rights to be. Equally important, the Founders insisted that self-government requires both civic engagement and civic virtue. For the Founders this meant that political and, pari passu, moral discourse would be informed by political and moral philosophy, that political economy would be explicitly value-laden, and that citizens would be other-regarding. In the Founders’ imagination, then, postconstitutional, conflictual politics would be constrained, inter alia, by federalism, by the separation of powers, by the enumerated powers of the national government, and by the substantive and procedural rights codified in the Bill of Rights. But day-to-day politics would also reflect the reciprocal relationship between the peoples’ concern for the public good and the body of constitutional and statutory law. Possessed of preference and value structures, the people would, it was hoped, appreciate that the choice of economic systems and policies is a political and, therefore, a moral problem, and that, whether the issue is ‘economic’ or ‘social’, political, altruistic and moralistic preferences cannot be ‘bracketed’. In short, if the imperative was not to give the individual unbridled ‘moral and political space’, it was to give both voice and venue to an informed, politically engaged and ‘virtuous’ citizency. Central to all of this was the Founders’ understanding of human nature. On the one hand, the Founders’ thinking reflected the ‘republican fear that powerful, self-interested forces would dominate government, secure special privileges, and deprive the people of their right to rule’ (Sandel, 1996, p. 157). On the other hand, Hamilton spoke for many of the Founders when he wrote that:





Morality, political economy and American constitutionalism There are certain social principles in human nature, from which we may draw the most solid conclusions with respect to the conduct of individuals and of communities. We love our families, more than our neighbours: We love our neighbours, more than our countrymen in general. The human affections, like the solar heat, lose their intensity, as they depart from the center. ([1788a] 2001, p. 509)

If this construction suggests that the individual’s attachment ‘will be first and forever secured by the states governments’ (p. 509), it also implicated the Founders’ understanding that man is a social creature. As Jefferson observed, I am among those who think well of the human character generally. I consider man as formed by society, and endowed by nature with those dispositions which fit him for society. I believe also, with Condorcet … that his mind is perfectible to a degree of which we cannot as yet form any conception. ([1799] 1984, p. 1064)2

While the passage gestures toward the Founders’ embrace of the ideas that morality can and should be cultivated, and that education and law may be instrumentally important to this enterprise, my interest centers, at least for the moment, on a different, though related matter. If the Founders believed that man is ‘endowed by nature with those dispositions which fit him for society’, they insisted, with Jefferson, that man is endowed with an innate ‘moral sense, or conscience’ ([1787d] 1984, p. 901); that ‘Rights and powers can only belong to persons, not to things, not to mere matter, unendowed with will’ ([1824] 1984, p. 1493), and that, in John Perkins’ words, the moral sense, or conscience, so universally found in our species, is a strong presumptive proof of liberty. Every human creature has a sense of right and wrong, ought and ought not, which are evidently intended to remind him of duty and obligation; and without which he could have no idea of it. ([1771] 1983, p. 149)

While the author of this passage, John Perkins, is not counted among them, his thinking was shared by the Founders. For them, like many of the political commentators of the founding era, the foundation of liberty – and of the success of the republican experiment – was to be found in morality. In Washington’s account, ‘virtue and morality is a necessary spring of popular government’ ([1796a] 1997, p. 971). Interestingly, in a letter to Washington, Hamilton invokes essentially the same words: ‘’Tis essentially true that virtue or morality is a main & necessary spring of popular or republican Governments’ ([1796] 2001, p. 863). Writing in The Federalist – which he insisted ‘may fairly enough be regarded as the most authentic exposition of the text of the federal Constitution, as understood by the Body which prepared and the Authority which accepted it’ ([1825] 1999, p. 808)



The Founders’ ‘republican cause’



– Madison averred that ‘Republican government presupposes the existence of [virtue] in a higher degree than any other form’ (Carey and McClellan, 2001, p. 291). His June 20, 1788 speech to the Virginia Ratifying Convention was more expansive: I have observed, that gentlemen suppose, that the general legislature will do every mischief they possibly can, and that they will omit to do every thing good which they are authorised to do … . But I go on this great republican principle, that the people will have virtue and intelligence to select men of virtue and wisdom. Is there no virtue among us? If there be not, we are in a wretched situation. No theoretical checks – no form of government can render us secure. To suppose that any form of government will secure liberty or happiness without any virtue in the people, is a chimerical idea. If there be sufficient virtue and intelligence in the community, it will be exercised in the selection of these men. So that we do not depend on their virtue, or put confidence in our rulers, but in the people who are to choose them. (Madison, [1788b] 1999, p. 398)

Whatever else is said, it is clear that the Founders regarded private and public virtue as intrinsically and instrumentally valuable.

1.2 THE COMMERCIAL REPUBLIC: Some Preliminaries The Founders’ embrace of republican government can be traced to two ideas: first, ‘the delegation of the government … to a small number of citizens elected by the rest’ and, second, ‘the greater number of citizens, and greater sphere of country, over which [republican government] can be extended’ (Carey and McClellan, 2001, p. 46). For its part, the second idea is animated by the presumption that ‘it is [the greater number of citizens] principally which renders factious combinations less to be dreaded in the [republican], than in the [democratic government]’ (p. 47). Granting this, the first idea relies on the notion that the ‘small number of citizens elected by the rest’ will ‘refine and enlarge the public views’. On this logic, the ‘wisdom’ and ‘patriotism and love of justice’ of the elected few will ‘best discern the true interest of their country’ and ‘will be least likely to sacrifice [the true interest of their country] to temporary or partial considerations’ (p. 46). From the Founders’ perspective, Under such a regulation, it may well happen, that the public voice, pronounced by the representatives of the people, will be more consonant to the public good, than if pronounced by the people themselves, convened for that purpose’ (p. 46)

Implicit in this construction is the presumption, articulated in the Virginia Declaration of Rights, that ‘civic virtue’ is a prerequisite for republican self-



Morality, political economy and American constitutionalism

government: ‘no free Government, or the blessing of liberty, can be preserved to any people but by a firm adherence to justice, moderation, temperance, frugality and virtue, and by frequent recurrence to fundamental principles’ (Mason, [1776] 1987, p. 7). This is true, moreover, of statesmen, of legislators, and of the broader community from which they would be drawn. Given this predicate, the self-interest which, in the Founders’ view, animates the ‘commercial republic’ was worrisome. I acknowledge, first, that the Founders’ economic views were somewhat ambivalent. In his September 19, 1796 Farewell Address, George Washington averred that Harmony, liberal intercourse with all Nations, are recommended by policy, humanity and interest. But even our Commercial policy should hold an equal and impartial hand: neither seeking nor granting exclusive favours or preferences; consulting the natural course of things … in order to give to trade a stable course. ([1796a] 1997, p. 975)

In contrast, his admiration for Adam Smith notwithstanding – he characterized Smith’s Wealth of Nations as the ‘best book to be read’ on ‘money and commerce’ – Jefferson seemed to argue for managed international trade ([1807] 1984, p. 1176). Moreover, while Washington gestured toward a laissez-faire trade policy, Hamilton’s Report on the Subject of Manufactures invoked ‘The embarrassments, which have obstructed the progress of our external trade’ ([1791] 2001, p. 647) to develop the case for emulation of the ‘bounties, premiums and other artificial encouragements, with which foreign nations second the exertions of their own Citizens in the [manufacturing] branches’ (p. 670). Significantly, Hamilton insisted that ‘this species of encouragement’ is constitutional: A Question has been made concerning the Constitutional right of the Government of the United States to apply this species of encouragement, but there is certainly no good foundation for such a question. The National Legislature has express authority ‘To lay and Collect taxes, duties, imposts and excises, to pay the debts and provide for the Common defence and general welfare … . The terms “general welfare” … [are]as comprehensive as any that could have been used … because this necessarily embraces a vast variety of particulars, which are susceptible neither of specification nor of definition. (p. 702)

If, in Hamilton’s account, the encouragement of manufactures was constitutional, Jefferson took a decidedly different view. In his February 28, 1792 ‘Conversations with the President’, Jefferson observed that particular members of the [national] legislature … in order to keep the game in their hands had from time to time aided in making such legislative constructions of the



The Founders’ ‘republican cause’



constitution as made it a very different thing from what the people thought they had submitted to; that they had now brought forward a proposition, far beyond every one ever yet advanced, & to which the eyes of many were turned as the decision which was to let us know whether we live under a limited or an unlimited government. ([1792a] 1984, p. 677)

When President Washington asked him ‘to what proposition I alluded?’, Jefferson answered that in [Hamilton’s] Report on manufactures which, under colour of giving bounties for the encouragement of particular manufactures, meant to establish the doctrine that the power given by the Constitution to collect taxes to provide for the general welfare of the U.S., permitted Congress to take everything under their management which they should deem for the public welfare, & which is susceptible of the application of money: consequently that the subsequent enumeration of their powers was not the description to which resort must be had, & did not at all constitute the limits of their authority. (p. 677)3

While the question of the constitutionality of manufacturing and other ‘bounties’ is of immense importance to the argument developed below, my immediate interest centers on the centrality of virtue to the Founder’s economic deliberations. Jefferson’s argument against the emergence of large-scale domestic manufacturers is heuristic. In his Notes on the State of Virginia, Jefferson argued that the agrarian way of life is congenial to the development of the virtuous citizens without whom republican self-government cannot survive: Those who labour on the earth are the chosen people of God, if ever he had a chosen people, whose breasts he has made his peculiar deposit for substantial and genuine virtue … . Corruption of morals in the mass of cultivators is a phenomenon of which no age nor nation has furnished an example … . It is the manners and spirit of a people which preserve a republic in vigour. ([1787e] 1984, pp. 290–91)4

While the agrarian vision did not prevail, it is a brute fact that the republican assumption – that public policy should cultivate civic virtue – played a prominent role in American national debate from the Revolution to the Civil War. The Founders, and successive generations of Americans, engaged in a moralistic political debate about which economic system to choose. And central to the debate was the notion of civic virtue. On the presumption that different economic systems promote distinguishable character traits and moral orientations, the question was this: Which economic system is most congenial to the cultivation of civic virtue; of the character traits that were seen to be a prerequisite to republican self-government? Reduced to its essentials, republicanism presupposes what Montesquieu called ‘the political honest man’; the man for whom public indifference and private and public corruption are anathema.5



Morality, political economy and American constitutionalism

1.3 FORMAL AND INFORMAL RESTRAINTS On the Founders’ view, then, choosing an economic system – or choosing among economic policy alternatives – is a political and, pari passu, a moral decision. Granting this, the imperative is to cultivate citizens for whom questions of political and moral philosophy both animate constitutional and postconstitutional, conflictual politics, and inform economic doctrine and policy. In short, the Founders imagined that the survival of republican selfgovernment depended, inter alia, on the cultivation of citizens for whom the answer to the question ‘How should we live?’ implicates both private and public domains. For the Founders, this meant that economics must be conjoined to republican political doctrine, that morality and politics are inexorably intertwined, and that ‘wisdom and knowledge, as well as virtue, diffused generally among the body of the people [are] necessary for the preservation of their rights and liberties’ (Kurland and Lerner, 1987a, p. 656). If this means, as Jefferson, Madison, Dr. Benjamin Rush, Noah Webster and others believed, that the education of a self-governing people is a government imperative, it also means that the character and content of rights is a matter of considerable interest. While the potential ‘tyranny of the majority’ concerned the Founders, the debate about the Bill of Rights ‘had less to do with individual rights as such than with the respective roles of the state and federal governments’ (Sandel, 1996, p. 33). It is of course true that securing the minority against the usurpation and tyranny of the majority animated the Anti-Federalists’ case for individual rights against the federal government. And it is also true that Jefferson insisted that ‘a bill of rights is what the people are entitled to against every government on earth’ ([1787a] 1984, p. 916). But it is not true that the case for a bill of rights was a gesture toward contemporary rights-based political philosophy. It seems safe to say that none of the Founders imagined that individuals should be given what Roger Scruton has called ‘moral and political space’. Stated differently, neither Federalists nor Anti-Federalists embraced a Dworkian view of rights as trumps against political, moralistic or altruistic ‘external preferences’. In fact, the Anti-Federalist ambition was to deploy a bill of rights to reduce national power relative to the states; an ambition for which Madison regarded rights to be ill-suited. Whereas ‘An elective despotism was not the government we fought for’, a bill of rights would be unavailing: My own opinion has always been in favor of a bill of rights … . At the same time I have never thought the omission a material defect … because experience proves the inefficacy of a bill of rights on those occasions when its controul is most needed. Repeated violations of these parchment barriers have been committed by overbearing majorities in every State. ([1788a] 1999, p. 420)



The Founders’ ‘republican cause’



For Madison, the formal institutional solution to the potential tyranny of the majority was federalism and the separation of powers, not the ‘parchment barriers’ of rights (p. 420). If an ‘elective despotism was not the government we fought for’, the government which was sought was one which should not only be founded on free principles, but in which the powers of government should be so divided and balanced among several bodies of magistracy, as that no one could transcend their legal limits, without being effectually checked and restrained by others. (Carey and McClellan, 2001, p. 258)

The distinctive features of the American Constitution – federalism, the electoral college, the separation of powers, bicameralism, and staggered elections – are all designed to ‘channel and manipulate self-interestedness into a social equilibrium’ (Will, 1983, p. 38). In effect, Madison and many of its ratifiers envisioned an instrumental role for the Constitution’s checks and balances: by means of ‘This policy of supplying by opposite and rival interests, the defect of better motives … the private interest of every individual may be a centinel [sic] over the public rights’ (Carey and McClellan, 2001, p. 269). All this notwithstanding, while Madison insisted that ‘experience has taught mankind the necessity of auxiliary precautions’ (p. 269), his procedural response to the factional problem did not signal a reduced reliance on informal institutional restraints. A recurring theme was the importance to republican self-government of virtue generally, and of civic virtue in particular. There was, moreover, widespread agreement that virtue ought to be promoted. In an August 4, 1822 letter to William Barry, Madison wrote that The American people owe it to themselves, and to the cause of free Government, to prove by their establishments for the advancement and diffusion of Knowledge, that their political Institutions … are as favorable to the intellectual and moral improvement of Man as they are conformable to his individual and social Rights. ([1822] 1999, pp. 792–3; emphasis mine)

For his part, Benjamin Rush averred that ‘To look up to a government that encourages Virtue – establishes justice, ensures order, secures property – and protects from every Species of Violence, affords a pleasure that can only be exceeded by looking up in all circumstances to a general providence’ ([1788b] 1993, p. 256; emphasis mine). It is true, of course, that Hamilton suggested that ‘It is not safe to trust to the virtue of any people’ ([1775] 2001, p. 44). And it is also true that Madison insisted that only three motives – ‘a prudent regard to private or partial good, as essentially involved in the general and permanent good of the whole’, a ‘respect for character’, and religion – could restrain a majority ‘from unjust violations of the rights and interests of the minority’ ([1787] 1999, pp. 76–8 and 150–51).



Morality, political economy and American constitutionalism

And, finally, it is true that, because he believed these motives to be ‘insufficient to restrain [a majority] from injustice’, Madison promoted the Constitution’s formal, ‘auxiliary precautions’. The essential point, however, is that Madison, Benjamin Rush, Melancton Smith and others regarded preference and value structures as mutable. They insisted, moreover, that there is a reciprocal relationship between formal and informal institutions; in particular, between law and virtue. Madison and the Anti-Federalist Melancton Smith agreed, for example, that ‘the value of a bill of rights was primarily educative’; that Bills of rights would best promote the cause of republican self-government if they enabled republican citizens to govern themselves – to resist the impulses of interest and passion that were the root of factious behavior. (Rakove, 1997, p. 336)6

The cultivation of virtuous citizens capable of republican self-government was a recurring theme, both of the Founders and of many contemporary American political commentators.7 Washington spoke of ‘using my utmost exertions to establish a national character’ ([1796b] 1997, p. 952). For Washington, patriotism was both intrinsically and instrumentally valuable: ‘The name of American, which belongs to you, in your national capacity, must always exalt the just pride of Patriotism, more than any appellation derived from local discriminations’ ([1796a] 1997, p. 965). In Washington’s account, a ‘national character’ – a character to be cultivated – served to mitigate the propensity toward ‘Geographical discriminations’ (p. 967) and faction. Hamilton shared this view. He acknowledged that ‘in my experience of public affairs, I have constantly remarked, in the conduct of members of Congress, a strong and uniform attachment to the interests of their own state’ ([1788b] 2001, p. 499).8 Yet, in his view, ‘the expedients which the partisans of Faction employ towards strengthening their influence by local discriminations’ ([1796] 2001, p. 858) can be overcome. He insisted, for example, that ‘under the regular and gentle influence of general laws, these varying interests will be constantly assimilating, till they embrace each other, and assume the same complexion’ ([1788b] 2001, p. 501). With this formulation, Hamilton gestured toward the idea that ‘law, by making visible and sometimes vivid the community values that are deemed important enough to support by law, can bolster these values’ (Will, 1983, p. 86).9 The essential point is that the Founders’ view that law both reflects and influences preference and value structures was a familiar theme during the founding era. Recall, first, that both Federalists and Anti-Federalists were avid readers of Montesquieu. Madison’s Federalist No. 47 is heuristic. For Madison, ‘The oracle who is always consulted and cited’ on the necessity in a republic of a separation of powers ‘is the celebrated Montesquieu’ (Carey and McClellan,



The Founders’ ‘republican cause’



2001, p. 250).10 Equally important, both Federalists and Anti-Federalists embraced Montesquieu’s characterization of civic or public virtue as ‘a constant preference of public to private interest’ and ‘the love of the laws and of our country’ ([1750] 1977, p. 130). American political writing and political sermons reflected Montesquieu’s understanding of the nature and importance of virtue. While he argued that ‘this species of virtue never yet preserved a republic from decay’, Noah Webster invoked ‘the learned, but visionary’ Montesquieu’s admonition that ‘“Virtue is the foundation of a republic”’ ([1802] 1983, p. 1226). Moreover, Webster embraced the idea that virtue can, and should, be cultivated: ‘[Virtue] proceeds from early habits, and a strong attachment to the place where men are born, and to the customs, manners and government, in which they are educated’ (p. 1226). Speaking some eighteen years earlier, in 1784, on the ‘occasion of the Commencement’ of New Hampshire’s ‘New Constitution and Form of Government’, Samuel McClintock pressed a familiar theme: ‘virtue is the basis of republics, their existence depends upon it, and the moment that the people in general lose their virtue, and become venal and corrupt, they cease to be free’ ([1784] 1998, p. 805).11 To this he added (p. 807): It may then justly be expected from those who are the fathers and the guardians of the people … that they will do every thing in their power, both by their authority and example, to encourage and promote the practice of those virtues among the people, industry, œconomy, frugality, obedience to the laws, a reverence of solemn oaths (the bond of civil society and security of life and property) public spirit and love of their country.

If McClintock urged ‘the fathers and the guardians of the people’ to promote virtue, the Tradesmen of the Town of Boston argued that the ‘constitution should be adopted by the United States of America’ because it would ‘promote industry and morality; [and] render us respectable as a nation’ ([1788] 1993, pp. 717–18). While less sanguine about the Constitution’s ability to promote virtue, David Ramsay’s oration, delivered on June 5, 1788 at Charleston, South Carolina, included these words: When the majority of our citizens becomes corrupt, even our well balanced constitution cannot save us from slavery and ruin. Let it therefore be the unceasing study of all who love their country, to promote virtue and dispense knowledge through the whole extent of our settlements. Without them our growing numbers will soon degenerate into barbarism. ([1788] 1993, p. 513; emphasis mine)

American political commentators of the founding era did not simply endorse the notion that there is a reciprocal relationship between morality and law. For some, moral philosophy was regarded as the foundation of law. Of particular

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interest is James Kent, reader of Blackstone’s Commentaries, Columbia University law professor, Federalist, three-term member of the New York legislature, and member of the 1820–21 New York constitutional convention. Kent’s views are not merely heuristic. They are important for their own sake because ‘By common accord, persons who study the development of American law seriously count Kent one of the half-dozen jurists who have put the deepest imprint on American jurisprudence’ (Hyneman and Lutz, 1983b, p. 936). In his ‘Introductory Lecture to a Course of Law Lectures’, Kent urged that The doctrines of Moral Philosophy form the foundation of Human Laws and must be deemed an essential part of Juridical Education. It is the business of this Science to examine the nature and moral character of Man, the relations he stands in to the Great Author of his being, and to his Fellow-Men; the duties, the rights and happiness resulting from these relations. We are led by these inquiries to a knowledge of the nature, extent, and fitness of moral obligation, the object and efficacy of punishment, the necessity and final end of government, the justice and harmony of obedience. ([1794] 1983, p. 945)

Kent was not alone. In a 1786 ‘Sermon on a Day Appointed for Publick Thanksgiving’, Joseph Lathrop both anticipated Kent’s 1794 Lecture and echoed Madison’s view of the importance of electing virtuous leaders: We must … contribute our aid to carry into effect the good laws of the state, especially those which relate to virtue and morals … . The more virtue there is among the people, the more there will be among rulers, because better men will be elected to power; and they, who are elected, will be more strongly influenced to a right use of their power. ([1786] 1998, p. 877)

Kent’s invocation of the nexus between law and moral philosophy, of the imperative to ‘examine the nature and moral character of Man’, and of ‘justice and harmony of obedience’ as the final ‘end of government’ are evocative of a number of questions. I emphasize, first, that the question of the Founders’ view of the nature and moral character of man is the subject matter of Section 1.5. For the moment, my interest centers on the ‘end of government’ and, momentarily, on the ‘harmony of obedience’. Madison’s view, articulated in Federalist No. 51, is unambiguous: ‘Justice is the end of government. It is the end of civil society’ (Carey and McClellan, 2001, p. 271).12 In a letter to P.S. Dupont de Nemours, Jefferson declares that ‘the moral principles on which the government is to be administered … [are] what is proper for all conditions of society’. In his account, whereas ‘Liberty, truth, probity, honor, are declared to be the four cardinal principles of your society’, ‘justice is the fundamental law of society’ ([1816b] 1984, pp. 1386–7). And, finally, in his Third Annual Message to Congress, Washing-



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ton invokes ‘the benefits of an impartial administration of justice’ ([1791] 1997, p. 788). If, for the Founders, and for many of the founding generation, the end of government is justice, two questions remain. First, what did the Founders and their contemporaries mean by ‘justice’? Second, liberty, like justice, is an important dimension of moral discussion and appraisal. Given the ‘reciprocal dependence’ of self-governing people and the need for what Kent called ‘harmony of obedience’, the meaning of ‘liberty’ – as it was understood by the founding generation – is an important question. It is a matter of considerable moment that Madison, Jefferson, Benjamin Rush and others embraced what I shall later characterize as a Kantian understanding of justice as impartiality. While more will be said of this below, I emphasize for the moment that Jefferson asserted it to be ‘self-evident, that all Men are created equal’, and that Madison averred that ‘the perfect equality of mankind’ is ‘an absolute truth’ ([1789b] 1999, p. 445). For his part, Benjamin Rush averred that It would have been a truth, if Mr. Locke had not said it, that where there is no law, there can be no liberty, and nothing deserves the name of law but that which is certain, and universal in its operation upon all the members of the community. ([1788a] 1993, p. 418; emphasis mine)

It is well known that both the meaning of impartiality or ‘equal treatment’, and the character and content of ‘liberty’ are matters of considerable controversy.13 While these matters are also taken up below, it is sufficient here to invoke the work of Timothy Stone. By one account, Stone provides ‘a good summary of what Americans during the founding era felt important for the continued success of their experiment in self-government, leadership and unity’ (Hyneman and Lutz 1983b, p. 839). In his Election Sermon, delivered at Hartford in 1792, Timothy Stone said: That liberty consists in freedom from restraint, leaving each one to act as seemeth right to himself, is a most unwise mistaken apprehension. Civil liberty, consists in the being and administration of such a system of laws, as doth bind all classes of men, rulers and subjects, to unite their exertions for the promotion of virtue and public happiness … A state of society necessarily implies reciprocal dependence in all its members; and rational government, is designed to realize and strengthen this dependence, and to render it, in such sense equal in all ranks, from the supreme magistrate, to the meanest peasant, that each one may feel himself bound to seek the good of the whole. ([1792] 1983b, p. 842)

Inter alia, Stone both anticipates and gives shape and substance to what Kent, some two years later, called the ‘harmony of obedience’. For Stone and many of the founding generation ‘liberty’ and ‘freedom from restraint’ were not con-

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gruent. Writing in 1787 as a ‘Citizen of America’, Noah Webster observed that Many people seem to entertain an idea, that liberty consists in a power to act without any control. This is more liberty than even the savages enjoy. But in civil society, political liberty consists in acting conformably to the sense of a majority of the society. In a free government, every man binds himself to obey the public voice, or the opinions of a majority; and the whole society engages to protect each individual. In such a government a man is free and safe. ([1787] 1993, pp. 153–4)

Alexander Hamilton presses this theme in a July 30, 1796 letter to President Washington. The letter, a draft of the President’s Farewell Address, is proffered with an eye to its important and lasting impact on posterity ([1796] 2001, p. 851): It has been my object to render this act importantly and lastingly useful, and avoiding all just cause of present exception, to embrace such reflections and sentiments as will wear well, progress in approbation with time, & redound to future reputation.

With this objective in mind, Hamilton offered for Washington’s consideration this paean to the ‘lately established … Constitution of General Government’ (p. 859): This Government the offspring of your own choice uninfluenced and unawed, completely free in its principles, in the distribution of its powers uniting energy with safety and containing in itself a provision for its own amendment is well entitled to your confidence and support.

Continuing, Hamilton codifies the connection between ‘the fundamental maxims of true liberty’ and its correlative duties: Respect for [this government’s] authority, compliance with its laws, acquiescence in its measures, are duties dictated by the fundamental maxims of true Liberty. The basis of our political systems is the right of the people to make and to alter their constitutions of Government. But the constitution for the time, and until changed by an explicit and authentic act of the whole people, is sacredly binding upon all. The very idea of the right and power of the people to establish Government presupposes the duty of every individual to obey the established Government. (p. 859)

With minor editorial changes, Washington’s September 19, 1796 Farewell Address adopted Hamilton’s formulation ([1796a] 1997, p. 968). The emphasis upon the Constitution as the product of self-government is transparent. So, too, are the appeals to the distribution or separation of powers and the provision for constitutional amendment as catalysts to public confidence and support. But equally important is the emphasis upon the duties that are correlative to self-



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government. If, for Noah Webster, ‘liberty consists in acting conformably to the sense of a majority of the society’, for Hamilton and Washington, ‘the fundamental maxims of true Liberty’ require that a self-governing people respect their government, comply with its laws, and acquiesce in its measures. It is clear, then, that the Founders did not imagine that liberty consists in freedom from restraint. Quite the opposite. For the Founders and the founding generation, ‘liberty’ – whose distribution is determined by rights – depends upon respect for majority rule; upon ‘explicit and authentic act[s] of the whole people’. For the Founders, then, liberty or the distribution of rights depends upon the agency of self-governing Americans. Importantly, however, the ‘explicit and authentic act[s] of the whole people’ are themselves constrained by the nation’s ‘fundamental law’, the Constitution.14 The Constitution, in turn, is ‘sacredly binding upon all’.15

1.4 The Bill of Rights Both Federalists and Anti-Federalists were committed to the self-government ideal. While their differences can be defined along a number of political and other dimensions – notably the roles of the state and federal governments – considerable interest centered on what many saw as the tension between majority rule and rights. It was Madison, after all, who insisted that the states’ bills of rights had been ‘parchment barriers’ against ‘overbearing majorities in every State’ ([1788a] 1999, p. 420). Indeed, as Leonard Levy suggests, ‘any member of the Constitutional Convention could have cited examples of gross abridgements of civil liberties in states that had bills of rights’ (2001, p. 22).16 All this notwithstanding, Jefferson spoke for many of the Anti-Federalists when, in a December 20, 1787 letter to Madison, he said ‘it is my principle that the will of the Majority should always prevail’ ([1787b] 1993, p. 213). Given this predicate, he adds that a ‘bill of rights is what the people are entitled to against every government on earth’ (p. 211). For Jefferson, respect for rights under majority rule depended upon public virtue. And, as we have seen, the cultivation of public virtue depended, in his view, upon the maintenance of an agrarian economy: ‘I think our governments will remain virtuous for many centuries; as long as they are chiefly agricultural’ (p. 213). For their part, the Federalists argued that respect for rights and their correlative duties did not depend upon ‘parchment barriers’. Echoing Madison, Hamilton saw ‘parchment provisions’ as ‘inadequate in “a struggle with public necessity”’. Granting this, respect for rights and duties depended upon ‘public opinion, an extended republic, a pluralistic society of competing interests, and a free and limited government structured to prevent any interest from becoming an overbearing majority’ (Levy, 2001, p. 21)

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If Hamilton gestured toward the idea that rights – however articulated, and however construed – can, in a utilitarian framework, be trumped by desired outcomes, he also embraced the idea, expressed in Madison’s Federalist No. 10, that ‘the causes of faction cannot be removed; and that relief is only to be sought in the means of controlling its effects’ (Carey and McClellan, 2001, p. 45). For Madison, the means of controlling the effects of faction and, pari passu, of protecting rights, depended upon the structure of government contemplated by the Constitution: In the compound republic of America, the power surrendered by the people, is first divided between two distinct governments, and then the portion allotted to each subdivided among distinct and separate departments. Hence a double security arises to the rights of the people. The different governments will control each other; at the same time that each will be controled by itself. (Carey and McClellan, 2001, p. 270)

These are familiar themes. It is not my purpose here to reprise the Federalist–Anti-Federalist debate. Nor is it to engage the question of why the motion – made five days before the Constitutional Convention adjourned – to appoint a committee to draft a bill of rights was ‘rejected without receiving the vote of a single state’ (Rakove, 1997, p. 288).17 And, finally, the question of what animated Madison’s decision to promote rather than to oppose a bill of rights is not of immediate interest. I note simply that, for some, Madison’s ‘reversal reflected shrewd political strategy and astute political science’ (Sandel, 1996, p. 37). For others, ‘merely political accounts’ of Madison’s efforts ‘to force his “nauseous project” of [constitutional] amendments on a reluctant First Federal Congress’ is inadequate (Rakove, 1997, p. 289). However this may be, my interest centers on the influence on Madison and the other Founders of what Roger Scruton (2002, p. 38) has called the American inheritance. The essence of the ‘inheritance’ has been elegantly summarized by Schweikart and Allen (2004, p. 37): The resemblance of [the English] Declaration and Bill of Rights to the eighteenthcentury American Declaration of Independence, Articles of Confederation, Constitution and Bill of Rights is striking, and one could argue that the Americans were more radicalized by the Glorious Revolution than the English.

Not surprisingly, when Madison crafted his twelve proposed constitutional amendments he had done so after conferring with Anti-Federalist leaders.18 But he also read the Magna Carta, and the other English precedents which, in turn, had influenced the Virginia Declaration of Rights and most of the state constitutions.19 It is in this sense that Madison’s efforts reflected the fact that The language of rights came naturally to the [American] colonists; it was, they thought, their native tongue. As eighteenth-century writers repeatedly argued, the



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original English settlers had carried all their rights with them, and passed these rights on to their descendants as a birthright and a patrimony. (Rakove, 1997, p. 290)

Importantly, this English inheritance – the ‘rights of Englishmen’ – informed Madison’s work on the Bill of Rights. But it was also reflected in the work of the Constitutional Convention. In a draft of a constitution ‘evidently drafted by Edmund Randolph and John Rutledge’, the Convention’s Committee of Detail noted that A preamble seems proper, but [n]ot for the purpose of designating the ends of government and human polities. [A] display of theory, howsoever proper in the first formation of state governments, is unfit here; since we are not working on the natural rights of men not yet gathered into society, but upon those rights, modified by society, and interwoven with what we call the rights of the states. (Rakove, 1997, pp. 316–17).20

In effect, the Framers of the Constitution and, pari passu, the Committee of Detail ‘recognized that the existence of organized society and government required the affirmation of certain rights that did not exist in the state of nature but that served to protect natural rights’ (Levy, 2001, p. 16).21 These rights included, inter alia, trial by jury in criminal cases, ‘a guarantee of the writ of habeas corpus … liberty of the press … a ban on maintaining an army in time of peace except with the consent of Congress; an explicit subordination of the military to the civil power; a prohibition on the quartering of troops in private homes during peacetime; and a ban on religious tests as a qualification for any United States office’ (p. 17). On the matter of what Randolph and Rutledge called ‘the rights of the states’, the Founders recognized ‘that the legitimate powers of government that did not belong to the central government of the Union could be called “the rights of the states”’ (p. 16). While this subject is addressed in later chapters, I emphasize for the moment that the Bill of Rights did not apply to the states. As Sandel has emphasized, one of the twelve amendments proposed by Madison would have protected certain rights against infringement by the states.22 But whereas the ‘House of Representatives adopted Madison’s proposal, … the Senate voted it down and sent to the state legislatures for ratification a Bill of Rights that restrained the federal government alone’ (Sandel, 1996, pp. 37–8). What seems clear is that In 1789 men were more devoted to their States than to the nascent federal government; they feared the centralized, remote power of the newcomer, hence the limitations imposed on the federal government by the Bill of Rights. (Berger, 1997, p. 212)23

In the event, the limitations imposed on the federal government by the Bill of Rights were ‘the rights of Englishmen’ – ‘rights which the existing law gave

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them’; rights which the British, both before and during the Revolutionary War, had not respected. These included ‘free speech, quartering of soldiers, unreasonable searches and seizures, the right to bear arms, and sundry procedural provisions to ensure fair trials’ (p. 186). The essential point is that, for the Founders, ‘a constitution represented the will of the people “that would determine explicit … allocations of power and its corresponding limits”’ (p. 275). And, for the founding generation, the will of the people was informed by ‘the already constituted rights and liberties which made the conscious adoption of a “constitution” into a coherent gesture’ (Scruton, 2002, p. 39). It is clear, then, that the Constitution and the Bill of Rights are reflective of path-dependent processes. On the one hand, they are reflections of antecedent norms and law. On the other hand, as ‘fundamental law’, they are both progenitors of, and, in certain circumstances, constraints upon, future norms and laws. In his October 17, 1788 letter to Jefferson, James Madison asked a rhetorical question: ‘What use then it may be asked can a bill of rights serve in popular Governments?’ His answer subsumes both the Founders’ view that preference and value structures are malleable – a point made above – and that law, whether fundamental or statutory is, and should be, the embodiment of popular will ([1788a] 1999, pp. 421–2): I answer the two following which though less essential than in other Governments, sufficiently recommend the precaution. 1. The political truths declared in that solemn manner acquire by degrees the character of fundamental maxims of free Government, and as they become incorporated with the national sentiment, counteract the impulses of interest and passion. 2. Altho’ it be generally true … that the danger of oppression lies in the interested majorities of the people rather than in usurped acts of the Government, yet there may be occasions on which the evil may spring from the latter sources; and on such, a bill of rights will be a good ground for an appeal to the sense of the community.24

In Jack Rakove’s account, the first, or ‘educative’ value of a bill of rights was, for Madison, decisive – ‘The true benefits of a bill of rights were to be found in the realm of public opinion, whose workings so intrigued Madison’: As greater popular respect for individual and minority rights developed over time, perhaps the judiciary would eventually act as Madison very much hoped yet initially doubted it would. But the greater benefit would occur if acceptance of the principles encoded in rights acted to restrain political behavior, tempering improper popular desires before they took the form of unjust legislation. Perhaps that in turn explains why Madison insisted that Congress take up the subject of amendments at its first session. (Rakove, 1997, pp. 335–6)

Writing almost two hundred years after Madison’s letter to Jefferson, George Will argued that ‘the enforcement of law, by making visible and sometimes



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vivid the community values that are deemed important enough to support by law, can bolster those values’. It was in this sense that ‘desegregation and the civil rights acts [of the 1960s] … were explicit and successful attempts to change (among other things) individuals’ moral beliefs by compelling them to change their behavior’ (1983, pp. 86–7). Whether this is an appropriate and compelling example of what Will calls statecraft as soulcraft is not my immediate concern. What is significant is that Madison, Richard Henry Lee, Patrick Henry, Melancton Smith and others of the founding generation – some Federalists, some Anti-Federalists – insisted that there is a reciprocal relationship between law and morality. For his part, Lee argued that a bill of rights ‘would assist popular “education” because it taught “truths” upon which freedom depends and that the people must believe as “sacred”’ (Levy, 2001, p. 30). While his argument focused less on the public than on government, Patrick Henry ‘seemed to suppose that a bill of rights would operate as a moral restraint on Congress’ (Rakove, 1997, p. 323). For the Federal Farmer – ‘long thought to be Richard Henry Lee … but more probably the New York anti-federalist Melancton Smith’ (Ketcham, 2003, pp. 256–7) – a bill of rights was important, neither because it ‘creat[ed] the rights it declared’ nor because ‘their ancestors once got together and enumerated them on paper, but because, by repeated negociations and declarations, all parties are brought to realize them, and … to believe them to be sacred’ (Rakove, 1997, pp. 323–4). As for the source of the rights which the Bill of Rights did not create, the Federal Farmer affirmed that the people of the states ‘derived all these rights from one common source, the British systems’, and that, having incorporated these rights in their state constitutions, ‘discovered that their ideas relative to these rights are very similar’ (Smith, [1787] 2003, p. 266).25 In an 1801 sermon before the governor and legislature of Vermont, Jeremiah Atwater invoked the English inheritance, emphasized the relationship between virtue and liberty, affirmed that virtue can be cultivated, and insisted that law and government, the family, schools and public opinion are instrumental to the cultivation of virtue and, pari passu, to the restraint that is essential to republican self-government ([1801] 1983, pp. 1177–8): Our present enjoyment of civil and religious liberty results from the wise institutions established by our ancestors. Even when colonies, our governments were free, and our present systems are but a continuation of them … . The state of society naturally admitted a free government: No other would have been consonant with the manners, sentiments, and character of the people. Now, it is evident that the more virtuous people are, the less need is there of the restraints of civil government, to promote order. Our country, we have seen, admits of our enjoying a mild and free government. The important enquiry is, to what is this owing? … If man is here formed a good citizen, it is not because he needs no restraint; but because, from his youth, he has been taught to restrain those passions,

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Morality, political economy and American constitutionalism which it is the principal business of law and government to restrain. This restraint is begun in the family. Children are early inured to family government, and are taught habits of subordination and respect. In the school, the same system is continued … . Man, from cradle to the grave, is constantly learning new lessons of moral instruction, and is trained to virtue and order by perpetual and salutary restraints. To all which may be added the restraint of public opinion … . When [these habits and institutions] have produced their effect, and taught man the course of conduct he ought to pursue, little is left for the magistrate: The business of government is already anticipated.

Considered in vacuo Atwater’s remarks reveal much of what animated the Founders’ – and the founding generation’s – thinking about the role of formal and informal institutions in the cultivation of citizens capable of self-government. Equally important, however, is Atwater’s characterization of the relationships among ‘the moral culture of the heart’, support for human laws, and the ‘discharge of reciprocal duties’ (p. 1178): From the moral culture of the heart, is derived the chief force of moral obligation, and of course, the chief support of human laws. Thence proceed all the endearing ties of gratitude and love, which unite man to man, in the discharge of reciprocal duties.

I suggest that it was thinking of this sort which, inter alia, informed the Founders’ view of the reciprocal relationship between morality and law and, in particular, their embrace of the idea that the Bill of Rights was instrumentally valuable to the cultivation of virtue and its concomitants, a sense of reciprocal duty and a restraint on ‘factious behavior’. I argue, moreover, that thinking of this sort informed the Founders’ understanding of what we today call ‘the self’. Clearly, the Founders did not envision the transcendental, autonomous self of modern imagination. Unfortunately, it is the latter understanding of the self which animates much of modern moral and political philosophy and contemporary economic doctrine.

1.5 The Founders’ Understanding of the Self It has become relatively commonplace to suggest that a number of Enlightenment writers profoundly influenced the views of the Founders and of the founding generation. The following passages are heuristic: Three major Enlightenment thinkers deeply affected the concepts of liberty and government held by the majority of the American Revolutionary leaders … . From Hobbes … the Revolutionary writers took the concept of ‘right to life’ … .



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From Locke … the Revolutionary writers took the phrase ‘right to liberty’, as well as to property. All that remained was to determine how best to guarantee those rights, an issue considered by … Charles de Montesquieu. In The Spirit of the Laws, drawing largely on his admiration for the British constitutional system, Montesquieu suggested dividing the authority of the government among various branches with different functions, providing a blueprint for the future government of the United States. (Schweikart and Allen, 2004, pp. 70–71)

I do not deny – in fact, it is indisputable – that the Founders and members of the founding generation were familiar with, and influenced by Hobbes, Locke and Montesquieu. It is also clear, however, that this is not – nor, presumably, was it intended to be – an exhaustive list of influential thinkers. We know, for example, that Jefferson also read, and recommended that others read, Bacon, Blackstone, Bollingbroke, Burke, Coke, Newton, Paine, Adam Smith and Voltaire. Clearly, the Founders and their contemporaries drew upon many sources.26 I emphasize, in particular, that whereas much has been made of Locke’s influence, the Founders and contemporary American writers espoused ideas ‘that Locke would have repudiated’ (Himmelfarb, 2004, p. 200). Indeed, one of their recurring themes was that ‘The moral sense, or conscience, is as much a part of man as his leg or arm’ (Jefferson, [1787d] 1984, p. 901). This is not Lockean. In fact, it is roughly congruent with Adam Smith’s characterization of the ‘moral sense’: Upon whatever we suppose that our moral faculties are founded, whether upon a certain modification of reason, upon an original instinct, called a moral sense, or upon some other principle of our nature, it cannot be doubted, that [our moral faculties] were given us for the direction of our conduct in this life … they were set up within us to be the supreme arbiters of all our actions, to superintend all our senses, passions, and appetites, and to judge how far each of them was either to be indulged or restrained … . No other faculty or principle of action judges of any other … . What is agreeable to our moral faculties, is fit, and right, and proper to be done; the contrary wrong, unfit, and improper. ([1759] 1976, pp. 164–5; (emphasis mine)27

If the Founders shared, and perhaps were influenced by, Smith’s innate moral sense construal, his work is also reconcilable with the Founders’ view that virtue can be cultivated: When custom and fashion coincide with the natural principles of right and wrong, they heighten the delicacy of our [moral] sentiments, and increase our abhorrence for every thing which approaches to evil. Those who have been educated in what is really good company, … who have been accustomed to see nothing in the persons whom they esteemed and lived with, but justice, modesty, humanity, and good order; are more shocked with whatever seems to be inconsistent with the rules which those virtues prescribe. (p. 200; emphasis mine)

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Smith’s emphasis on the ‘Influence of Custom and Fashion upon Moral Sentiments’ reflected the value he placed in ‘the market, the family, and other social institutions for their role in creating that imperfect but attainable level of virtue which he called “decency”’ (Muller, 1993, p. 188). And central to what Muller has called Smith’s ‘civilizing project’ is the idea that ‘to be virtuous is to make our conduct conform to an external model which we have internalized’ (p. 189): The love and admiration which we naturally conceive for those whose character and conduct we approve of, necessarily dispose us to desire to become ourselves the objects of the like agreeable sentiments … . But, in order to attain this satisfaction, we must become the impartial spectators of our own character and conduct … . When seen in this light, if they appear as we wish, we are happy and contented. But it greatly confirms this happiness and contentment when we find that other people, viewing [our character and conduct] with those very eyes which we, in imagination only, were endeavouring to view them, see them precisely in the same light in which we ourselves had seen them. Their approbation necessarily confirms our own selfapprobation. (Smith, [1759] 1976, p. 114; emphasis mine)

Smith’s impartial spectator formulation is important for its own sake.28 Of immediate interest, however, is the fact that the impartial spectator, influenced as he is by family, tradition, custom and other ‘external’ factors, is not congruent with the transcendental, autonomous self of modern imagination. The spectator is, however, fully reconcilable with the Founders’ view that man has an innate moral sense, and that there is a reciprocal relationship between virtue and society’s formal and informal institutions. On the one hand, Smith insisted that ‘antecedent to all law or positive institution, the mind was naturally endowed with a faculty, by which it distinguished in certain actions and affections, the qualities of right, laudable, and virtuous, and in others those of wrong, blamable, and vicious’ (1759] 1976, p. 318). In this account, the codification of ‘right, laudable, and virtuous’ laws (p. 318) reflects the intervention of the impartial spectator; a spectator possessed of an innate moral sense. On the other hand, ‘that sense of what is due to his fellow-creatures which is the basis of justice and of society’ (p. 102) – the perspective of the impartial spectator – must itself be cultivated. Given that ‘it is only by consulting this judge within … that we can ever make any proper comparison between our own interests and those of other people’ (p. 134), it is imperative that ‘custom and fashion coincide with the natural principles of right and wrong’ so as to ‘heighten the delicacy of our [moral] sentiments, and increase our abhorrence of every thing which approaches to evil’ (p. 200). If the Founders and their countrymen were accustomed to invoking the moral sense, the idea that man is ‘formed by society’, and the imperative to cultivate virtue, they were equally inclined to appeal to the golden rule. Consider, for example, that in a letter to Jefferson, John Adams wrote, ‘Jus cuique, the golden rule, do as you would be done by, is all the equality that can



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be supported or defended by reason or common sense’ (Himmelfarb, 2004, p. 216). That this may be ascribed to Americans’ religious inheritance is obvious.29 Consider, for example, Nicholas Collins’ September 1787 ‘An Essay on the Means of Promoting Federal Sentiments in the United States’. In relevant part, Collins asserts that Moral principles are universal – Whatsoever ye would that men should do unto you, even so do unto them, love thy neighbour as thyself: These principles of equity and benevolence, are engraven on all human minds by the same Almighty hand; known in Japan and America, in Lapland, and Otabeite. ([1787] 1998, pp. 414–15)

Yet if invocations of the golden rule were, at least in part, animated by the founding generations’ religious inheritance, the golden rule is itself evocative of Immanuel Kant’s categorical imperative or moral law. One formulation of the moral law says: ‘Act only on that maxim whereby thou canst at the same time will that it should become a universal law’ (Kant, [1785] 1988, p. 49). But the formulation which ‘has had the greatest cultural impact’ (O’Neill, 1993, p. 178) is the Formula of the End in Itself: ‘So act as to treat humanity, whether in thine own person or in that of any other, in every case as an end withal, never as means only’ (Kant, [1785] 1988, p. 58). It is, perhaps, this formulation of the moral law which is most evocative of the idea which animates it; namely, the moral equivalence of persons: The conception of free and equal persons as reasonable and rational is the basis of the construction: unless this conception and the powers of moral personality it includes – our humanity – are animated, as it were, in human beings, the moral law would have no basis in the world. (Rawls, [1989] 1999, p. 515)

While it is true that the Formula of the End in Itself demands that persons respect the autonomy, agency, independence and dignity of morally equivalent persons it is not true that it gestures toward the modern conception of the transcendental, autonomous self. While this discussion is deferred to later chapters, I emphasize that Kant himself argues that respect for the moral law – the categorical imperative – must be cultivated, and that his conception is therefore reconcilable both with Adam Smith’s impartial spectator construal, and with the Founders’ view that virtue – both private and public – must be cultivated. Consider first that Kant was familiar with Adam Smith’s The Theory of Moral Sentiments (TMS): It seems that Kant knew and valued TMS, judging from a letter of 1771 written to him by one Markus Herz. A passage in this letter speaks of ‘the Englishmen Smith who, Mr. Friedlander tells me, is your favorite’ (Liebling), and then goes on to compare the work of Smith with ‘the first part’ of ‘Home, Kritik’, no doubt meaning

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Morality, political economy and American constitutionalism Elements of Criticism by Henry Home, Lord Kames. As Eckstein points out, the date of 1771 (too early for [The Wealth of Nations] and one year after the publication of the first German translation of TMS) and the comparison with Kames show that the writer must have had TMS in mind … . Eckstein goes on to note that there is a passage in Kant’s Reflections on Anthropology where Kant writes of ‘the man who goes to the root of things’ and who looks at every subject ‘not just from his own point of view but from that of the community’ and then adds, in brackets, ‘the Impartial Spectator’ (der Unpartheyische Zuschauer). (Smith, [1759] 1976, Introduction, p. 31)

Kant’s allusion to the impartial spectator is particularly revealing because there are elements of remarkable correspondence between Smith’s and Kant’s construals.30 While the implications will be drawn out in later chapters, the central point is that, for both Smith and Kant, the cultivation of virtue – of respect for the moral law – requires a two person perspective. For Smith, When I endeavour to examine my own conduct … . I divide myself, as it were, into two persons … . The first is the spectator … . The second is the agent, the person whom I properly call myself, and of whose conduct, under the character of a spectator, I was endeavouring to form some opinion. The first is the judge; the second the person judged of. ([1759] 1976, p. 113)31

For Kant, ‘what makes categorical imperatives possible’ ([1785] 1988, p. 86) is the One resource [which] remains to us, namely, to inquire whether we do not occupy different points of view when by means of freedom we think ourselves as causes efficient a priori, and when we form our conception of ourselves from our actions as effects, which we see before our eyes. (p. 82)

Thus, if for Smith, ‘The love and admiration which we naturally conceive for those whose character and conduct we approve of, necessarily dispose us to desire to become ourselves the objects of the like agreeable sentiments’ ([1759], 1976, p. 114), for Kant, There is no one, not even the most consummate villain … who, when we set before him examples of honesty of purpose, of steadfastness in following good maxims, of sympathy and general benevolence (even combined with great sacrifices of advantage and comfort), does not wish that he might also possess these qualities … . He proves by this that he transfers himself in thought with a will free from the impulses of the sensibility … since he cannot expect to obtain by that wish any gratification of his desires … he can only expect a greater intrinsic worth of his own person. This better person, however, he imagines himself to be when he transfers himself to the point of view of a member of the world of the understanding, to which he is voluntarily forced by the idea of freedom … from this point of view he is conscious of a good will … a law whose authority he recognizes while transgressing it. (Kant [1785] 1988, p. 87)



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The essential point is that, for Smith and Kant, respect for the moral law – the duty to treat others as ends rather than as means – must be cultivated by examples of ‘sympathy and general benevolence (even combined with great sacrifices of advantage and comfort)’. The Founders understood this. They understood that, man’s innate moral sense notwithstanding, private and public virtue must be cultivated. They also understood, as did Montesquieu, from whom they borrowed heavily, that public virtue is both a sine qua non for self-government, and ‘a self-renunciation which is always arduous and painful’: This virtue may be defined, as the love of the laws and of our country. As this love requires a constant preference of public to private interest, it is the source of all the particular virtues; for they are nothing more than this very preference itself. (Montesquieu, [1750] 1977, p. 130)32

Thomas Jefferson’s thinking embraces many of these themes. In an August 19, 1785 letter to Peter Carr, Jefferson urges that Whenever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the world looking at you, and act accordingly. ([1785] 1984, p. 815)

If this is evocative of Smith’s impartial spectator construal it is, not surprisingly, roughly congruent with Kant’s two points of view. Equally important, Jefferson’s writing, like that of many of the Founders, invoked the idea of an innate moral sense, encouraged other-regarding behavior, and emphasized the role of ‘education, instruction or restraint’ in the cultivation of public virtue. His June 13, 1814 letter to Thomas Law is heuristic: Self-interest, or rather self-love, or egoism, has been more plausibly substituted as the basis of morality. But I consider our relations with others as constituting the boundaries of morality … . To ourselves, in strict language, we can owe no duties, obligation requiring also two parties. Self-love, therefore, is no part of morality. Indeed it is exactly its counterpart. It is the sole antagonist of virtue leading us constantly by our propensities to self-gratification in violation of our moral duties to others … . Take from man his selfish propensities, and he can have nothing to seduce him from the practice of virtue. Or subdue those propensities by education, instruction or restraint, and virtue remains without a competitor. Egoism, in a broader sense, has been thus presented as the source of moral action. It has been said that we feed the hungry, clothe the naked, bind up the wounds of the man beaten by thieves, pour oil and wine into them, set him on our own beast and bring him to the inn, because we receive ourselves pleasure from these acts … . This is indeed true. But it is one step short of the ultimate question. These good acts give us pleasure, but how happens it that they give us pleasure? Because nature hath implanted in our breasts a love of others, a sense of duty to them, a moral instinct, in short, which prompts us irresistibly to feel and to succor their distresses. ([1814b] 1984, pp. 1336–7)

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For Jefferson, like Adam Smith, ‘The want or imperfection of the moral sense in some men, like the want or imperfection of the senses of sight and hearing in others, is no proof that it is a general characteristic of the species’ (pp. 1337– 8). Indeed, Jefferson’s invocation of ‘our propensities to self-gratification in violation of our moral duties to others’ is consistent with Kant’s ‘heteronomy’ construal (Kant, [1759] 1988, p. 62). For Kant and, presumptively, for Smith, any action that springs from desire, emotion or interest is heteronomous (Scruton, 1982, p. 65). It is precisely because we are subject to heteronomous impulses that respect for the moral law must be cultivated. Again, Jefferson and others of the founding generation understood this. It is clear that Jefferson was not alone in his embrace of what I shall call the Smithian/Kantian understanding of the self. In a June 12, 1823 letter to Justice William Johnson, Jefferson makes this clear. He declares that the objective of the Anti-Federalists was to maintain the will of the majority of the convention, and of the people themselves. We believed, with them, that man was a rational animal endowed by nature with rights, and with an innate sense of justice; and that he could be restrained from wrong and protected in right by moderate powers, confided to persons of his own choice. ([1823] 1984, p. 1470)

If Jefferson’s attribution of a belief in ‘an innate sense of justice’ to ‘the majority of the [constitutional] convention and [to] the people themselves’ is unambiguous, it is also clear that the Founders had a clear understanding of the meaning of ‘justice’. Whether informed by the ‘golden rule’, by Smith’s impartial spectator, or by Kant’s categorical imperative, justice, for the Founders, required that morally equivalent persons be treated impartially. Madison’s thinking is illustrative. For Madison, ‘the perfect equality of mankind … to be sure is an absolute truth’ ([1789b] 1999, p. 445). Given this predicate, Madison insists that ‘that alone is a just government which impartially secures to every man, whatever is his own’ ([1792b] 1999, p. 515), and that That is not a just government, nor is property secure under it where arbitrary restrictions, exemptions, and monopolies deny to part of its citizens that free use of their faculties, and free choice of their occupations … . What must be the spirit of legislation where a manufacturer of linen cloth is forbidden to bury his own child in a linen shroud, in order to favour his neighbour who manufactures woolen cloth; where the manufacturer and wearer of woolen cloth are again forbidden the œconomical use of buttons of that material, in favor of the manufacturer of buttons of other materials! (p. 516)

While the passage is animated by Madison’s concern that government ‘protect property of every sort’, there is a larger point at issue. Madison’s Federalist No. 10 has basic relevance:



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the most common and durable sources of factions, has been the various and unequal distribution of property. Those who hold, and those who are without property, have ever formed distinct interests in society. Those who are creditors, and those who are debtors, fall under a like discrimination. A landed interest, a manufacturing interest, a mercantile interest, a monied interest, with many lesser interests, grow up of necessity in civilized nations, and divide them into different classes, actuated by different sentiments and views. The regulation of these various and interfering interests, forms the principal task of modern legislation, and involves the spirit of party and faction in the necessary and ordinary operations of government. (Carey and McClellan, 2001, p. 44; emphasis mine)

If the passage highlights Madison’s and the other Founders’ concern with faction and its discriminatory impulse, the crucial point is that ‘The examples of regulation that Madison cited reveal that he regarded all decisions of economic policy as implicating questions of justice and thus of private rights’ (Rakove, 1997, p. 315). Madison’s admonition that taxation ‘seems to require the most exact impartiality’ is characteristic: The apportionment of taxes, on the various descriptions of property, is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party, to trample on the rules of justice. (Carey and McClellan, 2001, p. 45; emphasis mine)

I note finally that, Hamilton notwithstanding, Jefferson regarded taxes and bounties intended to encourage manufacturing as both discriminatory and unconstitutional (S1.2). While the Hamilton–Jefferson dispute gestures, inter alia, toward contemporary debates about the meaning and reach of the Constitution’s Commerce Clause, I defer this discussion to Chapter 8. Of immediate interest is the institutional imperative to which the Founders’ Smithian/Kantian understanding of the self gives rise. Recall first that the ‘innate sense of justice’ that the Founders insisted is inherent in human nature is animated by the idea that, because all persons are morally equivalent, each is entitled to equal or impartial consideration. More­ over, as we have seen, the Founders appreciated that respect for the moral law – the imperative to treat morally equivalent persons equally – must be cultivated. And finally, they understood that there is a reciprocal relationship between private and public virtue and the body of statutory, common and constitutional law. A corollary of this, also understood by the Founders, is that law should both reflect and cultivate respect for the moral law. Granting all of this, it is clear that the Founders did not embrace a consequence-based, procedurally detached moral theory. Whereas consequentialists begin with a theory of the good and insist that that good ought to be promoted (Pettit, 1993, p. 231), the Founders started with a conception of the right, the moral equivalence of persons.33 It follows that they were concerned with the

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specification of permissible ends and the institutionalization of just, in the sense of impartial, laws – whether fundamental or statutory. Importantly, this means that the Founders were not utilitarians. As is well known, utilitarianism – the theory of the good that is most standardly employed to fill out the consequentialist framework – insists that the right action is that which maximizes utility summed across all those affected by the action. This, I suggest, would have been alien to the Founders’ imagination. It is, moreover, irreconcilable with their Smithian/Kantian conception of the self. To see this, it is appropriate to make explicit what has already been implied: the imperative to treat persons as ends rather than as means is procedurally based and consequence detached. In this framework, it is not persons’ ‘utility’ or ‘happiness’ that is intrinsically valuable. On the one hand, morality cannot be grounded in ‘private happiness’ since the springs [the principle of private happiness] provides for morality are such as rather undermine it and destroy its sublimity, since they put the motives to virtue and to vice in the same class, and only teach us to make a better calculation, the specific difference between virtue and vice being entirely extinguished. (Kant, [1785] 1988, p. 72)34

On the other hand, ‘a man cannot form any definite and certain conception of the sum of satisfaction of all of [his inclinations] which is called happiness’ (p. 24).35 Stated differently, ‘the notion of happiness is so indefinite that although every man wishes to attain it, yet he can never say definitely and consistently what it is that he really wishes and wills’ (p. 45). If this suggests that grounding morality on utility or happiness both invites all manner of casuistries, and forces reliance upon an essentially indeterminate evaluative standard, the essential point is this: the moral law – the imperative to treat morally equivalent persons impartially – requires that man ‘should promote his happiness not from inclination but from duty, and by this would his conduct first acquire true moral worth’ (p. 24). These considerations underscore the contrast between what John Rawls has characterized as Kant’s CI (categorical imperative) procedure and utilitarianism ([1989] 1999, pp. 507–8). Given their prior ethical commitment to the moral equivalence of persons, it follows that the Founders were not, and could not be, utilitarians. My point is not that each of the Founders was, necessarily, aware either of Smith’s impartial spectator or of Kant’s categorical imperative. It is, to use a metaphor familiar to contemporary economists, ‘as if’ they were familiar with both. If this means, as I shall argue below, that the contemporary politics of ‘wants and needs’ and of economic growth and distributive justice found no place in the Founders’ thinking, it also means that their attention centered on just, in the sense of impartial, procedure. Madison’s focus on justice as ‘the end of government … the end of civil society’ (Carey and McClellan, 2001, p. 271)



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found expression in the Founders’ attention to the cultivation of self-governing citizens who would respect the moral law, and in the codification of formal, constitutional restraints on discriminatory ‘factious behavior’. If the Founders’ procedural concern was animated by the moral theory they embraced, it was also informed by experience. President Washington’s September 19, 1796 Farewell Address reflects, in relevant part, his experience with what we now call postconstitutional, conflictual politics: The alternate domination of one faction over another, sharpened by the spirit of revenge natural to party dissention, which in different ages and countries has perpetrated the most horrid enormities, is itself a frightful despotism. ([1796a] 1999, p. 969)

1.6 The Founders’ Constitution With the benefit of hindsight, we know that the work of the Constitutional Convention was informed and animated by the Founders’ English inheritance – inter alia, the rights of Englishmen – by the work of political and moral philosophers, by contemporary political writing and political sermons and, above all, by the Founders’ conception of the self (S1.5). It is against this background that the distinctive features of the American Constitution – federalism, the separation of powers, bicameralism, the electoral college, and staggered elections – must be understood and assessed. If, as Madison suggested, these ‘auxiliary precautions’ were a necessary formal constraint on ‘factious behavior’, it is also clear that the Founders understood that exclusive reliance on constitutional restraints on the discriminatory impulse would be unavailing (S1.3). This insight accounts, in significant measure, for what could fairly be described as the Founders obsession with the cultivation of public virtue. While this argument need not be reprised, the essential point is that the Founders embraced a distinctive, Smithian/Kantian conception of the self. Given their prior ethical commitment to the moral equivalence of persons and the correlative duty to respect the moral law, the Founders rejected what we would today call the politics and the economics of ‘wants and needs’ (S1.7). Instead, their consequence-detached, procedurally based enterprise found expression in the Constitution. In the Founders’ view, the Constitution, as the new republic’s ‘fundamental law’ (Carey and McClellan, 2001, p. 404) would be both intrinsically and instrumentally valuable. It would be valuable for its own sake because of the procedural restraints it formalized. And it would be instrumentally valuable because it, like the body of statutory law, reflects a reciprocal relationship with virtue. In effect, the Constitution could promote both a ‘constant preference of public to private interest’ and ‘the love of the laws and of our country’.

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Given the Founders’ insistence that justice, in the sense of impartiality, is ‘the end of government … the end of civil society’ (Carey and McClellan, 2001, p. 271),36 and given that the Founders intended that the Constitution both institutionalize and promote acceptance of this moral commitment, it comes as no surprise that, for Washington, The basis of our political systems is the right of the people to make and to alter their Constitutions of Government. But the Constitution which at any time exists, ’till changed by an explicit and authentic act of the whole People, is sacredly obligatory upon all. The very idea of the power and the right of the People to establish Government presupposes the duty of every Individual to obey the established Government. ([1796a] 1997, p. 968)

If the juxtaposition of ‘right’ and ‘duty’ is itself Smithian/Kantian, the essential point is that, whereas in a self-governing republic the people are sovereign, there is nevertheless a duty to respect, inter alia, the impartiality imperative embedded in the Constitution. It is in this spirit that Madison avers that My idea of the sovereignty of the people is, that the people can change the constitution if they please, but while the constitution exists, they must conform themselves to its dictates. ([1789a] 1999, p. 469)

Hamilton’s position is equally unambiguous: In my opinion the present Constitution is the standard to which we are to cling. Under its banners, bona fide must we combat our political foes – rejecting all changes but through the channel itself provides for amendments. ([1802] 2001, p. 989)

If their conception of the Constitution as fundamental law admitted of the possibility of constitutional amendment, the Founders had a consistent and unequivocal view of judicial interpretation. As Raoul Berger has emphasized, ‘Judicial alteration of the fundamental law ran counter to [the Founders’] belief in a “fixed Constitution”; it was altogether outside their contemplation, as Hamilton made plain’ (1997, pp. 331–2). Writing in 1830 and again in 1833, James Madison reflected on ‘the proceedings of the Legislature of Virga. in 98 & 99 agst. the Alien and Sedition Acts’ ([1830] 1999, p. 850). In a March 12, 1833 letter to William Cabell Rives, Madison wrote: In explaining the proceedings of Virga. in 98–99, the state of things at that time was the more properly appealed to, as it has been too much overlooked. The doctrines combated are always a key to the arguments employed. It is but too common to read



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the expressions of a remote period thro’ the modern meaning of them, & to omit guards agst. misconstruction not anticipated … . The remark is equally applicable to the Constitution itself. ([1833] 1999, p. 865)37

In a September 7, 1803 letter to Wilson Cary Nicholas, Thomas Jefferson, while addressing a different constitutional issue, offers a similar argument against ‘misconstruction’ or ‘broad construction’ of the Constitution: I am aware of the force of the observations you make on the power given by the Const. to Congress, to admit new States into the Union, without restraining the subject to the territory then constituting the U.S. But when I consider that the limits of the U.S. are precisely fixed by the treaty of 1783, that the Constitution expressly declares itself to be made for the U.S., I cannot help believing the intention was to permit Congress to admit into the Union new states, which should be formed out of the territory for which, & under whose authority alone, they were acting. I do not believe it was meant that they might receive England, Ireland, Holland, etc. into it, which would be the case on your construction. When an instrument admits two constructions, the one safe, the other dangerous, the one precise, the other indefinite, I prefer that which is safe & precise. I had rather ask an enlargement of power from the nation, where it is found necessary, than to assume it by a construction which would make our powers boundless. Our peculiar security is in possession of a written Constitution. Let us not make it a blank paper by construction. I say the same as to the opinion of those who consider the grant of the treaty making power as boundless. If it is, then we have no Constitution. If it has bounds, they can be no others than the definitions of the powers which the instrument gives. It specifies & delineates the operations permitted to the federal government, and gives all the powers necessary to carry these into execution … . I confess, then, I think it important, in the present case, to set an example against broad construction, by appealing for new power to the people. ([1803] 1984, pp. 1140–41; emphasis mine)

If Madison and Jefferson argue for what some today call ‘original meaning’, or ‘orginalism’ – an issue taken up in Chapter 8 – Hamilton used his discussion of the ‘independence of the judges’ to invoke the right of the people to amend the constitution.38 That said, he avers that Until the people have, by some solemn and authoritative act, annulled or changed the established form, it is binding upon themselves collectively, as well as individually: and no presumption, or even knowledge of their sentiments, can warrant their representatives in a departure from it, prior to such an act. (Carey and McClellan, 2001, p. 406; emphasis mine)

Equally important, Hamilton implicitly appeals to Smithian/Kantian moral philosophy to make the case for the independence and the ‘moderation of the judiciary’: But it is not with a view to infractions of the constitution only, that the independence of the judges may be an essential safe-guard against the effects of occasional ill hu-

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Morality, political economy and American constitutionalism mors in the society. These sometimes extend no farther than to the injury of the private rights of particular classes of citizens, by unjust and partial laws. Here also the firmness of the judicial magistracy … not only serves to moderate the immediate mischiefs of those [laws] which may have been passed, but it operates as a check upon the legislative body in passing them. (p. 406; emphasis mine)

If Hamilton’s concern with inherently discriminatory ‘unjust and partial laws’ belies his own support for discriminatory, possibly unconstitutional, ‘bounties, premiums and other artificial encouragements’ (S1.2), his argument is clearly derivative of Smith’s and Kant’s justice as impartiality construal. His implicit invocation of a Kantian-style veil of ignorance in the following passage is, I believe, equally apparent: The benefits of the integrity and moderation of the judiciary have already been felt in more states than one; and though they may have displeased those whose sinister expectations they may have disappointed, they must have commanded the esteem and applause of all the virtuous and disinterested. Considerate men, of every description, ought to prize whatever will tend to beget or fortify that temper in the courts; as no man can be sure that he may not be tomorrow the victim of a spirit of injustice, by which he may be a gainer to-day. And every man must now feel, that the inevitable tendency of such a spirit is to sap the foundations of public and private confidence, and to introduce in its stead universal distrust and distress. (pp. 406–7; emphasis mine)

Whatever else is said, it is clear that the Founders did not imagine an ‘adaptive’ or ‘living’ Constitution.39 Stated differently, they did not embrace a ‘result-oriented’ or instrumentalist constitutional jurisprudence (Berger, 1997, pp. 23 and 327–32). Whereas some would argue that the Supreme Court should be an ‘instrument of social change’, we have it on Hamilton’s authority that ‘The courts must declare the sense of the law; and if they should be disposed to exercise WILL instead of JUDGEMENT, the consequence would equally be the substitution of their pleasure to that of the legislative body’ (Carey and McClellan, 2001, p. 405; emphasis in original). Writing in support of the Founders’ understanding of judicial review, Hamilton insisted that To avoid an arbitrary discretion in the courts, it is indispensable that they should be bound down by strict rules and precedents, which serve to define and point out their duty in every particular case that comes before them. (p. 407)

Significantly, with this and the tenure of judges ‘during good behaviour’ in mind, Hamilton invokes the English inheritance: Upon the whole, there can be no room to doubt, that the [constitutional] convention acted wisely in copying from the models of those constitutions which have established good behaviour as the tenure of judicial offices, in point of duration; … . The experi-



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ence of Great Britain affords an illustrious comment on the excellence of the institution. (p. 408)

The essential point is that, from the Founders’ perspective, the solution of ‘social problems’ was the prerogative not of the judiciary, but of the legislative bodies and, especially, of the various state legislatures. If this means, as Raoul Berger has suggested, that the Supreme Court is not the ‘conscience to the country’ (1997, p. 333),40 it also means that, for Hamilton, ‘the proposed government cannot be deemed a national one; since its jurisdiction extends to certain enumerated objects only, and leaves to the several states, a residuary and inviolable sovereignty over all other objects’ (Carey and McClellan, 2001, p. 198). Indeed, Hamilton’s Federalist No. 82 makes clear that the federal government’s authority is limited to ‘one of three cases’: The principles established in a former paper [Federalist No. 32] teach us that the states will retain all pre-existing authorities which may not be exclusively delegated to the federal head; and that this exclusive delegation can only exist in one of three cases; where an exclusive authority is, in express terms, granted to the union; or where a particular authority is granted to the union, and the exercise of a like authority is prohibited to the states; or, where an authority is granted to the union, with which a similar authority in the states would be utterly incompatible. (Carey and McClellan, 2001, p. 426)

For his part, Madison, in his Federalist No. 45 assures us that The powers delegated by the proposed constitution to the federal government, are few and defined. Those which are to remain in the state governments, are numerous and indefinite. The former will be exercised principally on external objects, as war, peace, negotiation and foreign commerce; with which last the power of taxation will, for the most part, be connected. The powers reserved to the several states will extend to all objects, which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people; and the internal order, improvement, and prosperity of the state. (Carey and McClellan, 2001, p. 241; emphasis mine)

Writing in retirement, long after the publication of The Federalist Papers, Madison reflected on the republic’s experience with federalism. In a June 27, 1823 letter to Thomas Jefferson, he evinced concern with the behavior of the Supreme Court, and suggested a possible remedy: I am not unaware that the Judiciary career has not corresponded with what was anticipated. At one period the Judges perverted the Bench of Justice into a rostrum for partizan [sic] harangues. And latterly the Court, by some of its decisions, still more by extrajudicial reasonings & dicta, has manifested a propensity to enlarge the general authority in derogation of the local, and to amplify its own jurisdiction, which has justly incurred the public censure … . And if no remedy of the abuse be practicable under the forms of the Constitution, I should prefer a resort to the Nation for an amendment of the Tribunal itself. ([1823] 1999, p. 802)

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Interestingly, Madison, writing almost four years earlier, attributed ‘Much of the error in expounding the Constitution’ to a failure to respect the dicta of what Hamilton called ‘a limited constitution’. On Hamilton’s account, a limited constitution is ‘one which contains certain specified exceptions to the [federal] legislative authority; such for instance as that it shall pass no bills of attainder, no expost facto laws, and the like’. Adding that ‘Limitations of this kind can be preserved in practice no other way than through the medium of the courts of justice’, Hamilton asserts that it is the Court’s ‘duty … to declare all acts contrary to the manifest tenor of the constitution void. Without this, all the reservations of particular rights or privileges would amount to nothing’ (Carey and McClellan, 2001, p. 403). Whereas Hamilton was making a generic point about the need for both the federal legislature and the Supreme Court to respect ‘reservations of particular rights or privileges’, Madison, with the benefit of hindsight, wrote in 1819 that Much of the error in expounding the Constitution has its origin in the use made of the species of sovereignty implied in the nature of Govt. The specified powers vested in Congress, it is said, are sovereign powers, and that as such they carry with them an unlimited discretion as to the means of executing them. It may surely be remarked that a limited Govt. may be limited in its sovereignty as well with respect to the means as to the objects of his powers; and that to give an extent to the former, superseding the limits to the latter, is in effect to convert a limited into an unlimited Govt. ([1819] 1999, p. 736)

Continuing, Madison insists that ‘The very existence of … local sovereignties is a controul on the pleas for a constructive amplification of the powers of the General Govt.’ and that Within a single State possessing the entire sovereignty, the powers given to the Govt. by the People are understood to extend to all the Acts whether as means or ends required for the welfare of the Community, and falling within the range of just Govt. To withhold from such a Govt. any particular power necessary or useful in itself, would be to deprive the people of the good dependent on its exercise; since the power must be there or not exist at all. In the Govt. of the U.S. the case is obviously different. In establishing that Govt. the people retained other Govts. capable of exercising such necessary and useful powers as were not to be exercised by the General Govt. (pp. 736–7)41

If Madison’s 1819 letter makes it clear that he was concerned about the erosion of local or state ‘sovereignties’, his January 7, 1800 ‘Report on the Alien and Sedition Acts’ was equally clear about the source of the states’ sovereignty: in all the co-temporary discussions and comments, which the Constitution underwent, it was constantly justified and recommended on the ground, that the powers not given



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to the [federal] government, were withheld from it; and that if any doubt could have existed on this subject, under the original text of the Constitution, it is removed as far as words could remove it, by the [Tenth] [A]mendment, now a part of the Constitution, which expressly declares, ‘that the powers not delegated to the United States, by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people’. ([1800] 1999, p. 610)

For his part, Jefferson embraces the idea, articulated by Madison, that the ‘discussions and comments, which the Constitution underwent’ were informed by the imperative to retain the states’ ‘sovereignties’. Equally important, he invokes the Tenth Amendment, and articulates the view that it is the states’ responsibility to enforce moral duties and restrain vice ‘within their own territory’: Can it be believed, that under the jealousies prevailing against the General Government, at the adoption of the constitution, the States meant to surrender the authority of prevailing order, of enforcing moral duties and restraining vice, within their own territory? … . The States supposed that by their tenth amendment, they had secured themselves against constructive powers … . I believe the States can best govern our home concerns, and the General Government our foreign ones. I wish, therefore, to see maintained that wholesome distribution of powers established by the constitution for the limitation of both; and never to see all offices transferred to Washington, where, further withdrawn from the eyes of the people, they may more secretly be bought and sold as at market. ([1823] 1984, pp. 1475–6)42

If all of this gestures toward contemporary debate about state and federal government prerogatives – a subject addressed in Chapter 8 – it also highlights Jefferson’s view that the Founders’ federalism enterprise was being undermined by the Supreme Court: The judiciary of the United States is the subtle corps of sappers and miners constantly working under ground to undermine the foundations of our confederated fabric. They are construing our constitution from a co-ordination of a general and special government to a general and supreme one alone. ([1820] 1984, p. 1446)

While some may construe Jefferson’s language to be a bit hyperbolic the essential point is this: the Founders had a clear vision of the respective roles of the federal and state governments; a vision which they came to believe was being undermined by a Supreme Court given to ‘forcing the meaning of words, hunting after possible constructions, and hanging inference on inference, from heaven to earth, like Jacob’s ladder’ (Jefferson, [1823] 1984, p. 1475). Yet, if the Founders were concerned with ‘broad construction’ of the federal government’s sovereignty and, therefore, with the possibility that ‘the Judicial Department also may exercise or sanction dangerous powers beyond the grant of the constitution’ (Madison, [1800] 1999, p. 613), they were also concerned with ‘legislative encroachments’.43

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Invoking what economists today would recognize as an elementary general equilibrium model, Madison provides a clear statement of the problem: But what is of most importance is the high sanction given to a latitude in expounding the Constitution which seems to break down the landmarks intended by a specification of the Powers of Congress, and to substitute for a definite connection between means and ends, a Legislative discretion as to the former to which no practical limit can be assigned. In the great system of Political Economy having for its general object the national welfare, everything is related immediately or remotely to every other thing; and consequently a Power over any one thing, if not limited by some obvious and precise affinity, may amount to a Power over every other. Ends & means may shift their character at the will & according to the ingenuity of the Legislative Body. ([1819] 1999, p. 734)

Whether Madison had in mind the Hamilton–Jefferson debate about the constitutionality of ‘bounties, premiums and other artificial encouragements’ (S1.2) is not clear. What is clear is that he employs legislative grants of monopoly to make his point: It is true, the [Supreme] Court are disposed to retain a guardianship of the Constitution against legislative encroachments. ‘Should Congress’, say they, ‘under the pretext of executing its Powers, pass laws for the accomplishment of objects not entrusted to the Government, it would become the painful duty of this Tribunal to say that such an act was not the law of the land.’ But suppose Congress should, as would doubtless happen, pass unconstitutional laws not to accomplish objects not specified in the Constitution, but the same laws as means expedient, convenient or conducive to the accomplishment of objects entrusted to the Government; by what handle could the Court take hold of the case? ([1819] 1999, pp. 734–5)

With this predicate in mind, Madison provides an example: We are told that it was the policy of the old Government of France to grant monopolies, such as that of Tobacco, in order to create funds in particular hands from which loans could be made to the Public, adequate capitalists not being formed in that Country in the ordinary course of commerce. Were Congress to grant a like monopoly merely to aggrandize those enjoying it, the Court might consistently say, that this not being an object entrusted to the Governt. the grant was unconstitutional and void. Should Congress however grant the monopoly according to the French policy as a means judged by them to be necessary, expedient or conducive to the borrowing of money, which is an object entrusted to them by the Constitution, it seems clear that the Court, adhering to its doctrine, could not interfere without stepping on Legislative ground, to do which they justly disclaim all pretension. (p. 735)

I suggest, first, that any plausible reading of his text suggests that Madison regarded legislative grants of ‘monopoly’ to be unconstitutional. Granting this, it is likely that Madison would agree with Jefferson that Hamiton’s invocation of ‘The embarrassments, which have obstructed the progress of our external



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trade’ as a justification for a system of ‘bounties, premiums and other artificial encouragements’ (S1.2) is unavailing. If, for Jefferson, Hamilton’s construction permits Congress ‘to take everything under their management which they should deem for the public welfare, & which is susceptible of the application of money’ ([1792a] 1984, p. 677), for Madison, it represents ‘a Legislative discretion as to [means] to which no practical limit can be assigned’ ([1819] 1999, p. 734). Given the Founders’ Smithian/Kantian justice as impartiality perspective (S1.5), this is hardly surprising. In the event, Madison is unequivocal in his view that a ‘Legislative grant’ of ‘monopoly’ is unconstitutional, and inconsistent with the precepts of ‘limited government’: it was anticipated I believe by few if any of the friends of the Constitution, that a rule of construction would be introduced as broad & as pliant as what has occurred. And those who recollect, and still more those who shared in what passed in the State Conventions, thro’ which the people ratified the Constitution, with respect to the extent of the powers vested in Congress, cannot easily be persuaded that the avowal of such a rule would not have prevented its ratification. It has been the misfortune, if not the reproach, of other nations, that their Govts. have not been freely and deliberately established by themselves. It is the boast of ours that such has been its source and that it can be altered by the same authority only which established it. It is a further boast that a regular mode of making proper alterations has been providentially inserted in the Constitution itself. It is anxiously to be wished therefore, that no innovations may take place in other modes, one of which would be a constructive assumption of powers never meant to be granted. If the powers be deficient, the legitimate source of additional ones is always open, and ought to be resorted to. ([1819] 1999, pp. 735–6)

Importantly, and perhaps paradoxically, given Hamilton’s broad reading of ‘means’ and ‘ends’, Madison goes on to invoke Hamilton’s ‘limited government’ construction: ‘It may surely be remarked that a limited Govt. may be limited in its sovereignty as well with respect to the means as to the objects of his powers; and that to give an extent to the former, superseding the limits of the latter, is in effect to convert a limited into an unlimited Govt.’ (p. 736; emphasis mine). Let us be clear. The Founders’ own words reveal that they acknowledged their English inheritance; that they regarded the Constitution as fundamental law; that they believed that, with self-governance comes a correlative duty to respect the Constitution; that they regarded the Constitution as ‘fixed’; that they therefore rejected the idea of what today would be called a ‘living’ or ‘adaptive’ Constitution, and that, whereas they believed that constitutional interpretation should be informed by ‘the state of things at [the] time’ of the framing, they insisted that the Supreme Court was given to ‘forcing the meaning of words, hunting after possible constructions, and hanging inference on inference, from heaven to earth, like Jacob’s ladder’. Moreover, we know that in Madison’s account, ‘The “Federalist” may fairly enough be regarded as the most authentic

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exposition of the text of the federal Constitution, as understood by the Body which prepared & the Authority which accepted it’ ([1825] 1999, p. 808).44 And we know that The Federalist establishes that the federal government’s jurisdiction ‘extends to certain enumerated objects only, and leaves to the several states, a residual and inviolable sovereignty over all other objects’. Yet, all this notwithstanding, we know that, by 1823, Madison had concluded that ‘the court, by some of its decisions, still more by extrajudicial reasonings and dicta, has manifested a propensity to enlarge the general authority in derogation of the local, and to amplify its own jurisdiction’. And, finally, we know that, whereas Jefferson was suspicious of ‘offices transferred [from the states] to Washington, where, further withdrawn from the eyes of the people, they may more secretly be bought and sold at market’, he emphasized, as did the other Founders, that the Constitution provided for its own amendment: whereas, under the existing Constitution, neither legislative nor judicial ‘encroachments’ are to be tolerated, the people are sovereign, and it is they who ‘can change the constitution if they please’. While all of this informs the argument developed in later chapters, my immediate interest centers on the Founders’ procedurally based, consequencedetached moral theory. If, as I have argued, the Founders’ constitutional enterprise was animated by their embrace of the moral law and the associated Smithian/Kantian understanding of the self, their appraisal of postconstitutional jurisprudence and of ‘legislative encroachments’ confirms their commitment to these ideas. On the one hand, while Hamilton inveighs against ‘the injury of the private rights of particular classes of citizens, by unjust and partial laws’, he insists that ‘the integrity and moderation of the judiciary’ will earn ‘the esteem and the applause of the virtuous and disinterested’. On the other hand, Madison worries about the Supreme Court’s ‘high sanction’ of a substitution ‘for [the] definite connection between means and ends, a Legislative discretion as to the former to which no practical limit can be assigned’. And, finally, it is clear that Jefferson’s invocation of the surreptitious buying and selling of political favors is both consistent with a Smithian/Kantian concern with fair procedure, and evocative of modern concerns with discriminatory ‘rent seeking’ and ‘majoritarian cycling’. Implicit in all of this is the idea that, whatever the ‘ends’, the ‘means’ must respect the moral equivalence of persons. In short, if the Founders’ republican self-government project envisioned constitutional restraints on the ‘tyranny of the majority’ and on discriminatory ‘factious behavior’, it also contemplated a postconstitutional conflictual politics constrained by public virtue; by respect for the moral law. And if this meant that public virtue must be cultivated, it also meant that self-governing people, in both their private and in their public lives, have a duty to promote just, in the sense of impartial, institutions.



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1.7 The Founder’s Political Economy It has been said that ‘no economic theory makes proper sense until conjoined to some adequate political doctrine (a doctrine which defines the nature and rights of the social arrangement to be served)’ (Scruton, 2002, pp. 106–7). For the Founders this meant that economics must be conjoined to republican political doctrine; a doctrine that, in their hands, was informed by Kantian-style contractarian moral and political philosophy. While the argument developed above need not be reprised, the essential point is that if the Founders sought to cultivate respect for the moral law, they also sought, through the Constitution, to institutionalize a moral political structure. Informed by the Smithian/Kantian idea of the moral equivalence of persons, an idea that Kymlicka, appropriately enough, characterizes as ‘a generalization of the golden rule’ (1993, p. 192), the Founders sought, through the Constitution’s ‘auxiliary precautions’ (S1.3) to minimize discriminatory ‘factious behavior’. As has been repeatedly emphasized, the Founders did not have a teleological conception of the state. What mattered was impartial procedure; the equal treatment of morally equivalent persons. For the Founders then, like Kantian contractarians, our tacit consent binds us to a legitimate and morally acceptable state only if the conventions which comprise it are the sort of conventions that we could agree to, were we able to impartially and fairly reappraise and recreate those conventions. (Hampton, 1995, p. 383)

But how is the non-consequentialist appraisal of prospective or extant constitutional orders to proceed? The Nobel laureate economist James Buchanan proffers this answer: But how are criteria for ‘efficiency’ or ‘justice’ to be introduced without reference to end states? It is precisely at this point that the notion of agreement, of quasi-contract, becomes critical in the argument. That rule is acceptable which is itself defined by agreement among all participants … . We may … substitute fair for acceptable here, and … we may replace fair with just. Or, … we may follow John Rawls in defining justice as fairness. ([1977] 2001, pp. 179–80)

Buchanan’s appeal to John Rawls is appropriate insofar as Rawls has been characterized as ‘The best-known exponent of Kantian contractarianism’ (Kymlicka, 1993, p. 191). However this may be, Rawls and Buchanan share with Kant and the Founders a prior commitment to the moral equivalence of persons; to persons as ‘ends in themselves’. While the ‘contract device’ cannot justify this prior ethical commitment since it presupposes it (p. 193), the moral law, or golden rule, gives rise to a ‘duty of justice’ that ‘requires us [both] to support and to comply with just institutions that exist and apply to us’ and ‘to further

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just arrangements not yet established’ (Rawls, 1971, p. 115). Thus, whereas, for utilitarians and, pari passu, for adherents of orthodox economic theory, the desideratum or ‘good’ is the maximization of utility, respect for the moral law implies a procedural imperative: Rather than starting from a conception of the good given independently of the right, we start with a conception of the right – of the moral law – given by pure (as opposed to empirical) practical reason. We then specify in the light of this conception what ends are permissible and what social arrangements are right and just. We might say: a moral conception is not to revolve around the good as an independent object, but around a conception of the right as constructed by our pure practical reason into which any permissible good must fit. Kant believes that once we start from the good as an independent given object, the moral conception must be heteronomous. (Rawls, [1989] 1999, p. 509)

Given that, for Kant, ‘acting from a certain interest’ is heteronomous ([1785] 1988, p. 62), desired ‘end states’ cannot be the basis of morality. Instead, we have a duty to promote and to respect just or impartial institutions. Yet if, as I have argued, the Founders’ moral and political philosophy was informed by the moral law and, pari passu, by the imperative to promote and to respect just institutions, a question remains: How is the non-heteronomous perspective to be achieved? As Buchanan suggests, ‘Something like “the original position” behind the “veil of ignorance,” made familiar by Rawls, must be introduced to make [institutional] evaluation possible’ ([1977] 2001, p. 180). In Rawls’s account, the ‘original position’ is an ‘initial situation of equality’ in which ‘One excludes the knowledge of those contingencies which set men at odds and allows them to be guided by their prejudices. In this manner the veil of ignorance is arrived at in a natural way’ (1971, pp. 17–22). While it is clear that no one can, in fact, be deprived of knowledge of his ‘particular inclinations and aspirations, and … conceptions of their good’, Rawls insists that ‘The idea here is simply to make vivid to ourselves the restrictions that it seems reasonable to impose on arguments for principles of justice, and therefore on these principles themselves’ (p. 18). If the idea of impartial consideration implicit in this construction is evocative of Adam Smith’s impartial spectator and of Kant’s ‘two points of view’ (S1.5), the essential point is that the original position – veil of ignorance ‘contract device’ serves some ‘useful purposes’: While the idea of contracting from an original position cannot justify our basic moral judgements, since it presupposes them, it does serve some useful purposes. It can render our judgements more determinate (contractual agreements must be explicitly and publicly formulated), render them more vivid (the veil of ignorance is a vivid way of expressing the moral requirement of putting ourselves in other people’s shoes),



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and can dramatize our commitment to them (the veil of ignorance dramatizes the claim that we would accept a certain principle however it affected us). In these and other ways, the contract device illuminates the basic ideas of morality as impartiality. (Kymlicka, 1993, p. 193)

Whatever else is said, the ‘contract device’ can be employed ‘to prescribe the best, or most just, form of political society’ (Hampton, 1995, p. 384). Given their prior ethical commitment to the moral equivalence of persons, the Founders’ republican project was informed by the idea that the new republic’s informal and formal institutions should cultivate respect for the golden rule, or moral law. Their constitutional enterprise, in particular, was animated by the idea that discriminatory ‘factious behavior’ is inconsistent with the equal consideration imperative. It is in this sense that the distinctive features of the American Constitution – its ‘auxiliary precautions’ – represented an attempt to institutionalize a Kantian-style social contract. It is ‘as if’ the Founders employed the ‘contract device’ to frame a Constitution that respected the Kantian duty of justice. The Founders were driven, in short, by the imperative to promote just institutions. Nothing in their project contemplated a teleological or consequentialist conception of the state. Equally important, the Founders saw ‘political economy’ as a branch of philosophy (Jefferson, [1814a] 1999, p. 1349). In their account, economic deliberation could not be distinguished from questions of moral and political philosophy. And the political and moral philosophy they endorsed was not utilitarianism. It was contractarianism. It should come as no surprise, then, that what Sandel has called the ‘political economy of growth and distributive justice’ (1996, p. 294) found no expression in the Founders’ political economy. What did find expression was ‘healthily moralistic political debate’ (Will, 1983, p. 105) about which economic policies were consonant with the moral imperative – institutionalized in the Constitution – to respect the moral law. Hamilton’s debate with Jefferson and Madison about the constitutionality of ‘bounties, premiums and other artificial encouragements’ is perhaps the best example (S1.2). What seems clear, then, is that consequentialist, institutionless and intendedly value-free economics would find no place in the Founders’ imagination. Yet this vector of characteristics is descriptive of the now-dominant economic paradigm. While more will be said of this in later chapters, the essential point is that the antiseptic, technocratic, outcomes-based approach to economics has captured the modern imagination. As Sandel has emphasized, The clearest expression of faith in the new economics as a neutral instrument of national governance was offered by [President Kennedy]. Speaking to a White House economic conference in 1962, he argued that modern economic problems could best be resolved if people bracketed, or set aside, their political and ideological convictions. ‘Most of us are conditioned for many years to have a political viewpoint,

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Continuing, Sandel notes that, ‘A few weeks later, in a commencement speech at Yale University, Kennedy elaborated this theme’: ‘The central domestic issues of our time’, he observed, ‘are more subtle and less simple’ than the large moral and political issues that commanded the nation’s attention in earlier days. ‘They relate not to basic clashes of philosophy or ideology but to ways and means of reaching common goals … . What is at stake in our economic decisions today is not some grand warfare of rival ideologies which will sweep the country with passion but the practical management of a modern economy.’ Kennedy urged the country ‘to face technical problems without ideological preconceptions,’ to focus on ‘the sophisticated and technical issues involved in keeping a great economic machinery moving ahead’. (p. 266)

If the Founders would not regard economics as a ‘neutral instrument of national governance’, they would surely reject the idea that people should ‘set aside their political and ideological convictions’ in the interest of securing ‘sophisticated judgments which do not lend themselves to the great sort of “passionate movements” that have stirred this country so often in the past’. For the Founders, economic judgments were moral judgments. Economic judgments did not, in their view, contemplate ‘sophisticated and technical issues involved in keeping a great economic machinery moving ahead’. Rather, economic judgments were important, not because of the goals to be achieved, but because they called to mind the imperative to treat morally equivalent persons equally. If President Kennedy gave expression to the intendedly value-free outcomesbased approach to economic policy appraisal, social welfare theory – the economist’s theory of the state – is the deus ex machina that, it is claimed, ensures the feasibility of the approach.45 While an explication and critique of the theory is developed in later chapters, the essential point is that welfare theorists identify ‘welfare’ or the ‘public good’ with utility (Warke, 2000, p. 374). And central to the institutionless, intendedly value-free enterprise are the theory’s two fundamental welfare theorems; theorems that I shall later claim can be employed to rationalize all manner of ad hoc, discriminatory market and redistributive interventions. Suffice it to say that the Nobel laureate economist Joseph Stiglitz, reflecting on his service as a Member, and later as Chairman, of President Clinton’s Council of Economic Advisers, averred that As a long-time student of the public sector, I welcomed the opportunity to come to Washington as a member of the Council of Economic Advisers and later to become Chairman of the Council … .



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To be sure, I came also as an activist … with a view about what it was that government should, and should not be doing. My reference point was the fundamental theorems of welfare economics … it has been shown that in the presence of imperfect information or incomplete markets, the economy will not be Pareto efficient; in other words, there will always be some intervention by which the government can make everyone better off. (Stiglitz, 1998, pp. 3–4)

While much can, and will, be said about this, it is sufficient for the moment to emphasize two ideas. First, whereas the Founders embraced the Smithian/ Kantian conception of justice as impartiality, ‘Welfare economics is the theory of current time-slice principles of justice’. Reduced to its essentials, the theory insists that: (a) ‘all that needs to be looked at, in judging the justice of a distribution, is who ends up with what’, with no account taken of how the distribution came about; and (b) ‘any two structurally identical distributions are equally just’ (Nozick, 1974, p. 154). Second, if the time-slice theory of justice implicit in social welfare theory would be unacceptable to the Founders, it is also clear that consequence-based, procedurally detached social welfare theory is irreconcilable with the Founders’ procedurally based, consequence-detached contractarian approach to institutional design and appraisal. While, as I have noted, utilitarian social welfare theory may fairly be described as the economist’s theory of the state, it is also true that not all economists are proponents of the theory. In a 1972 paper entitled ‘Rawls on Justice as Fairness’, James Buchanan makes this observation: When I first encountered John Rawls’ conception of ‘justice as fairness’, I was wholly sympathetic. I interpreted his approach to be closely analogous, even if not identical, to that aimed at explaining the voluntary emergence of ‘fair games’, with widely divergent applications … . I sensed the possible extensions in the explanatory– descriptive power of models for ‘rules of games’, derived in accordance with some criteri[on] of ‘fairness’.

Continuing, Buchanan reminds us that As readers of The Calculus of Consent recognize, Gordon Tullock and I employed such models in our derivation of the ‘logical foundations of constitutional democracy’ (our subtitle) of a political structure not grossly divergent from that envisioned by the Founding Fathers and embodied in the United States Constitution, at least in its initial conception. ([1972] 2001, p. 353)

If this passage implicitly confirms my hypothesis that the Founders’ constitutional enterprise was animated by a Smithian/Kantian and, one might appropriately say, Rawlsian, conception of justice as impartiality, it also captures the essence of Buchanan’s ‘constitutional political economy’ (CPE) enterprise.46 Both in conception and in execution, the CPE project is the contemporary ana-

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logue for the Founders’ procedurally based, consequence-detached republican political economy. While a formal discussion of CPE is deferred to later chapters, it is appropriate to appeal to Buchanan’s adumbration of the CPE approach: Orthodox economic analysis … attempts to explain the choices of economic agents, their interactions with one another, and the results of these interactions, within the existing legal–institutional–constitutional structure of the polity. Normative considerations enter through the efficiency criteria of theoretical welfare economics, and policy options are evaluated in terms of these criteria … . By both contrast and comparison, constitutional economic analysis attempts to explain the working properties of alternative sets of legal–institutional–constitutional rules that constrain the choices and activities of economic and political agents, the rules that define the framework within which the ordinary choices of economic and political agents are made. In this sense, Constitutional Economics involves a ‘higher’ level of inquiry than orthodox economics. ([1987a] 2001, pp. 3–4)47

If it is clear that the CPE enterprise, like that of the Founders, does not embrace a teleological conception of the state (Buchanan, [1977] 2001, p. 178), it is also clear that the explicitly normative process of institutional appraisal cannot be based on Paretian optimality or ‘economic’ efficiency (Buchanan, [1989b] 2001, p. 271). While economic efficiency is an artifact of the economist’s utilitarian theory of the state, political efficiency is understood to ‘describe the efficacy of differing institutions in reducing or eliminating the incentives for participants to invest resources in rent seeking aimed to secure discriminatory advantage through majoritarian exploitation’ (Buchanan and Congleton, 1998, p. 40). While these ideas will be developed in later chapters, it should be clear that the ‘rent seeking’ and ‘majoritarian exploitation’ to which Buchanan and Congleton refer are euphemisms for what the Founders called ‘factious behavior’. As we have seen (S1.3), the ‘auxiliary precautions’ embedded in the Constitution were intended to be formal institutional constraints on the intendedly discriminatory behavior to which Washington referred: The alternate domination of one faction over another, sharpened by the spirit of revenge natural to party dissention … is itself a frightful despotism. But this leads at length to a more formal and permanent despotism. The disorders and miseries, which result, gradually incline the minds of men to seek security and repose in the absolute power of an Individual: and sooner or later the chief of some prevailing faction … turns this disposition to the purposes of his own elevation, on the ruins of Public Liberty. ([1796a] 1997, pp. 969–70)

If Washington’s somewhat hyperbolic language gestures toward the modern concept of ‘majoritarian cycling’ (Arrow, 1951; Black, 1958; Buchanan and



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Congleton, 1998, pp. 19–20), it is also roughly congruent with constitutional political economists’ concern that ‘As it operates, postconstitutional politics is majoritarian, which is, naturally, discriminatory to the extent that participants promote separable interests’ (Buchanan and Congleton, 1998, p. 12).48 It is clear that Madison’s ‘auxiliary precautions’ were intended to provide a set of formal, constitutional constraints on such behavior: ‘A careful reading of [Federalist No. 10] suggests that Madison clearly recognized that individuals and groups would try to use the processes of government to further their own differential or partisan interests’ (Buchanan and Tullock, [1962] 1999, p. 25). Yet, while Buchanan and Tullock acknowledge ‘the genius of the Founding Fathers in the construction of the American system’ (pp. 298–9), observable features of contemporary reality – single-item spending ‘earmarks’, a metastasizing, discriminatory tax code, and intergenerational discrimination are examples – suggest that the Founders’ auxiliary precautions have been unavailing.49 Animated by the same idea that motivated the Founders, the moral equivalence of persons, constitutional political economists argue that discriminatory [postconstitutional] politics cannot pass the contractarian test. In reflective equilibrium and behind a veil of ignorance/uncertainty, persons could never agree to the establishment of political institutions that are predicted to discriminate explicitly in their operation. The politics of discrimination would not meet the agreement criterion that defines fairness or justice. And, also importantly, such a politics would necessarily be inefficient in a resource-wasting sense. (Buchanan and Congleton, 1998, p. 11)

It is on this logic that constitutional political economists argue that a generality or impartiality constraint should be embedded in the Constitution. While the nature and implications of such a constraint are developed in later chapters, it is sufficient for the moment to emphasize that, whereas a generality constraint would be resisted at the postconstitutional stage, it seems plausible to assume that it could emerge at the constitutional level. The essential point is that, on contractarian logic, At the constitutional level, identifiable self-interest is not present in terms of external characteristics. The self-interest of the individual participant at this level leads him to take a position as a ‘representative’ or ‘randomly distributed’ participant in the succession of collective choices anticipated. Therefore, he may tend to act, from self-interest, as if he were choosing the best set of rules for the social group. Here the purely selfish individual and the purely altruistic individual may be indistinguishable in their behavior. (Buchanan and Tullock, [1962] 1999, p. 96)

If all of this is consistent with the logic of the Kantian/Rawlsian ‘contract device’, a generality or impartiality constraint is plainly recognizable as a sup-

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plement to the Founders’ ‘auxiliary precautions’. Consistent with the Founders’ procedurally based, consequence-detached constitutional enterprise, Normatively, the task for the constitutional political economist is to assist individuals, as citizens who ultimately control their own social order, in their continuing search for those rules of the political game that will best serve their purposes, whatever these might be. (Buchanan, 1987b, p. 250)

The symbiotic relationship between the Founders’ constitutional project and the constitutional political economist’s enterprise extends both to a shared rejection of instrumentalist or ‘results oriented’ jurisprudence and to a concern with the national legislature’s propensity to usurp the prerogatives of the states. For both the Founders and the constitutional political economist, justice as impartiality is both a procedural concept and ‘the end of government’ (S1.6). Given their non-teleological conception of the state, the notion of ‘social justice’ (S6.4), a decidedly consequentialist notion, finds no expression in the thinking either of the Founders or of the constitutional political economist. The work of James Buchanan is, I believe, heuristic: The American judiciary views law as an instrument to promote the ‘social good’, as this good is defined by the judges, and it also allows, in its ‘majesty’, the legislative bodies to promote the ‘social good’ in those areas where the judiciary has chosen to remain aloof, and notably in so-called economic legislation. In matters of economic policy the effective American constitution is what Congress determines it to be; the judiciary adopts a hands-off attitude here … confusion between the constitutional stage of choice … and collective actions taken within ‘the law’ will almost necessarily arise as long as the objectives of the state are seen as those of promoting ‘social good’. To the extent that the institutions of law and government, along with the prevailing public attitudes toward these institutions, reflect this teleological conception of the state, constitutional order is necessarily undermined. In its most elemental meaning a constitution is a set of rules which constrain the activities of persons and agents in the pursuit of their own ends and objectives. To argue directly or by inference that the constitution in itself embodies or should embody a ‘social purpose’ is to negate its very meaning. ([1977] 2001, p. 178)

If all of this is evocative of the Founders’ concern with judicial and legislative encroachments (S1.6), it also gestures toward their insistence that ours is a federal system; a system in which, to paraphrase Madison, whereas the powers delegated by the Constitution to the federal government are ‘few and defined’ and ‘will be exercised principally on external objects, as war, peace, negotiation and foreign commerce’, those of the state governments are ‘numerous and indefinite’ (Carey and McClellan, 2001, p. 241): ‘Within a single State possessing the entire sovereignty, the powers given to the Govt. by the People are understood to extend to all the Acts whether as means or ends required for the welfare of the Community, and falling within the range of just Govt.’ (Madison, [1819]



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1999, p. 736).50 Thus, if the Founders insisted that a ‘just government’ treat morally equivalent persons equally, they also asserted that the states have a ‘residuary and inviolable sovereignty’ (Carey and McClellan, 2001, p. 198) over ‘all objects, which, in the ordinary course of affairs, concern the lives, liberties and properties of the people; and the internal order, improvement, and prosperity of the state’ (Carey and McClellan, 2001, p. 241). From the perspective of the constitutional political economist, there is an analogy to be drawn as between the Founders’ vision of political federalism and an economy organized on market principles. Whereas the economist’s consequence-based, procedurally detached and intendedly value-free theory of the state, social welfare theory, models politics as the activity of a benevolent despot who ‘seeks always and everywhere to promote “the public interest”’, the constitutional political economist rejects this ‘romanticized image of politics’. Once account is taken of bounded rationality, of information asymmetry, of positive monitoring costs and of their concomitant, opportunistic behavior, ‘any increase in the relative size of the politicized sector of an economy must carry with it an increase in the potential for [discriminatory] exploitation’ (Buchanan, [1995] 2001, p. 68). With this as background, the constitutional political economist argues that ‘The categorical difference between market and political interaction lies in the continuing presence of an effective exit option in market relationships and its absence in politics’ (ibid., pp. 68–9).51 Granting this, ‘The federalized structure, through the force of interstate competition, effectively limits the power of the separate political units to extract surplus value from its citizenry’ (p. 70). On this logic, given the ‘exit option’, Tiebout-type mobility among states or other political jurisdictions would seem to ensure that, under a federal system, ‘local governments should be observed widely to provide substantially uniform service packages to all their citizens’ (Buchanan and Congleton, 1998, p. 141). While these ideas are more fully developed in later chapters, the essential idea is that, from the constitutional economist’s perspective, ‘Federalism clearly allows uniform services to be a consequence of competition rather than a manipulated feature of constitutional design. In this, federalism is perhaps the best real laboratory of the appeal of the generality principle’ (p. 142). In her Dissent in a recent medical marijuana case (Gonzalez, Attorney General, ET AL. v. Raich ET AL., June 6, 2005), Justice Sandra Day O’Connor wrote that We enforce the ‘outer limits’ of Congress’ Commerce Clause authority not for their own sake, but to protect historic spheres of state sovereignty from excessive federal encroachment and thereby to maintain the distribution of power fundamental to our federalist system of government … . One of federalism’s chief virtues, of course, is that it promotes innovation by allowing for the possibility that ‘a single courageous

46

Morality, political economy and American constitutionalism State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country’. (Dissent, p. 1)

If, as I believe, the view of states as laboratories for ‘novel social and economic experiments’ comports with the Founders’ understanding of federalism, it is also clear that, as Raich demonstrates, American constitutional jurisprudence has not always sustained this vision. While this discussion is deferred to Chapter 8, the central point is this: whereas the economist’s consequence-based, procedurally detached and intendedly value-free theory of the state is illequipped to do so, the constitutional political economist embraces both the Founders’ prior ethical commitment to the moral equivalence of persons, and their idea of states as ‘laboratories’ for ‘novel social and economic experiments’. And central to the constitutional political economist’s project are the questions that animated the Founders’ thinking. Whatever else is said, the Founders would associate themselves with a political economy that seeks, inter alia, to answer the question, ‘May federalism be regarded as part of a just constitution; of a constitution which both institutionalizes and promotes the moral equivalence of persons?’52 The intertemporal path of constitutional jurisprudence aside (Chapter 8), the constitutional political economist’s answer is ‘Yes’. As Buchanan and Congleton have suggested, ‘It may … be said that our analysis of the generality [or impartiality] principle makes the first-best case for federalism’ (1998, p. 142). Implicit in the Founders’ and the constitutional political economist’s projects is an appreciation of the Smithian/Kantian/Rawlsian duty to promote just or impartial institutions. And central to both enterprises is the notion that there is a reciprocal relationship between formal and informal institutions. Hamilton insisted, for example, that ‘under the regular and gentle influence of general laws … varying interests will be constantly assimilating, till they embrace each other, and assume the same complexion’ (S1.3). For James Buchanan, ‘The genius of the eighteenth-century social philosophers … is to be found in their recognition that the self-interests of men can be made to serve social purposes under the appropriate institutional arrangements’ ([1973] 2001, p. 446). If the Founders sought via the Constitution’s ‘auxiliary precautions’ to minimize discriminatory factional influence, they also sought, through the Constitution and by other means, to promote respect for the moral law (SS1.3 and 1.5). Animated by the same prior ethical commitment to the moral equivalence of persons, the constitutional political economist seeks to promote the generality or impartiality principle. Like the Founders (S1.6), constitutional political economists intend that the Constitution both institutionalize and promote acceptance of the equal treatment imperative. And, like the Founders, they regard respect for the moral law to be both intrinsically valuable, and instrumentally important to the legitimacy of



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and, pari passu, trust in, government. In short, like the Founders, constitutional political economists regard the promotion of public virtue as a sine qua non for the survival of republican self-government (S1.1): The effective operation of democratic government, in its fiscal as well as its nonfiscal aspects, requires the adherence of its citizens to what may be called the ‘constitutional attitude’ … government can function properly only if a large proportion of its dayto-day operations take place within a quasi-permanent constitutional structure. Individuals, and groups, must recognize the importance of constitutional–institutional continuity, and the dependence of democratic process on firm adherence to such continuity. If this is not recognized, and if individuals come to consider governmental processes as nothing more than available means through which separate coalitions can exploit each other, democracy cannot, and should not, survive. (Buchanan, [1967] 1999, pp. 301–2)

If this echoes the Founders’ insistence that the Constitution, as fundamental law, is ‘sacredly obligatory upon all’ (S1.6), it also embraces the Founders’ idea that discriminatory factional behavior is corrosive of trust, and inimical, therefore, to the republican project. The Founders’ ‘auxiliary precautions’ notwithstanding, it seems clear that American postconstitutional politics is ‘almost exclusively dominated by and derivative from the strategic choices made by competing interests in disregard of the effects on political structure’ (Buchanan, [1989a] 1999, p. 372). While an adumbration of this problem is deferred to later chapters, the essential point is that the Founders would welcome a healthy moralistic debate about the discriminatory nature of American day-to-day conflictual politics. At its core, the debate would center on the reconcilability of a consequentialist politics of ‘wants and needs’, and of economic growth and distributive justice with a Constitution informed by the procedural imperative to treat morally equivalent persons equally. Whatever else is said, the constitutional political economist’s position in such a debate is unambiguous. Informed, as were the Founders, by the Smithian/Kantian/ Rawlsian duty of justice, he recognizes his obligation both to promote the greatest possible equal political participation (Rawls, 1971, pp. 221–8) and ‘to support and to comply with just institutions that exist and apply to us … [and] to further just arrangements not yet established’ (p. 115). Yet, if a constitutionally embedded generality or impartiality constraint is therefore both morally exigent and instrumentally important, it is nevertheless true that the ‘publicness’ and potential durability of constitutional provisions militate against constitutional change. On the one hand, when the expected benefits of constitutional amendments are not partitionable, one might plausibly ask, ‘Who are to take upon themselves the personal burden of designing provisional proposals for basic changes in the rules? (Brennan and Buchanan, [1985c] 2000, p. 160). On the other hand, the present value of the net expected benefits of constitutional

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amendment will, for an idealized person who expects to live forever, exceed that of the participatory agent whose planning horizon is finite (Buchanan, [1975] 2000, p. 156). In short, the ‘free rider’ problem and the lack of congruence between ideal and actual planning horizons complicate the constitutional amendment process. If the Founders could not have anticipated the nuances of modern public choice theory, they would most assuredly associate themselves with the constitutional political economist’s approach to these problems: given the moral exigency, instrumental importance, and ‘publicness’ of the impartiality principle, Buchanan argues that constitutional dialogue must be encouraged ([1989a] 1999, p. 369). For Buchanan, like the Founders (SS1.3 and 1.5), preference and value structures are mutable, and private and public virtue can be cultivated: The methodological individualist must, it seems to me, acknowledge the relationships between individual utility functions and the socioeconomic–legal–political–cultural setting within which evaluations are made. But such acknowledgement carries with it, almost as a matter of course, the possible productivity of investment in the promulgation of moral norms. (1991, p. 186)

The logic of the constitutional political economist’s ‘investment in the promulgation of moral norms’ – what Buchanan characterizes as ‘preaching’53 – is informed, in part, by the duty of justice. Reduced to its essentials, the individual, as a citizen, must be made to understand that he has an ‘ethical responsibility of full and informed participation in a continuing constitutional convention’ (Buchanan, [1989a] 1999, p. 372). Importantly, Buchanan maintains that the efficacy of preaching does not depend on ‘bootstrap ethics’. We are not required to assume, in other words, that persons ‘really “want better wants”’. All that is required is that ‘persons rationally will “want others to want better wants”, or, specifically, that others behave more cooperatively toward themselves in social intercourse’ (Buchanan, 1991, p. 186). On this logic, the imperative to treat morally equivalent persons impartially can be fashioned into ‘models amenable to public comprehension’ (Buchanan, [1975] 2000, p. 227). So, too, can the idea that discriminatory politics is both incompatible with the moral equivalence of persons, and reflective of the rent seeking and majoritarian cycling that is corrosive of trust and the legitimacy of government. Granting this, the ‘contract device’ retains its basic relevance. In effect, the individual, as self-governing citizen, should be made to understand that, given majoritarian cycling, a constitutionally embedded impartiality constraint is in his (or her) self-interest. In effect, because he cannot foresee his own future contingent circumstance, he will understand that his membership in an extant, dominant majority does not ensure that he will not, in the future, be a member of an exploited minority. On this logic, the individual



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‘may tend to act, from self-interest, as if he were choosing the best set of rules of the social group’ (Buchanan and Tullock, [1962] 1999, p. 96). Thus, while it is self-interest that animates his thinking, it is ignorance of future contingent states that provides incentive to agree to a veil-of-ignorance situated agreement on an impartiality or generality constraint. If it is clear that, on contractarian logic, agreement on a constitutionally embedded impartiality constraint is possible (S8.3), it is also clear that the work of the constitutional political economist comports with the Founders’ vision of a procedurally based, consequence-detached republican political economy.

NOTES   1. It is, of course, true that the Founders benefited from what might be called the Americans’ English inheritance (S1.4).   2. See also Dickinson ([1788] 1993, p. 409).   3. See also Jefferson’s ‘Letter To the President of the United States’ ([1792b] 1984, pp. 994–5).   4. See also ‘Thomas Jefferson Replies to James Madison’ ([1787c] 1993, p. 213).   5. See Kurland and Lerner (1987a, p. 654) and Montesquieu ([1750] 1977, Book III, 3; Book IV, 5; Book V, 2). See also David Wallace Carrithers’ Introduction, pp. 60–61.   6. See also Levy (2001, pp. 30, 33 and 35) and Rakove (1997, p. 333).   7. See, for example, the Rev. Stephen Peabody’s 1797 Sermon before the General Court of the State of New Hampshire ([1797] 1998, pp. 1323–38, esp. p. 1337). See also Samuel Langdon’s June 5, 1788 Sermon before the General Court of the State of New Hampshire ([1788] 1998, pp. 943–67. Of particular interest is Langdon’s admonition that ‘you are impowered to make righteous laws for promoting public order and good morals’ (p. 957). For his part, in his January 3, 1788 New York Journal article, the Anti-Federalist, Brutus, insisted that ‘We ought to furnish the world with an example of a great people, who in their civil institutions hold chiefly in view, the attainment of virtue, and happiness among ourselves’ ([1788] 1993, p. 693). Finally, in his 1802 ‘An Oration on the Anniversary of the Independence of the United States of America’, Zephaniah Swift Moore averred that, ‘The fathers of America chose a different path, in which to seek the desired object. The cultivation of science, the dissemination of knowledge, and the practice of virtue, were by them pursued, as the only means of rightly forming the public mind, and perpetuating national freedom and happiness. They well knew, that civil liberty could not be preserved without these means; and that good citizens must be made, by making good men’ ([1802] 1983, p. 1218).   8. See Hamilton’s June 27, 1788 ‘Speech in the New York Ratifying Convention on the Distribution of Powers’ ([1788a] 2001, p. 509) for a discussion of ‘certain principles in human nature’.   9. An emerging theme in the law and economics literature is that law both reflects and shapes societal norms. See, for example, McAdams and Rasmusen (2004) and Posner (1997). 10. In fact, Montesquieu’s admonition that ‘when the legislative and executive powers are united in the same person, or in the same body of magistrates, there can be no liberty’ was invoked by both Federalists and Anti-Federalists. See, for example, Madison’s Federalist No. 47 (Carey and McClellan, 2001, p. 251) and Ketcham (2003, p. 251). 11. See also Jonathan Edwards ([1794] 1998, p. 1215) and Bishop James Madison ([1795] 1998, p. 1319). 12. As Carey has emphasized, ‘Madison was an objectivist in the sense that he attached meaning to such terms as “justice,” “permanent and aggregate interests of the community,” and the “rights of other citizens” … . For instance, justice, probably his highest end, is not to be

50

13. 14. 15. 16.

17. 18. 19.

20. 21. 22. 23. 24. 25. 26. 27. 28.

Morality, political economy and American constitutionalism equated with what any majority, or “the great body of the people” may regard it to be at any given point in time; it embodies known and objective characteristics that are the measure of whether a group is factious’ (1995, p. 41). For his part, Hamilton gestured toward a Rawlsian notion of equal political participation ([1792] 2001, p. 783). For more on the Constitution as fundamental law, see The Federalist, No. 53, pp. 277–8, The Federalist No. 78, pp. 403–5 and The Federalist No. 81, pp. 417–18 in Carey and McClellan (2001). See also Madison’s ‘Remarks in Congress on Proposed Constitutional Amendments’ ([1789a] 1999, p. 469). See also Noah Webster’s February 1788 article in American Magazine (New York) ([1788] 1993, pp. 304–15). Having declared that ‘A paper-declaration is a very feeble barrier against the force of national habits, and inclinations’ (p. 309), Webster nevertheless argued that majority rule ‘is a dictate of natural law’ (p. 312). For his part, in his December 20, 1787 reply to Madison, Jefferson asserted that ‘it is my principle that the will of the Majority should always prevail’ ([1787b] 1993, p. 213). This, despite the fact that he objected to the proposed Constitution’s omission of a bill of rights (p. 210). For more on this, see Berkin (2002, pp. 158–9). On December 15, 1791, the states ratified ten of the proposed amendments. As is well known, Montesquieu also influenced Madison and the other Founders. It is interesting, therefore, that Montesquieu’s The Spirit of Laws has been characterized as a ‘eulogy of [the English] Constitution’. See David Wallace Carrithers’ ‘Introduction’ to Montesquieu’s The Spirit of Laws ([1750] 1977, p. 57). For more on Montesquieu’s influence, see Jefferson’s August 12, 1810 letter to William Duane ([1810] 1984, pp. 1229–31). For more on the influence of the British Constitution, see Jefferson’s June 14, 1807 letter to John Norvell ([1807] 1984, pp. 1176–7). See also Berger (1997, p. 303) and Levy (2001, pp. 15–25). For more on the Committee of Detail, see Berkin (2002, pp. 130–37). In fact, ‘The Senate killed the one proposal Madison thought “the most valuable”: protection against state infringement of speech, press, religion, or trial by jury’ (Levy, 2001, p. 40). See also Berger (1997, pp. 155–6 and 174–5). It should be acknowledged that Jack Rakove regards the first reason as ‘remarkably optimistic’ by Madison’s own standards, and that, as to the second, ‘Madison treated even this more as a speculative possibility than as a serious threat’ (1997, p. 333). For a brief survey of the state constitutions, see Levy (2001, pp. 22–3). In fact, in their treatment of rights, the state constitutions were not so homogeneous as the Federal Farmer declared. See, for example, Peterson (1984, pp. 939–40, 966–8, 977–8, 1451 and 1495). See also Smith ([1759] 1976, p. 58). For more on Smith’s influence on Jefferson, see Himmelfarb (2004, pp. 200–201). I shall argue below that the impartial spectator may have influenced Immanuel Kant. However this may be, we know that many Americans and a number of the Founders read The Theory of Moral Sentiments. As Samuel Fleischacker has pointed out,



Smith’s Theory of Moral Sentiments did not share the central place of Hutcheson’s moral sense theory in pre-revolutionary college curriculums, but it was taught and, before 1776 and from 1777–1790, it had a greater presence in American libraries than either Reid’s or Hume’s philosophical writings. John Witherspoon incorporated it into his teaching at Princeton … . Jefferson included the book in a 1771 list of titles recommended for a private library, and John Adams devoted a chapter of his Discourse on Davila to a long excerpt from it. Benjamin Rush quoted The Theory of Moral Sentiments during a 1774 lecture on American Indians, and Wilson seemed to allude to it in his 1790–91 lectures on American law. (2004a, p. 1)

29. Hyneman and Lutz argue, in fact, that whereas ‘Locke built his theory from rationalist assumptions, … Americans built their institutions on biblical foundations, especially upon the



30.

31. 32.

33. 34.

35. 36. 37.

38. 39. 40. 41. 42. 43.

44.

45. 46.

47. 48.

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notion of a covenant’ (1983a, p. 158). They suggest, moreover, that ‘Americans during the founding era frequently had a deeper philosophical or theological basis for their understanding of concepts like freedom and equality than is apparent from their political writing’ (p. 137). In fact, Kant refers to the impartial spectator in his Fundamental Principles of the Metaphysics of Morals: ‘The sight of a being who is not adorned with a single feature of a pure and good will, enjoying unbroken prosperity, can never give pleasure to an impartial spectator’ ([1785] 1988, p. 18). See also Smith ([1759] 1976, p. 110). Montesquieu’s particular concern, like that of the Founders, was the influence, in the absence of public virtue, of ‘faction’ ([1750] 1977, pp. 118–19). See David Wallace Carrithers’ ‘Introduction’ to The Spirit of Laws for a more expansive definition of public or ‘political’ virtue (1750] 1977, pp. 60–61). For more on ‘love of country’, see Adam Smith ([1759] 1976, pp. 227–34). For more on ethical theories of the right and theories of the good, see Goodin (1993, p. 241). Kant is clear that ‘Empirical principles are incapable of serving as a foundation for moral laws’ ([1785] 1988, p. 71). The essential idea is that ‘all moral conceptions have their seat and origin completely a priori in the reason … they cannot be obtained by abstraction from any empirical, and therefore merely contingent knowledge’ ([1785] 1988, pp. 38–9. See also Paton (1964, p. 51). See also Kant ([1785] 1988, pp. 19, 45, 52 and 74). For more on this, see Rawls ([1989] 1999, p. 519). See also Jefferson’s April 24, 1816 letter to P. S. Dupont de Nemours ([1816b] 1984, p. 1387). Berger quotes Justice Iredell, ‘one of the first Founders’, as saying, ‘We are too apt, in estimating a law passed at a remote period, to combine in our consideration, all the subsequent events which have had an influence upon it, instead of confining ourselves (which we ought to do) to the existing circumstances at the time of its passing’ (1997, p. 9). For a modern discussion of ‘original meaning’ or ‘originalism’ see Ring (2004, esp. pp. 8–9). For more on this, see Berger (1997, Chapter 20, esp. pp. 403–5). See also Berger (1997, pp. 347–57). See also Madison’s The Federalist No. 39 (Carey and McClellan, 2001, esp. p. 198). For more on Jefferson’s view of the states’ and federal roles, see Jefferson’s February 8, 1786 letter to Madison ([1786] 1984, pp. 848–9). Interestingly, in The Federalist No. 81, Hamilton avers that, ‘It may in the last place be observed, that the supposed danger of judiciary encroachments on the legislative authority, which has been upon many occasions reiterated, is, in reality, a phantom’ (Carey and McClellan, 2001, p. 420; emphasis mine). Jefferson concurred in this assessment. In his March 4, 1825 ‘Minutes of the Board of Visitors, University of Virginia’, he averred that, among the ‘best guides’ to the ‘distinctive principles of the government of our State, and of that of the United States’ is ‘The book known by the title of “The Federalist”, being an authority to which appeal is habitually made by all, and rarely declined or denied by any as evidence of the general opinion of those who framed, and of those who accepted the Constitution of the United States, on questions as to its genuine meaning’ ([1825] 1984, p. 479). The characterization of social welfare theory as the ‘economist’s theory of the state’ is due to Geoffrey Brennan. See his ‘The Contribution of Economics’ (1995, esp. p. 142). Robert Tollison observes that ‘Buchanan literally founded the field of constitutional political economy’ (see Tollison, 2001). For more on The Calculus of Consent as ‘the first attempt to derive what [Buchanan and Tullock] called an “economic theory of political constitutions”’ see Buchanan ([1983b] 2000, pp. 20 and 23–4). See also Buchanan ([1978] 2000, p. 46) and Section 7.5 below. See also Buchanan ([1989b] 2001, pp. 270–74). In his discussion of ‘Political justice and the Constitution’, Rawls assumes ‘that the main

52

49. 50. 51.

52. 53.

Morality, political economy and American constitutionalism variation in the extent of equal political liberty lies in the degree to which the constitution is majoritarian’ (1971, p. 224). Intergenerational discrimination was a particular concern of Jefferson’s. See his June 5, 1824 letter to Major John Cartwright ([1824] 1984, pp. 1493–4). See also Jefferson’s letter to Major John Cartwright ([1824] 1984, p. 1493). For his part, Rawls argues that ‘the ideal [or perfectly competitive] market process and the ideal legislative procedure are different in crucial respects. They are designed to achieve distinct ends, the first leading to [Paretian] efficiency, the latter if possible to justice’ (1971, p. 360). This observation is not inconsistent with Buchanan’s claim that the absence of an effective exit option distinguishes non-federal politics from market relationships. For more on the meaning of a ‘just constitution’, see Rawls (1971, p. 357) and Section 8.3 below. For more on ‘preaching’, see Buchanan (1991, pp. 185–6; 1994b, p. 80; 1994a).

2. The commercial republic 2.1 The Smithian Influence The argument developed in Section 1.2 need not be reprised. It is useful to recall, however, that, from the Founders’ perspective, federal ‘encouragement of particular manufactures’ is a constitutional issue, and that the choice of an economic system is a political and, therefore, a moral issue. While the constitutionality of federal ‘species of encouragement’ will be considered in later chapters, immediate interest centers on what I shall characterize as the ‘Smithian influence’ on the Founders’ thinking about commercial policy and, more generally, about postconstitutional, conflictual politics. I begin by noting that, ‘Despite all the recent scholarship on the impact of Scottish thought on the American founding, curiously little attention has been paid to the influence of Adam Smith’ (Fleischacker, 2004a, p. 1).1 This is true, despite the fact that we know that the Founders read both The Wealth of Nations and The Theory of Moral Sentiments.2 All of this has basic relevance because the Founders’ views on commerce were either reflective of, or shared with, Adam Smith. The influence of, or congruence with, Smith’s view of human nature – articulated in its essentials in The Theory of Moral Sentiments (TMS) – has already been discussed (Chapter 1). Of immediate interest is the Founders’ embrace of ideas articulated in The Wealth of Nations (WN). While WN has been widely characterized as a paean to self-interest, this is demonstrably not the case. It is true, of course, that the ‘invisible hand’ metaphor, employed only once in WN and once in TMS, codified the idea that ‘By pursuing his own interest [every individual] frequently promotes that of the society more effectually than when he really intends to promote it’ ([1776] 1976, p. 456). Indeed, in TMS Smith averred that The rich … in spite of their natural selfishness and rapacity … are led by an invisible hand to make nearly the same distribution of the necessities of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society. ([1759] 1976, pp. 184–5)

It should come as no surprise that these passages – and Smith’s ‘natural liberty’ construal – have been misinterpreted. If the ‘invisible hand’ metaphor has been misconstrued, so too has the following passage:

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Morality, political economy and American constitutionalism All systems either of preference or of restraint, therefore, being thus completely taken away, the obvious and simple system of natural liberty establishes itself of its own accord. Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. ([1776] 1976, p. 687; emphasis mine)

As Jerry Muller has observed, Smith’s ‘rhetoric of “natural liberty”’ would later be taken ‘as a warrant for the notion that “doing what comes naturally” would result in providential outcomes’. Indeed, on Muller’s account, the result has been that ‘The need for institutions to direct the passions, the role of social science in designing institutions, the obligation of government to combat the dangers inherent in commercial society – all would be overlooked’ (1993, p. 187). Stated differently, considered in vacuo, the ‘natural liberty’ construal appears to be irreconcilable with the Founders’ republican project. Considered in context, however, it is clear that the Founders could associate themselves with Smith’s analysis. I emphasize, first, that the paragraph immediately preceding the ‘system of natural liberty’ passage provides an adumbration of Smith’s position on discriminatory policies designed to promote manufacturing, foreign trade or agricultural ‘species of industry’: It is thus that every system which endeavours, either by extraordinary encouragements, to draw towards a particular species of industry a greater share of the capital of the society than would naturally go to it; or, by extraordinary restraints, to force from a particular species of industry some share of the capital which would otherwise be employed in it; is in reality subversive of the great purpose which it means to promote. It retards, instead of accelerating, the progress of the society towards real wealth and greatness; and diminishes, instead of increasing, the real value of the annual produce of its land and labour. ([1776] 1976, p. 687)

In short, the ‘systems either of preference or restraint’ to which Smith objected were mercantilist policies; policies that Jefferson and Madison opposed. If Smith rejected discriminatory market interventions because they are ‘subversive of the great purpose which [they mean] to promote’, he had two other, fundamental reservations. The first, taken up below, is the self-interested factious behavior to which these interventions give expression. The second is articulated in the sentence immediately following the ‘natural liberty’ passage: The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society. (p. 687)



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While much can be said about this, Smith’s implicit invocation of lawmakers’ limited cognitive abilities is consistent both with the modern literature on bounded rationality – and the asymmetric information and opportunism which are its concomitants – and with Hayek’s ‘errors of constructivism’: You will probably most clearly see what I mean by ‘constructivism’ if I quote a characteristic statement of a well-known Swedish sociologist. … ‘The most important goal that sociology has set for itself … is to predict the future development and to shape (gestalten) the future, or, if one prefers to express it in that manner, to create the future of mankind’. (Muller, 1997, p. 320)

In Hayek’s view, the predicate upon which the constructivist grounds his argument is ‘factually erroneous’: The factually erroneous assertion, from which the constructivists derive such farreaching consequences and demands, appears to me to be that the complex order of our modern society is exclusively due to the circumstance that men have been guided in their actions by foresight – an insight into the connections between cause and effect – or at least that it could have arisen through design. What I want to show is that men are in their conduct never guided exclusively by their understanding of the causal connections between particular known means and certain desired ends, but always also by rules of conduct of which they are rarely aware, which they certainly have not consciously invented. (ibid., pp. 320–21)

Whether Smith was animated by an understanding of man’s bounded rationality or by an appreciation of the ‘errors of constructivism’, or both, we know that Hayek traces the history of the constructivist insight to the Scottish social philosophers: ‘As was at last clearly seen by the Scottish social philosophers of the eighteenth century … a large part of social formations, although the result of human action, is not of human design’ (Muller, 1997, p. 319). More recently, the Nobel laureate economist Vernon Smith emphasized that ‘People follow rules without being able to articulate them, but they can be discovered. This is the intellectual heritage of the Scottish philosophers’ (2003, p. 470). However this may be, Adam Smith is quite explicit about lawmakers’ cognitive limitations and, pari passu, about their inability to ‘direct’, in a consequentialist sense, an economy. The paragraph immediately following the ‘invisible hand’ metaphor is clear and unambiguous: What is the species of domestick industry which his capital can employ, and of which the produce is likely to be of the greatest value, every individual, it is evident, can, in his local situation, judge much better than any statesman or lawgiver can do for him. The statesman, who should attempt to direct private people in what manner they ought to employ their capitals, would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so danger-

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Morality, political economy and American constitutionalism ous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. ([1776] 1976, p. 456)

It is clear, then, that Smith’s ‘political œconomy’, on his account a ‘branch of the science of a statesmen or legislator’ ([1776] 1976, p. 428), is not consequentialist. Whether this accounted, in part, for the Founders’ consequencedetached and procedurally based political economy (S1.7) cannot be known with certainty. What can be said is that Smith’s epistemology, his moral philosophy (S1.5), his awareness of self-interested factious behavior, and his conviction that ‘I have never known much good done by those who affected to trade for the publick good’ ([1776] 1976, p. 456), are consistent with his admonition that To hurt in any degree the interest of any order of citizens, for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects. (p. 654; emphasis mine)3

Not surprisingly, the passage just quoted is fully consistent with the Founders’ procedurally based impartiality imperative (Chapter 1). It seems clear, moreover, that the Founders would associate themselves with Smith’s conception of the sovereign’s ‘three duties’: According to the system of natural liberty, the sovereign has only three duties to attend to; … first, the duty of protecting the society from the violence and invasion of other independent societies; secondly, the duty of protecting, as far as possible, every member of the society from the injustice or oppression of every other member of it, or the duty of establishing an exact administration of justice; and, thirdly, the duty of erecting and maintaining certain publick works and certain publick institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain. (pp. 687–8)

If Smith’s ‘three duties’ gesture toward James Buchanan’s conception of the ‘protective’ and the ‘productive’ state ([1975] 2000, pp. 88–90), it also suggests that ‘the state’ has a legitimate role; a postconstitutional role that the Founders would endorse. But neither for Smith nor the Founders does that role contemplate the accommodation of discriminatory factional politics. Whatever else is said, it is clear that the ‘extreme incompatibility between business habits and concern for the public good’ animated much of the discussion in WN (Fleischacker, 2004b, p. 237). And central to Smith’s political economy as science of the legislator project ([1776] 1976, p. 428) was his insistence that legislators must be alert to the ‘mean rapacity, the monopolizing spirit’ (p. 493) of self-interested merchants and manufacturers:



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Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the publick consideration. As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen. As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgement, even when given with the greatest candour … is much more to be depended upon with regard to the former of those two objects, than with regard to the latter. (p. 266)

If this view comports with the Jeffersonian view that the manufacturing and agrarian ways of life have asymmetric effects on virtue (S1.2),4 the essential point is that, for Smith, discriminatory factional self-interest should not find expression in law or in regulations: The proposal of any new law or regulation of commerce … ought always to be listened to with great precaution … . It comes from an order of men, whose interest is never exactly the same with that of the publick, who have generally an interest to deceive and even to oppress the publick, and who accordingly have, upon many occasions, both deceived and oppressed it. (p. 267)

It seems beyond dispute that Smith’s concern with the influence of self-interested factions comports with the Founders’ view (SS1.2 and 1.3). So too, does his insistence that laws should promote virtue (S1.3): A [lawmaker] may, indeed, sometimes, with universal approbation, oblige those under his jurisdiction to behave … with a certain degree of propriety to one another … . The [lawmaker] is entrusted with the power not only of preserving the public peace by restraining injustice, but of promoting the prosperity of the commonwealth, by establishing good discipline, and by discouraging every sort of vice and impropriety; he may prescribe rules, therefore, which not only prohibit mutual injuries among fellow-citizens, but command mutual good offices to a certain degree. ([1759] 1976, p. 81)

2.2 An Institutional Imperative: Education I have suggested that Smith’s position on discriminatory law – particularly, though not exclusively, as laws implicate commerce ([1776] 1976, pp. 654 and 267) – comports with the Founders’ procedurally based impartiality imperative (SS1.5, 1.6 and 1.7). The same is true of Smith’s view that law may promote virtue (SS1.3 and 1.4). Yet, if this, along with his ‘three duties’ of government (pp. 687–8) and his rejection of the constructivist vision of discretionary public policy (p. 687) suggests that Smith, like the Founders, did not envision a consequentialist role for the state, the similarities do not end there.

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I emphasize, first, Smith’s third duty of government; ‘the duty of erecting and maintaining certain publick works and certain publick institutions’ which, in contemporary parlance, implicates positive and negative externalities (pp. 687–8). Characteristically, Smith, like the Founders, does not take an instrumental or consequentialist view of public education: ‘Though the state was to derive no advantage from the instruction of the inferior ranks of people, it would still deserve its attention that they should not be altogether uninstructed’ (p. 788). Instead, for Smith – like the Founders – education is intrinsically valuable, both because it promotes virtue, and because ‘instructed and intelligient people’ are ‘more capable of seeing through, the interested complaints of faction and sedition’: The more [the people] are instructed, the less liable they are to the delusions of enthusiasm and superstition, which, among ignorant nations, frequently occasion the most dreadful disorders. An instructed and intelligient people besides are always more decent and orderly than an ignorant and stupid one. They feel themselves, each individually, more respectable, and more likely to obtain the respect of their lawful superiors, and they are therefore more disposed to respect their superiors. They are more disposed to examine, and more capable of seeing through, the interested complaints of faction and sedition, and they are, upon that account, less apt to be misled into any wanton or unnecessary opposition to the measures of government. (p. 788)

If this passage is evocative of Smith’s self-approbation construal ([1759] 1976, pp. 109–13) and of the role of the impartial spectator in resisting the ‘violence and injustice of faction’ (p. 146) (S1.5), it also gestures toward a Kantian/Rawlsian duty of justice (S1.7), and embraces the Founders’ view that the education of a self-governing people is a government imperative (S1.3). While all of this is self-evidently relevant to the Founders’ concern with the corrosive effects of self-interested factious behavior, it also calls to mind the Founders’ apprehension about what we would today call the ‘large-number dilemma’.5 On one account, Zephaniah Swift Moore’s 1802 ‘Oration on the Anniversary of the Independence of the United States of America’ is ‘notable for its discussion of public opinion and illumination of the theoretical connections between virtue, education, and successful popular government’ (Hyneman and Lutz, 1983b, p. 1206). With this as background, it is revealing that Moore told his audience that As those, therefore, who justly appreciate National Independence, and who wish to transmit to future generations civil and sacred institutions … let us be vigilant against every source of impurity, and everything, that tends to vitiate. The necessity of this does, and will increase with our numbers and wealth … . Let us [therefore] use every effort to promote the purity of public opinion … . On this depend the preservation of our freedom, and those constitutions of government, of which we boast. ([1802] 1983, p. 1217; emphasis mine)



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For his part, James Madison addressed the numbers problem in his Federalist No. 63: It may be suggested, that a people over an extensive region, cannot, like the crouded inhabitants of a small district, be subject to the infection of violent passions; or to the danger of combining in the pursuit of unjust measures. I am far from denying, that this is a distinction of peculiar importance. I have, on the contrary, endeavoured in a former paper to show that it is one of the principal recommendations of a confederated republic. At the same time, this advantage ought not to be considered as superseding the use of auxiliary precautions. (Carey and McClellan, 2001, p. 327)

If the Founders embraced the Constitution’s auxiliary precautions as formal restraints on factious behavior (S1.3), they would surely have associated themselves with Smith’s first ‘remedy’ for the large numbers problem: While he remains in a country village [a man’s] conduct may be attended to, and he may be obliged to attend to it himself … . But as soon as he comes into a great city, he is sunk in obscurity and darkness. His conduct is observed and attended to by nobody, and he is therefore very likely to neglect it himself, and to abandon himself to every sort of low profligacy and vice. The first [remedy] is the study of science and philosophy, which the state might render almost universal among all people of middling or more than middling rank and fortune. ([1776] 1976, pp. 795–6)6

To this I need only add Smith’s concern that the division of labor was, itself, inimical to self-government. In his account, ‘The man whose whole life is spent in performing a few simple operations … has no occasion to exert his understanding … in finding out expedients for removing difficulties which never occur.’ On this logic, ‘Of the great and extensive interests of his country, he is altogether incapable of judging.’ It is in this manner that ‘His dexterity at his own particular trade seems … to be acquired at the expence of his intellectual, social, and martial virtues’ (p. 782). It has been said that ‘The importance of stability pervades Smith’s remarks on government’: Only a stable government can guarantee the security of person and property which is so essential to the flourishing of commercial society … . The importance of public opinion in a legitimate regime was one of the arguments Smith advanced for the promotion of mass education. (Muller, 1993, p. 172)

I suggest that this construction, while consistent with Smith’s ‘three duties’ of government, is too narrowly drawn. While Smith – and the Founders – attended to the functioning of an ‘extensive’ and increasingly ‘commercial society’, their interest centered less on what we would today call ‘economic

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growth’ than on the implications for self-government. The essential point is that, for Smith, and for the Founders, the duties of government comprehended the cultivation, through education, of citizens capable of self-government.

2.3 An Institutional Imperative: The Rule of Law The confluence of Smith’s ‘three duties’ of government (S2.1), his commitment to the impartiality imperative (SS1.5 and 2.1), his rejection of the constructivist–consequentialist impulse (S2.1), and his counsel that ‘The proposal of any new law or regulation of commerce … ought always to be listened to with great precaution’ because of the factional self-interest which frequently animates such initiatives (S2.1) suggests an important corollary. As Fleischacker has suggested, Above all, [Smith] recommends that government actions be enshrined as much as possible in general laws, rather than in bureaucracies making ad hoc decisions, and that new laws and institutions be designed with an eye toward how they will most easily fit in with existing practice and custom (2004b, pp. 242–3; emphasis mine)

The links to the Founders are clear. On the one hand, the existing practice and custom formulation is evocative of the Founders’ reliance on their ‘English inheritance’ (SS1.4 and 1.6). On the other hand, Smith’s insistence on general – in the sense of impartial – laws is congruent with the Founders’ view that constitutional and postconstitutional law should reflect a prior ethical commitment to the moral equivalence of persons (SS1.5 and 1.6). Finally, it is interesting to note that Smith’s concern with ad hoc regulatory rulemaking gestures toward a modern concern. Reduced to its essentials, regulatory agency rulemaking (S8.4) has been characterized as unconstitutional ‘regulation without representation’ (Schoenbrod, 2005, p. 9). If Smith’s insistence that postconstitutional law be impartial in conception and in administration comports with the Founders’ vision, there are elements of rough correspondence between his separation of powers construal and that of the Founders. For the Founders, constitutionally embedded ‘auxiliary precautions’ were conceived as restraints on self-interested factious behavior (S1.6). For Smith, the institutional imperative was provision for a ‘government strong enough to protect citizens from one another, and a system of regular and impartial justice which limits the use of government power and protects the rights of the citizen against the sovereign’ (Muller, 1993, p. 125; emphasis in original). Animating this procedural concern was the idea that ‘In a modern commercial society, personal security and the security of property depend on the separation of legislative, judicial, and executive powers’ (p. 125). In Smith’s words:



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When the judicial is united to the executive power, it is scarce possible that justice should not be frequently sacrificed to, what is vulgarly called, politics. The persons entrusted with the great interests of the state may, even without any corrupt views, sometimes imagine it necessary to sacrifice to those interests the rights of a private man. But upon the impartial administration of justice depends the liberty of every individual, the sense which he has of his own security … it is not only necessary that the judicial should be separated from the executive power, but that it should be rendered as much as possible independent of that power. ([1776] 1976, pp. 722–3; emphasis mine)

While much can be said about this, I emphasize, first, that Smith evinced a particular concern for the caprice and myopia of the politician; ‘that insidious and crafty animal … whose councils are directed by the momentary fluctuations of affairs’ ([1776] 1976, p. 468). His view of the judiciary was equally critical. On the one hand, he attributed the ‘institution of the legislative power’ to the ‘growth of the judicial power’. In his account, The growth of the judicial power was what gave occasion to the institution of a legislative power, as that first made them think of restraining the power of judicial officers. Laws instituted at the beginning of a society … would appear to be the greatest restraint imaginable on the liberty and security of the subjects; but afterwards they evidently appear to tend to the security of the people by restraining the arbitrary power of the judges, who are then become absolute or nearly so. ([unpublished] 1978, pp. 314–15)

On the other hand, if Smith was insistent that the legislature must constrain the ‘arbitrary power’ of the judiciary, he also averred that liberty depends on what we would today call an originalist interpretation of law: [a] thing which greatly confirms the liberty of the subjects in England … [is] the little power of the judges in explaining, altering, or extending or correcting the meaning of the laws, and the great exactness with which they must be observed according to the literall meaning of the words. (p. 275)

While there is no one-to-one correspondence between Smith’s separation of powers construal and the Founders’ ‘auxiliary precautions’, it is clear that the Founders’ view of judicial interpretation is, in its essentials, the same as that of Smith (S1.6). More generally, it is clear that both enterprises were animated by the same procedural imperative; the duty to promote just, in the sense of impartial, institutions. Finally, there is this. If the Founders would likely associate themselves with Smith’s circumspect view of the ‘politician’ and of the judiciary, his ‘science of the legislator’ – arguably, the essence of his Wealth of Nations – would not have been alien to their imagination. In his – and their – accounts, it is ‘Ultimately … only the legislator who can prevent special interests from dominating

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the decisions of government.’ Yet, ‘To do so requires politicians motivated to put the welfare of the country above their personal and particular interests’ (Muller, 1993, pp. 170–71). On this logic, Smith would likely have agreed with Madison’s 1788 assessment: I have observed, that gentlemen suppose, that the general legislature will do every mischief they possibly can, and that they will omit to do everything good which they are authorized to do. If this were a reasonable supposition, their objections would be good. I consider it reasonable to conclude, that they will as readily do their duty, as deviate from it: Nor do I go on the grounds mentioned by gentlemen on the other side – that we are to place unlimited confidence in them, and expect nothing but the most exalted integrity and sublime virtue. But I go on this great republican principle, that the people will have virtue and intelligence to select men of virtue and wisdom. Is there no virtue among us? If there be not, we are in a wretched situation. No theoretical checks – no form of government can render us secure. To suppose that any form of government will secure liberty or happiness without any virtue in the people, is a chimerical idea. If there be sufficient virtue and intelligence in the community, it will be exercised in the selection of these men. So that we do not depend on their virtue, or put confidence in our rulers, but in the people who are to choose them. ([1788b] 1999, p. 398)

If this calls into question a crucial assumption of the economist’s theory of the state – the agency of a ‘benevolent despot’ (a subject taken up in later chapters) – it also highlights the importance of Smith’s and the Founders’ commitment to public education and the promotion of virtue. ‘Auxiliary precautions’ and the ‘science of the legislator’ notwithstanding, Smith and the Founders would agree: if republican self-government is to give expression to the impartiality imperative, the citizenry must be both educated and virtuous. It has been said that ‘Smith’s overarching aim in The Wealth of Nations was to refine existing institutions in such a way that man’s selfish passions would be harnessed to the general good’ (Muller, 1993, p. 82). If this comports with the Founders’ understanding of human nature (S1.5), with their constitutional project (S1.6) and with their understanding of political economy (S1.7), it is also consistent with ‘[t]he tradition of psychological institutionalism’ (p. 49). Stated differently, Smith’s work – subsuming The Wealth of Nations, The Theory of Moral Sentiments and his Lectures on Jurisprudence – ‘suggests a way of looking at the social world that balances moral concern with a realistic appraisal of human nature and human institutions’ (ibid., p. 5). It is in this sense that Smith and America’s Founders saw morality, political economy and the science of government as inexorably intertwined – a recurring theme of this book. With all of this as background, Muller’s assessment has basic relevance: The authors of the Federalist Papers, perhaps the most successful practitioners of psychological institutionalism, followed the lead of Hume and Smith in seeking to



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design institutions which would pit the passions against one another and channel self-interest to serve the public good. (p. 198)

NOTES 1. That said, I have already emphasized Smith’s (and Kant’s) influence on the Founders’ understanding of the self (S1.5). 2. In a February 1, 1804 letter to Jean Baptiste Say, Jefferson referred to the ‘opinions of Adam Smith’ ([1804] 1984, p. 1143). Moreover, in his June 14, 1807 letter to John Norvell he characterized Smith’s Wealth of Nations as ‘the best book to be read’ on money and commerce ‘unless Say’s Political Economy can be had’ ([1807] 1984, p. 1176). For his part, Madison referred to The Wealth of Nations more than once in his Federalist Papers. And, finally, we know that John Witherspoon, Jefferson, Benjamin Rush, John Adams and James Wilson invoked Smith’s The Theory of Moral Sentiments (Fleischacker, 2004a, p. 1). 3. It is of some interest (and relevance) that Smith refers in WN to the impartial spectator ([1776] 1976, p. 945). 4. Jefferson and many of the Founders would likely have agreed with Smith’s admonition that, ‘Country gentlemen and farmers are, to their great honour, of all people, the least subject to the wretched spirit of monopoly’ ([1776] 1976, p. 461). It should be noted, however, that Smith seems to qualify his complement when he observes that ‘Country gentlemen and farmers, dispersed in different parts of the country, cannot so easily combine as merchants and manufacturers’ (p. 462). 5. For more on the ‘large-number dilemma’, see Section 7.5 and, especially, footnote 38 in Chapter 7. 6. The second ‘remedy’ is ‘the frequency and gaiety of publick diversions’ ([1776] 1976, p. 796).

3. Autonomy ascendant 3.1 Some Preliminaries I have argued that the Founders’ republican project was informed by a Smithian/ Kantian prior ethical commitment to the moral equivalence of persons (S1.5). This commitment, in turn, implies an equal treatment imperative; an imperative that finds expression in the Constitution’s ‘auxiliary precautions’ (SS1.2 and 1.6), in the Founders’ political economy (S1.7 and Chapter 2) and in the Founders’ concern that respect for the moral law be cultivated (S1.5). Interest centers in Chapter 3 on a preliminary discussion of the problems attendant to the equal treatment imperative. My point of departure is a claim made above (S1.5), that the Founders’ insistence that the autonomy, agency, independence and dignity of morally equivalent persons be respected does not gesture toward the modern conception of the transcendental, autonomous self. At issue are the following questions: First, how has the concept of autonomy evolved? Second, is the contemporary understanding reconcilable with the Founders’ republican self-government project?

3.2 The Ancients’ Question As is well known, Western moral philosophy began with the ancient Greeks. For Socrates, Plato and Aristotle, man is a social being for whom the fundamental question is, ‘[H]ow should a man live, in order to achieve [happiness]?’ (Rowe, 1993, p. 123). The answer depends, of course, on the meaning of ‘happiness’. While, for the Greeks, ‘happiness’ is variously identified with ‘pleasure’, living a ‘moral life’ and ‘the life of the intellect’, this much is clear: it was understood that ‘one had obligations to one’s city, and one’s fellow-citizens, … but there were also competing sets of obligations to other groupings within the city – one’s associates, friends, family’ (p. 125). What is not clear is how this duty arose, and why an agent must respect these obligations; in particular, ‘why one should honour obligations whose strength appeared to stand in inverse proportion to their distance from home’ (p. 125). If this problem gestures toward Hamilton’s view of the strength of parochial attachments – ‘I have constantly remarked, in the conduct of members of Congress, a strong and uniform attach

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ment to the interests of their own state’ ([1788b] 2001, p. 499) – this much is clear: The rise of Greek ethics can be seen in large part as a reflection of the overlaying of a fundamentally individualistic ethos with the demands for co-operative behaviour implied by the political institutions of the city-state. What the [Greek] philosophers attempt to show is that there is, in the end, no conflict between the two. (Rowe, 1993, p. 127)

Whether the ancient Greek philosophers succeeded in reconciling an ‘individualistic ethos’ with the ‘demands for co-operative behavior’ is not my immediate concern. For present purposes, I emphasize only that it is possible to argue, with Will, that Aristotle and other ancients thought human nature contained a political compass that points toward fulfillment in a well-ordered political society. At least, the compass will point if social conditions give the compass a chance to function. Statecraft should gently pull in the direction in which the needle in human nature points. (1983, p. 42)

Whatever else is said, we know that Madison and Jefferson read Socrates and Plato1 – and that, while Jefferson had a decidedly negative view of the ‘whimsies of Plato’s own foggy brain’ – the ancient Greek philosophers’ view of man as a social being with obligations to his fellow-citizens gestures toward the Founders’ view of the obligations of a self-governing people.

3.3 Hobbesian Contractarianism If the ancient Greeks focused on the question, ‘How should a man live, in order to achieve happiness’, much of modern moral and political philosophy seeks to answer two questions: If there is no highest good determined by nature or God, how are we to know whether our desires are misguided or sound? If there are no divinely ordained laws, what can tell us when we should refuse to do what our desires urge us to do, and when we may proceed? (Schneewind, 1993, p. 147)

Animated by these questions, philosophers were drawn to the concept of human self-governance or autonomy; to the idea, in other words, that ‘morality might arise from resources within human nature itself’ (p. 147). The seventeenth century saw the emergence of philosophical work that stressed two related ideas: first, that agency is animated by self-interest rather than ‘natural sociability’ and, second, that ‘Since we are basically equal in natu-

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ral ability, this would cause a war of all against all if we did not agree to be ruled by a sovereign capable of enforcing peace while we each pursue our private goals’ (p. 149). In the world envisioned by Thomas Hobbes, political society emerges from a social contract, an idea embraced by John Locke, though with some modification. While the social contract tradition takes two different forms, one that, like the Founders, regards justice as impartiality (S1.7), and one that identifies justice as mutual advantage, my interest centers, for the moment, on the latter. Characteristically, Hobbesian contractarianism, the theory of justice as mutual advantage, assumes that, while there is nothing inherently right or wrong about either the goals that agents pursue or the means by which they pursue them, it is mutually advantageous for agents to adopt conventions against harming each other (Kymlicka, 1993, p. 189). Given this predicate, the bargaining by which these conventions are adopted is the process by which a community establishes its ‘social contract’. It is these conventions, rather than some authoritative source outside of human nature, that are seen as providing a moral code. On this logic, a moral code is ‘generated as a rational constraint from the non-moral premises of rational choice’ (Gauthier, 1986, p. 4). I emphasize first that no account is taken of which goals are pursued, and there is no presumption that particular goals ought to be promoted. Hobbesian contractarianism is therefore not consequentialist. Rather, it is procedural in orientation, with the process of convention adoption contemplating bargaining among rational, self-interested agents. Importantly, the obligation to respect the adopted conventions is grounded in the idea that bargaining proceeds ‘among expected utility maximizers with common knowledge of everyone’s capabilities, endowments, and preferences’ (Hausman and McPherson, 1996, p. 158). Granting all of this, the presumption is that a rational agent will not agree to accept less than he or she could get in the absence of agreement. Yet, to the extent that agents possess heterogeneous capabilities, this bargaining constraint will result in the emergence of asymmetric gains. Moreover, the presumption is that the cooperative process will itself generate gains. In this account, whereas a just society would respect the inequalities in gains that accrue as a result of prior advantage, the gains from cooperation would be distributed in accordance with a principle of ‘minimax relative concession’. In effect, ‘The largest relative concession anyone has to make should be as small as possible’ (Hausman and McPherson, 1996, p. 159). Serious questions attach to the ‘original position’ contemplated by the theory. On the one hand, bargaining among agents possessed of complete knowledge of others’ capabilities, endowments and preferences is irreconcilable with fundamental features of observable reality, including bounded rationality – a subject deferred to later chapters. On the other hand, it is clear that bargaining among self-interested agents who, by the nature of the theory, must be presumed to be



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inclined toward opportunistic behavior implies ex ante and ex post transaction costs; costs of which the theory takes no explicit account. More important, the problem of respecting the adopted principles of justice is daunting. Given that agents’ goals and the means of achieving them are neither right nor wrong, nothing in the theory implies a duty to respect the rules of justice: even if two agents, A and B, jointly benefit from the rules, A (B) can do better if B (A) obeys the rules, and A (B) violates the rules whenever it suits him. While Gauthier (1986) argues that, in the face of this prisoner’s dilemma, it may be in B’s (A’s) self-interest to cultivate the kind of character in A (B) that will lead A (B) to respect the adopted rules of justice, this leads to still other, logical problems. Inter alia, the suggestion that preference and value structures are mutable further erodes the plausibility of the original position. Finally, if nothing in the theory implies that the adopted rules of justice will be respected, the same is true of rights. It is true that the theory assumes that bargaining among rational, self-interested agents possessed of asymmetric capabilities will result in the emergence of rights conventions. Yet, because it ‘does not view individuals as having any inherent moral rights or status’ (Kymlicka, 1993, p. 189), Hobbesian contractarianism cannot accommodate the moral force of rights. Stated differently, the theory does not contemplate a moral obligation to respect the rights accorded by the ‘contract’. While the ‘rights problem’ is not endemic to Hobbesian contractarianism – it is, I argue below, characteristic of the economist’s theory of the state – the problem arises for the former because, ‘rights flow from the constraints necessary for mutually beneficial co-operation, even when the activity in which people co-operate is the exploitation of other individuals’ (ibid., p. 190). The empirical and logical problems that attend Hobbesian contractarianism appear insoluble. Yet, even if this were not so, a fundamental problem would remain: nothing in the mutual advantage approach contemplates moral claims that are prior to the pursuit of mutual advantage. Because they embraced a prior ethical commitment to the moral equivalence of persons (S1.5), Hobbesian contractarianism would find no place in the Founders’ imagination. Equally important, nothing in the Founders’ republican project contemplates political association grounded in indifference to agents’ goals, or to the means by which those goals are pursued. While they would agree with Gauthier that preference and value structures can be cultivated, they had in mind the cultivation of respect for the moral law, not the emergence of a moral code ‘generated as a rational constraint from the non-moral premises of rational choice’. Finally, the Founders would recognize that ‘The whole point of the Hobbesian approach is that there are no natural duties to others’ (Kymlicka, 1993, p. 190). Clearly, this understanding of ‘autonomy’ is not reconcilable with the Founders’ republican self-government project.

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3.4 Utilitarianism On Hobbesian logic, morality and political association emerge out of self-interest; out of anxiety about physical safety and the security of property – not from an innate social impulse or a shared political philosophy. If this meant that cultural and other local particularities had no role either in the emergence of morality or of political association, it also meant that ‘selfinterest’ became the new universal. This idea finds clearest expression in utilitarianism, a theory of the good.2 It is safe to say that utilitarians of every stripe insist that ‘the good [is] equivalent to the desired’ (Goodin, 1993, p. 243), and that the good ought always to be promoted (Pettit, 1993, p. 231). Importantly, the utilitarian is ‘non-commital as between various more specific theories of the good that people might embrace, and is equally open to all of them’ (Goodin, 1993, p. 242). Granting this, there is nothing in the theory that says that people should have [particular] sorts of preferences. It is just a theory of what follows, morally, if they happen to do so. It is good – good for them – to have their preferences satisfied, whatever those preferences might be. (p. 243; emphasis mine)

I emphasize first that, on some accounts, the utilitarian argument is associated with equal consideration – with impartiality. As Ronald Dworkin has observed, ‘The utilitarian argument, that a policy is justified if it satisfies more preferences overall, seems at first sight to be an egalitarian argument. It seems to observe strict impartiality’ (1978, p. 234). For John Rawls, however, the utilitarian argument is not persuasive: ‘The fault of the utilitarian doctrine is that it mistakes impersonality for impartiality’ (1971, p. 190). In the event, it is clear that, for modern liberalism (Chapter 4), all preferences are not equal. In Dworkin’s account, Preference utilitarianism asks [government] officials to attempt to satisfy people’s preferences so far as this is possible. But the preferences of an individual for the consequences of a particular policy may be seen to reflect, on further analysis, either a personal preference for his own enjoyment of some goods and opportunities, or an external preference for the assignment of goods and opportunities to others, or both. (1978, p. 234; emphasis in original)

While this is the subject matter of Chapter 4, the essential point is that, for modern liberalism, the ‘right of each person to respect and concern as an individual’ demands that external – or political, altruistic or moralistic – preferences be ‘bracketed’ or excluded from majoritarian deliberation. Reduced to its essentials, the claim is that ‘the domination of one set of external preferences, that is, preferences people have about what others shall do or have … invades rather than enforces the right of citizens to be treated as equals’ (Dworkin, 1985, p. 196).3



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While discussion of modern liberalism’s rights as non-absolute trumps against external preferences construal is deferred to Chapter 4, the point of immediate relevance is that utilitarianism, like contractarianism, grounds morality on a particular understanding of self-governance or autonomy. But, unlike the Founders’ Kantian/Rawlsian contractarianism, utilitarianism does not seek to promote just institutions. Instead, for utilitarians, the right action is that which maximizes utility (however construed) summed impersonally across all those affected by that action. That is the standard that we are to use, individually, in choosing our own actions. That is, more importantly, the standard that public policy-makers are to use when making collective choices impinging on the community as a whole. (Goodin, 1993, p. 245)

These ideas have a long history. While his hedonic pleasure–pain calculus is today rarely, if ever, advocated, the essential point is that Jeremy Bentham believed that only utilitarian arguments could justify political decisions (Dworkin, 1978, p. 233). Today, the same can be said of preference and welfare utilitarians. Thus, whereas the former – a group that includes most economists – asserts a public policy imperative to promote preference satisfaction, the latter argue for the suppression of ‘short-sighted preference satisfaction in favour of protecting people’s long-term welfare interests’ (Goodin, 1993, p. 244). Inter alia, welfare utilitarians sometimes assume that it is possible to determine what people ‘need’, rather than what they ‘want’ (Hausman and McPherson, 1993, p. 706). Granting this, public policy should promote ‘welfare’ or ‘need’ satisfaction. While preference utilitarianism finds expression both in the economist’s theory of the state (Chapter 5) and in modern liberalism’s derivative political positions (Chapter 4), immediate interest centers on the irreconcilability of utilitarianism with the Founders’ republican self-government project. To see this, it is useful once again to draw a distinction between constitutional and postconstitutional, conflictual politics. For the Founders, and for Kantian/ Rawlsian contractarians generally, the distinction is easily drawn: the former contemplates veil-of-ignorance situated determination of the rules of the game for, and the constraints on, conflictual politics (S1.7). I concentrate, for the moment, on the constitutional stage. As has been repeatedly emphasized, the Founders embraced a prior ethical commitment to the moral equivalence of persons. The impartiality imperative to which this commitment gives rise – an idea drawn from moral philosophy – has an analogue in political philosophy. The principle of equal political participation requires that all citizens are to have an equal right to take part in, and to determine the outcome of, the constitutional process that establishes the laws with which they are to comply. Justice as [impartiality] begins with the idea that where common

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Reduced to its essentials, the principle of equal political participation implies a constitutional imperative. Inter alia, ‘firm constitutional protections’ must be provided ‘for certain liberties, particularly freedom of speech and assembly, and liberty to form political associations’ (Rawls, 1971, pp. 222–3). If this is evocative of the Founders’ constitutional project (S1.6) and of Americans’ English inheritance (S1.4), the essential point is that, ‘under favourable conditions’, the principle of equal political participation contemplates ‘some form of constitutional democracy’ (Rawls, [1989] 1999, p. 526).4 Equally important, the principle of equal political participation requires that the constitution ‘be framed so that of all the feasible just arrangements, it is the one more likely than any other to result in a just and effective system of legislation’ (Rawls, 1971, p. 221). In short, the moral equivalence of persons demands that the constitution provide rules of the conflictual politics game which are consonant with the emergence of just, in the sense of impartial, laws. This, I contend, is fully consistent with the Founders’ view of the Constitution as a system of constraints on postconstitutional, factional politics (SS1.6 and 1.7), and with their insistence that laws must not be discriminatory (SS1.2, 1.4, 1.5, 1.6 and 1.7) Let us be clear. The Founders’ republican self-government project was procedurally based and consequence-detached. It was, in short, congruent with the Kantian/Rawlsian contractarian enterprise. Other things equal, it would therefore be sufficient to assert that the Founders were not, and could not be, utilitarians (S1.5). While this is, in part, a function of the nature of the two enterprises, more can be said. I emphasize first that, because it is outcomes-based and procedurally detached, utilitarianism is ill-adapted to address the institutional imperatives that informed the Founders’ deliberations. While, in principle, rule-utilitarianism endorses rules that are justified on utilitarian grounds, utilitarian arguments can always be deployed to deviate from the rules. Thus, whereas rule-utilitarianism ‘limits the application of the standard of utility to rules or social institutions and requires compliance with rules that are certified as having the requisite utilitarian justification’ (Lyons, 1982, p. 128), there is a logical problem: if a utilitarian believes that certain rules are justified on utilitarian grounds, he or she does not contradict himself ‘by supposing that direct utilitarian arguments for deviating from the rules may be entertained’. Inter alia, the utilitarian ‘cannot regard the morally defensible rights under utilitarian institutions as having moral force’ (p. 129).5 The fact that utilitarian logic cannot accommodate the moral force of rights – whether rights are regarded as intrinsically valuable or merely instru-



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mentally important – is a theme to which I shall return. For the moment it is sufficient to emphasize that a theory that allows preference or welfare satisfaction to trump just, in the sense of impartial, institutions would be alien to the Founders’ imagination. Finally, there is this: as we have seen, the Founders’ prior ethical commitment to the moral equivalence of persons has an analogue in political philosophy. In effect, the Kantian/Rawlsian impartiality imperative finds institutional expression in ‘some form of constitutional democracy’ (Rawls, [1989] 1999, p. 526). It was this understanding which, I argue, animated the Founders’ constitutional project (S1.7). In sharp contrast, because it is consequence-based and procedurally detached, the utilitarian justification of democratic institutions is necessarily contingent: the intellectual foundations of democratic institutions in [the utilitarian] perspective are weaker by an order of magnitude than those in the contractarian perspective. Democratic institutions stand or fall on their alleged superiority in generating the attainment of an independently existing ‘public good’. The whole defense is necessarily based on efficiency. (Brennan and Buchanan, [1985a] 2000, p. 49)

On utilitarian logic, there is no duty to respect rights or to promote just, in the sense of impartial, institutions. There is only a duty to promote good consequences. It follows that, from this perspective, both constitutional and postconstitutional politics are consequentialist and teleological: the only dimension of moral appraisal of political acts is a comparative assessment of their consequences (Davis, 1993, p. 205). It follows, pari passu, that rather than seeking to ‘get the institutions right’, the utilitarian imperative is to promote the public good. On this logic, utilitarians must regard democratic institutions as instrumentally rather than intrinsically valuable. While these observations do not exhaust the logical, empirical and ontological difficulties that attend utilitarianism – many of which are discussed in subsequent chapters – this much is clear: nothing in the utilitarian enterprise finds, or could find, expression in the Founders’ republican self-government enterprise. Yet, as we shall see, utilitarianism informs both the public philosophy of modern America and the economist’s theory of the state.

3.5 Modern Liberalism: Some Preliminaries Despite the logical, empirical and ontological difficulties that inhere in Hobbesian contractarianism and utilitarianism, the emphasis on the autonomous, self-interested agent led, eventually, to the embrace of a distorted image of Kantian autonomy. Kant’s insistence that ‘Freedom … Must Be Presupposed As A Property of the [Free] Will of All Rational Beings’ ([1785] 1988, p. 79)

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was wrongly interpreted to imply moral license. In effect, the value of freedom came to be understood to reside in the individual’s ‘right to personal moral decisions’, a right ‘derivative, not from a more abstract general right to liberty as such, but from the right to equality itself’ (Dworkin, 1978, p. XIII). It is this claim which, in essence, accounts both for modern liberalism’s ‘rights as nonabsolute trumps’ against others’ ‘external preferences’ construal, and for its associated, contingent defense of majoritarian democracy (S3.4 and Chapter 4). If it is clear that neither Hobbesian contractarianism (S3.3) nor utilitarianism (S3.4) is reconcilable with the Founders’ republican self-government project, the same is true of modern liberalism. Central to modern liberalism’s enterprise is the notion of a transcendental, autonomous self, an agent for whom there are no contingent, path-dependent social bonds, and for whom there are no moral and civic obligations save those which he or she has chosen. As we shall see, this conception also finds expression in the economist’s theory of the state. Autonomous, atomistic and possessed of intertemporally stable and well-ordered preferences, Homo economicus affects narrowly self-interested utility-maximizing decisions in an institutionless, intendedly value-free decision environment. The elements of correspondence between the two enterprises are interesting for their own sake. So, too, is the fact that the economist’s theory of the state is instrumentally important to modern liberalism’s constitutive political position. These, however, are matters to be explored in subsequent chapters. Immediate attention centers on modern liberalism, the public philosophy of modern America. Before proceeding, however, an expository note is clearly in order. I have repeatedly referred to modern liberalism, a subject more fully developed in Chapters 4 and 6. It is important to emphasize that whereas modern liberalism deploys a peculiar, truncated image of the Smithian/Kantian two-person self (Chapter 4), classical liberalism rejects the transcendental autonomous selfconstrual. As James Buchanan has emphasized, classical liberalism requires a faith, as it were, that most persons are capable of being, and are willing to be, independent within the limits of physical and institutional constraints. Independence rather than dependence – or at least location toward the independence end of the imaginary spectrum. But the classical liberal edifice would fall quickly if persons are independent in the sense that they fail to recognize themselves in an interdependent nexus of social interaction – a nexus that involves other persons to be reciprocating, acting and choosing human beings like themselves. Along this interdependence dimension, we may imagine a person at one extreme who, quite straightforwardly, treats other persons as elements in the state of nature confronted, as objects to be manipulated to his own advantage. (2005, p. 14; emphasis mine)



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If classical liberalism recognizes that, at one extreme, a person may treat other persons ‘as objects to be manipulated to his own advantage’, it also acknowledges ‘The Kantian ethical precept … [that] persons are to be treated always as ends and never as means’, and that it is not possible ‘to model a viable socioeconomic–political–legal order in which the legal incentives are such that persons behave as Kantians quite independent of whether or not they feel ethically constrained’ (pp. 14–15). As Buchanan emphasizes, I can scarcely imagine an interaction setting in which persons refrain from cheating, stealing and keeping promises only because of some fear of punishment. There is surely a minimal level of voluntary adherence to the whole set of norms implied by the Kantian precept – a level that must be reached by a substantial number of persons in the relevant social nexus. (p. 16)

Whatever else is said, it is clear that Buchanan’s appreciation of ‘the [limited] substitutability between legal and ethical constraints’ (p. 15) comports with the Founders’ insistence that constitutional ‘auxiliary precautions’ against narrowly self-interested ‘factious behavior’ must be supplemented by efforts to cultivate respect for the moral law (S1.6).6 My quarrel is therefore not with classical liberalism. It is with what I have styled ‘modern liberalism’.

NOTES 1. See, for example, Rakove (1997, pp. 288 and 316). See also Peterson (1984, pp. 96, 1120–21, 1124, 1341–3, 1431 and 1436). 2. Ethical theories are typically characterized as theories of the right or theories of the good (Goodin, 1993, p. 241). Whereas the Founders, as Kantian/Rawlsian contractarians, start with a theory of the right, the moral equivalence of persons (SS1.3 and 1.5), consequentialists start with a theory of the good, and insist that that good ought to be promoted (Pettit, 1993, p. 231). 3. See also Dworkin (1978, p. 235). 4. See also Rawls (1996, pp. XVIII and XX). The ‘favourable conditions’ to which Rawls refers include, in particular, a ‘thick rather than a thin’ veil of ignorance: when a society is characterized by ‘reasonable pluralism’ in the sense that individuals ‘affirm different and opposing though reasonable’ comprehensive religious, philosophical or moral doctrines, social cooperation requires a ‘thick rather than a thin’ veil of ignorance. On this logic, parties in the original position are deprived, inter alia, of knowledge of the comprehensive doctrines of those they represent (1996, pp. 24–5). 5. For more on the logical difficulties with rule-utilitarianism, see Scruton (1994, pp. 282–3). 6. As would be expected, Buchanan’s Kantian understanding of individual autonomy finds expression in his constitutional political economy enterprise. See Buchanan ([1990] 1999, p. 390). See also Sections 1.7, 7.5 and 8.3.

4. The public philosophy of modern America 4.1 Introduction George W. Carey is a Professor of Government at Georgetown University. He is also an editor of the Gideon edition of The Federalist (Carey and McClellan, 2001), a document that Madison regarded as ‘the most authentic exposition of the text of the federal Constitution, as understood by the Body which prepared & the Authority which accepted it’ ([1825] 1999, p. 808).1 While these are Madison’s words, Jefferson would have agreed ([1825] 1984, p. 479). It is perhaps of some moment then that, writing in 1995, Carey observed that What seems increasingly clear in recent decades is that the [constitutional] revisionists … have given primacy to ends over means; that is, their commitment to majority rule is secondary to their commitment to democratic ends which, to a great extent, come down to egalitarianism mixed with virtually unbridled liberty. (1995, p. 4)

If the passage is evocative of utilitarianism’s contingent defense of majoritarian democracy (S3.4), it also calls to mind Madison’s concern with ‘legislative encroachments’; with the latitude given by the Supreme Court to the substitution ‘for a definite connection between means and ends, a Legislative discretion as to the former to which no practical limit can be assigned’ ([1819] 1999, p. 734).2 Of immediate interest, however, is Carey’s characterization of what animates the ‘revisionists’: While we cannot explore all the aspects of the relationship between the natural rights school of thought and our contemporary malaise, certain features do merit our attention … . First, let us consider the image of the autonomous individual who is viewed apart from the complex organic whole of society. His duties and responsibilities to others in the order of things are almost nonexistent. Beyond this, the individual becomes a moral universe unto himself; the rationalism imputed to him is the source of rights. Thus, the individual is not subordinate to any higher or transcendental order not of his own making or derived from his own private stock of reason. (1995, pp. 187–8; emphasis mine)

On Michael Sandel’s account, it is the transcendental autonomous self that animates American public philosophy – ‘the political theory implicit in our

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practice, the assumptions about citizenship and freedom that inform [American] public life’ (1996, p. 4). If, as Sandel suggests, it is this public philosophy that accounts for ‘democracy’s discontent’ – for ‘the fear that, individually and collectively, we are losing control of the forces that govern our lives … [and] the sense that … the moral fabric of community is unraveling’ (p. 3) – it is also clear that the transcendental autonomous self is appealing, at least to some: The liberal ethic derives much of its moral force from the appeal of the self-image which animates it. This appeal has at least two sources. First, the image of the self as free and independent, unencumbered by aims and attachments it does not choose for itself, offers a powerful liberating vision. Freed from the sanctions of custom and tradition and inherited status, unbound by moral ties antecedent to choice, the liberal self is installed as sovereign, cast as the author of the only obligations that constrain … we become capable of the dignity that consists in being persons of our ‘own creating, making, choosing’ … . A second appeal of the liberal self-image consists in the case it implies for equal respect. The idea that there is more to a person than the roles he plays or the customs she keeps or the faith he affirms suggests a basis for respect independent of life’s contingencies … . Nor does it matter, from the standpoint of liberal justice, what virtues we display or what values we espouse … . The liberal state … does not discriminate; none of its policies or laws may presuppose that any person or way of life is intrinsically more virtuous than any other. It respects persons as persons, and secures their equal right to live the lives they choose. (ibid., pp. 12–13)

If modern liberalism’s transcendental autonomous self offers a ‘liberating vision’ and makes a case for ‘equal respect’, it is also clear that the former is inconsistent with the Founders’ view of man as ‘formed by society’ (S1.1), and constrained by ‘the justice of harmony and obedience’ (S1.2). For its part, the contemporary equal respect construal represents a distorted image of the Founders’ Smithian/Kantian impartiality imperative (S1.5). Reduced to its essentials, modern liberalism’s disproportionate individualism is irreconcilable with what the Nobel laureate economist James Buchanan has called ‘moral community’: A moral community exists among a set of persons to the extent that individual members of the group identify with a collective unit, a community, rather than conceive of themselves to be independent, isolated individuals. ([1981] 2001, p. 188)

If a moral community – a ‘national character’ – is what Washington and the Founders had in mind (S1.3), Buchanan’s ‘three abstract models or forms of [social] interaction’ distinguish among moral community, moral order, and moral anarchy. For its part, ‘moral anarchy’ denotes a situation in which, in violation of the ‘basic Kantian moral precept that human beings are to be treated

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only as ends not as means’, ‘each person treats other persons exclusively as means to further his own ends or objectives’ (p. 190). In contrast, A moral order exists when participants in social interaction treat each other as moral reciprocals, but do so without any sense of shared loyalties to a group or community. Each person treats other persons with moral indifference, but at the same time respects their equal freedoms with his own. Mutual respect … does not require moral community in any sense of personal identification with a collectivity or community. Each thinks about and acts toward other persons as if they are autonomous individuals, independent of who they might be in terms of some group or community classification scheme. (p. 189)

While Buchanan stipulates that ‘The emergence of the abstract rules of behavior describing moral order had the effect of expanding dramatically the range of possible interpersonal dealings’ (p. 189), he is not sanguine about America’s moral order: For several decades … our moral order has been in the process of erosion. Larger and larger numbers of persons seem to become moral anarchists; they seem to be losing a sense of mutual respect one for another along with any feeling of obligation to abide by generalizable rules and codes of conduct. To the extent that such erosion continues and/or accelerates, the internal social stability of the United States must deteriorate. If confronted with this apparent breakdown in the internal cohesion of the social structure, more and more persons who are not themselves moral anarchists will turn to the arms and agencies of government for more direct protection than seems to be currently provided … . Government necessarily will move toward repression in the society as moral anarchy becomes more and more descriptive of the relationships among persons. (p. 197)

These words were written in 1981. If, as I believe, they could as well be written today, they are, in their essentials, roughly congruent with Madison’s June 20, 1788 remarks before the Virginia Ratifying Convention: Is there no virtue among us? If there be not, we are in a wretched situation. No theoretical checks – no form of government can render us secure. To suppose that any form of government will secure liberty or happiness without any virtue in the people, is a chimerical idea. ([1788b] 1999, p. 398)

And if, as I maintain, the Founders embraced the ideas that there is a reciprocal relationship between formal and informal institutions, that there is a relationship between virtue and liberty, and that virtue, both private and public, can be cultivated (SS1.1, 1.3, 1.4, 1.5, 1.6, and 1.7), they would surely associate themselves with Buchanan’s trenchant warning: I have suggested that those who have promoted the extension of Western national governments have done so in their failure to recognize that the moral order, described



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by voluntary adherence to abstract rules of behavior, carries implications for the reach of governance. Accordingly, these governments have been allowed to grow far beyond the limits that might sustain and reinforce effective moral order, while at the same time, they have failed to generate effective moral community as a replacement force that might, in turn, legitimate such extended governance. Indeed, the moral anarchists among us have used the instruments of governance to subvert both moral community and moral order as necessary to advance their own ends. ([1981] 2001, p. 200)

If, as Professor Buchanan suggests, America’s moral order is eroding, and ‘the moral anarchists among us have used the instruments of governance to subvert both moral community and moral order to advance their own ends’, this is, I suggest, a reflection of the institutional skepticism that is a defining characteristic of modern liberalism. On the one hand, the transcendental autonomous self – freed from the push and tug of contingent circumstance – cannot, logically, be influenced by what Hayek has called ‘the process of cultural transmission’. On the other hand, agency requires immersion in contingent circumstance (S6.2). Yet, informed by modern liberalism’s peculiar autonomous self-construal, the agent must regard the inherited ‘rules of conduct’ that ‘most people follow but few if anyone can state in words’ as intrusive; as what Mill called ‘the despotism of custom’ ([1859] 2000, p. 70). This, despite the fact that, as Hayek insists, the ‘order of society’ depends on culturally transmitted formal and informal institutions. Inter alia, the ‘wisdom of our ancestors’ is conducive to ‘a condition in which individuals are able … to form expectations concerning the conduct of others’ ([1970] 1997, p. 323). If, as he suggests, Hayek’s formulation corresponds to the evolution of what Professor Buchanan has called ‘moral community’ ([1981] 2001, p. 200), the essential point is this: both the logic of, and the institutional skepticism inherent in, modern liberalism is inimical to the emergence of moral community. Moreover, modern liberalism’s insistence that moralistic, altruistic and political ‘external preferences’ find no expression in majoritarian politics militates against the promotion of the moral community, which the Founders regarded as a sine qua non for the survival of republican self-government. And, finally, if as Buchanan suggests, the moral anarchists underwrite the expansion of government ‘far beyond the limits that might sustain and reinforce effective moral order’, they also give expression to the self-interested factional behavior which the Founders sought to constrain. I shall argue, then, that modern liberalism does not simply promote an understanding of the Smithian/Kantian self that would be alien to the Founders’ imagination (S1.5). In their relentless pursuit of ‘political and moral space’, modern liberals define liberty in opposition to republican self-government rather than as a consequence of self-government. And, in their insistence that rights are antecedent to civil society, they deny what the Founders affirmed; namely,

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that the rights codified in the Constitution and the Bill of Rights reflect Americans’ ‘English inheritance’ (SS1.4 and 1.6). In the process, modern liberalism denies the role and importance of the received ‘social knowledge’ or tradition that, in part, identifies man as a social creature and informs his ‘external preferences’. With all of this as background, I turn now to an adumbration of modern liberalism’s constitutive and derivative political positions.

4.2 Modern Liberalism’s Political Morality I emphasize, again, that modern liberalism is not congruent with classical liberalism (S3.5). Whereas the key principles embraced by the latter include respect for the individual’s autonomy, a strong system of private property rights, the voluntary exchange of productive inputs and comestibles, and prohibition against fraud and abuse,3 the construals that animate modern liberalism’s constitutive political position – equality, natural rights and the transcendental autonomous self – find expression neither in classical liberalism nor in the Founders’ republican self-government project. I emphasize, in particular, the notion upon which the equality and natural rights construals rely: the ‘autonomous self’ is understood to be a transcendental or ‘first-person self’. Derivative as it is from Kantian/Rawlsian moral and political philosophy, the autonomous self, possessed of free will and reason, is motivated by the categorical imperative or moral law (S1.5). As has been repeatedly emphasized, the institutional imperatives to which the moral law gives rise are, first, that the greatest possible equal participation must be promoted and, second, that government must treat each person impartially or ‘equally’. Importantly, because these institutional imperatives are formal rather than substantive, they do not specify which rights (duties) are to be respected. That said, modern liberalism’s rights construal is inexorably bound up with its understanding of ‘equal treatment’. In this account, the presence of interpersonal effects in agents’ utility functions is a matter of considerable moment: [Majoritarian] democracy is justified because it enforces the right of each person to respect and concern as an individual; but in practice the decisions of a democratic majority may often violate that right, according to the liberal theory of what the right requires. Suppose a legislature elected by a majority decides to make criminal some act (like speaking in favor of an unpopular political position, or participating in eccentric sexual practices), not because the act deprives others of opportunities they want, but because the majority disapproves of those views or that sexual morality. The political decision, in other words, reflects not just some accommodation of the personal preferences of everyone, in such a way as to make the opportunities of all as nearly equal as may be, but the domination of one set of external preferences, that is, preferences people have about what others shall do or have. The decision invades



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rather than enforces the right of citizens to be treated as equals. (Dworkin, 1985, p. 196; emphasis in original)

It is clear, then, that modern liberalism’s contingent defense of majoritarian democracy (S3.4) is derivative of this understanding of rights: persons are presumed to possess rights, antecedent to civil society, against the potential tyranny of a majority possessed of ‘external’ preferences. If this construal is not congruent with the Founders’ understanding of rights (S1.4), the same is true of modern liberalism’s equal treatment imperative. Recall, first, that the Founders embraced a Smithian/Kantian non-teleological theory of the right (SS1.5, 1.6 and 1.7). Stated differently, their prior ethical commitment to the moral equivalence of persons implied a procedural imperative; an imperative that did not interpret the right as maximizing the good (Rawls, 1971, p. 30). In sharp contrast, modern liberalism takes the Kantian equal treatment imperative to mean that government must treat persons equally, but that it be ‘neutral on what might be called the question of the good life’ (Dworkin, 1985, p. 191). While more will be said of this in Chapter 6, the essential point is that modern liberalism’s equal treatment construal, a concept of the right, implicates the satisfaction of non-external preferences, a concept of the good.4 Whatever else is said, this conception is not reconcilable with the Founders’ understanding of the self (S1.5), and of the reciprocal relationship between morality and law (SS1.3, 1.4, 1.5, 1.6 and 1.7). It is significant, then, that modern liberalism rules out ‘the state’s use of coercion to make people morally better’ (G. Dworkin, 1995, p. 363). Whereas the Founders imagined that the Constitution and postconstitutional statutory law can be instrumental to the cultivation of respect for the moral law (SS1.4, 1.5, 1.6 and 1.7), modern liberalism insists that the authority and legitimacy of the state depends upon its respect for an ‘endorsement constraint’: [Ronald Dworkin] develops an argument against state paternalism which … relies on the idea that the good life for persons is necessarily one that they create for themselves, that is lived from the inside as opposed to led from the outside. He argues for what Kymlicka has called the ‘endorsement constraint’. (G. Dworkin, 1995, p. 363)

In Ronald Dworkin’s account, in opposition to the Founders’ view, neither government policy nor constitutional, statutory or common law ‘can make a person’s life better against his opinion that it does not’ (Dworkin, 1991, p. 50).5 In this view, failure to respect this ‘endorsement constraint’ is violative of autonomy, and corrosive of the state’s authority and legitimacy. This, in essence, is modern liberalism’s ‘constitutive political position’. This position, ‘valued for its own sake’, is distinguished from liberalism’s derivative political positions, or positions ‘that are valued as strategies, as means of achieving the constitutive positions’ (Dworkin, 1985, pp. 183–4).

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The relationship between the constitutive and derivative political positions is, in Dworkin’s account, a corollary of modern liberalism’s predicate; that ‘there is broad agreement within modern politics that the government must treat all its citizens with equal concern and respect’, but that ‘Different people hold … very different conceptions of what that abstract principle requires in particular cases’ (p. 191). Given modern liberalism’s Kantian prior ethical commitment to the moral equivalence of persons – a commitment shared with the Founders – the question becomes: ‘What does it mean for the government to treat its citizens as equals? … as free, or as independent, or with equal dignity’. Dworkin suggests that the question may be answered in ‘two fundamentally different ways’: The first supposes that government must be neutral on what might be called the question of the good life. The second supposes that government cannot be neutral on that question, because it cannot treat its citizens as equal human beings without a theory of what human beings ought to be. (p. 191)

Whereas Dworkin avers that liberalism ‘takes as its constitutive political morality the first conception of equality’ (p. 192), I argue that the Founders would associate themselves with the second (Chapter 1). Setting this aside, at least for the moment, the question becomes: What are the institutional imperatives to which modern liberalism’s constitutive political morality gives rise? Suppose, with Dworkin, that a liberal is asked to found a new state. Given this de novo enterprise, the liberal is required to ‘dictate [the new state’s] constitution and fundamental institutions. He must propose a general theory of political distribution, that is, a theory of how whatever the community has to assign, by way of goods or resources or opportunities, should be assigned’ (p. 192). Dworkin suggests that, as a result of this thought experiment, the [modern] liberal ‘will arrive initially at something like this principle of rough equality: resources and opportunities should be distributed, so far as possible, equally’ (p. 192). But, because ‘citizens have different theories of the good and hence different preferences’, he asserts that The liberal, as lawgiver … needs mechanisms to satisfy the principles of equal treatment in spite of these disagreements. He will decide that there are no better mechanisms available, as general political institutions, than the two main institutions of our own political economy: the economic market, for decisions about what goods shall be produced and how they shall be distributed, and representative democracy, for collective decisions about what conduct shall be prohibited or regulated. (pp. 193–4)

It follows, pari passu, that the ‘economic market’ and representative democracy are modern liberalism’s key derivative political positions. Yet, given ‘the anti-egalitarian consequences of free enterprise in practice’ (p. 194), and given



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that agents possess ‘external preferences … about what others shall do or have’ (p. 196), the liberal lawgiver will choose a ‘mixed economic system’, and institutionalize a system of rights against the potential majoritarian ‘domination of one set of external preferences’ (p. 196). On the presumption that a ‘mixed economic system’ can correct ‘the antiegalitarian consequences of free enterprise in practice’, it is nevertheless true that the ‘liberal lawgiver … faces a difficult task’: His conception of equality requires an economic system that produces certain inequalities (those that reflect the true differential costs of goods and opportunities) but not others (those that follow from differences in ability, inheritance, and so on). The market produces both the required and the forbidden inequalities, and there is no alternative system that can be relied upon to produce the former without the latter. (pp. 195–6)

On the matter of ‘the forbidden inequalities’, those ‘that follow from differences in ability, inheritance, and so on’, I note first that, for Thomas Jefferson, To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, the guarantee to every one of a free exercise of his industry, and the fruits acquired by it. ([1816a] 1987, p. 573; emphasis in original)

If this suggests that at least one of the Founders would be unsympathetic to Dworkin’s ‘forbidden inequalities’ construal, the essential point is that, in his adumbration of what might be characterized as the perfectibility of the ‘economic market’, Dworkin invokes the first and second fundamental welfare theorems; theorems derivative of utilitarian social welfare theory, the economist’s theory of the state (Brennan, 1995, p. 142). As is well known, the first fundamental welfare theorem asserts that a perfectly competitive system will automatically move to a first-best Pareto optimal or ‘efficient’ outcome. For its part, the second fundamental welfare theorem indicates that, no matter to which point on the efficiency or welfare frontier an economic system is impelled, a ‘socially desired’ allocation can be realized by appeal to a system of ‘lump-sum’ taxes and bounties. While discussion of the economist’s theory of the state is deferred to Chapter 5, it is sufficient for present purposes to emphasize that lump-sum taxes are, in principle, those which do not affect relative product and input prices (Graaff, 1967, p. 63). It is significant then, that because the ‘economic market’ produces both ‘the required and the forbidden inequalities’, The liberal must be tempted, therefore, to a reform of the market through a scheme of redistribution that leaves its pricing system relatively intact but sharply limits, at

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Given Dworkin’s invocation both of ‘efficiency’ (p. 194) and, implicitly, of lump-sum taxes and bounties, it is clear that modern liberalism’s derivative political position is inexorably bound up with utilitarian social welfare theory; with the economist’s consequence-based, procedurally detached theory of the state. Were nothing else to be said, it is clear that modern liberalism’s political morality is irreconcilable with the Founders’ non-teleological, procedurally based and consequence-detached republican self-government project (SS1.5, 1.6 and 1.7). Moreover, as we shall see in later chapters, modern liberalism’s ‘utilitarian connection’ is encumbered by fundamental logical, empirical and ontological problems. Significantly, Dworkin’s ‘general theory of rights’, modern liberalism’s second derivative political position, is an attempt to perfect both majoritarian democracy and utilitarianism: The concept of an individual political right … is a response to the philosophical defects of a utilitarianism that counts external preferences and the practical impossibility of a utilitarianism that does not. It allows us to enjoy the institutions of political democracy, which enforce overall or unrefined utilitarianism, and yet protect the fundamental right of citizens to equal concern and respect by prohibiting decisions that seem, antecedently, likely to have been reached by virtue of the external components of the preferences democracy reveals. (1978, p. 277)6

It is clear, then, that liberalism’s political morality imagines that only ‘sanitized’ preferences may be satisfied. In this account, ‘The liberal … needs a scheme of civil rights whose effect will be to determine those political decisions that are antecedently likely to reflect strong external preferences and to remove those decisions from majoritarian political institutions altogether’ (Dworkin, 1985, p. 197; emphasis mine). If Noah Webster, Alexander Hamilton and many of the founding generation would reject the idea that moralistic and other external preferences should be ‘bracketed’ or ‘remove[d] … from majoritarian political institutions altogether’ (SS1.3 and 1.6), they would surely find it peculiar that ‘rights’ depend upon a myopic appreciation of contingent circumstance: in Dworkin’s account, ‘The scheme of rights necessary [to remove external preferences from majoritarian institutions] will depend on general facts about the prejudices and other external preferences of the majority at any given time, and different liberals will disagree about what is needed at any particular time’ (1985, p. 197). Whatever else is said, modern liberalism’s utilitarian connection is unambiguous. It follows, pari passu, that modern liberalism’s political morality is a hybrid



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moral theory.7 Because it assigns an instrumental role to rights, modern liberalism incorporates elements of right-based moral theories. And, because it incorporates elements of utilitarian social welfare theory it is, perforce, a goalbased moral theory. Granting this, it seems clear that insufficient attention has been paid to the fundamental irreconcilability of right- and goal-based moral theories and, pari passu, to the logical opposition between modern liberalism and utilitarianism. Equally important, insufficient account has been taken of the irreconcilability of the Smithian/Kantian/Rawlsian theory of the right, the moral equivalence of persons, and the utilitarian theory of the good. While these ideas are more fully developed in Chapter 6, it is sufficient to note, again, John Rawls’s admonition that, ‘The fault of the utilitarian doctrine is that it mistakes impersonality for impartiality’ (1971, p. 190).

NOTES 1. See also Section 1.6. 2. See also Section 1.6. 3. For recent, exhaustive discussions of classical liberalism, see Buchanan (2005) and Epstein (2003). 4. On the logic that it is questionable that ‘racist, sadistic and other antisocial preferences should count as contributing to individual well-being’, Hausman and McPherson have suggested that one approach is to ‘launder’ preferences (1993, pp. 690–91). This, it is clear, is a rough analogue for Dworkin’s approach. 5. Jeremy Waldron has suggested that ‘Liberals demand that the social order should in principle be capable of explaining itself at the tribunal of each person’s understanding’ (1987, p. 149), Arguably, this ‘endorsement constraint’ gives rise to institutional skepticism. 6. See also Dworkin (1985, p. 198). 7. As we shall see, the same is true of the economist’s theory of the state, social welfare theory.

5. The economic analogue 5.1 INTRODUCTION I stipulate, first, that utilitarian social welfare theory’s instrumental role in modern liberalism’s political morality is, in a generic sense, unexceptionable. Economics must, after all, be ‘conjoined to some adequate political doctrine (a doctrine that defines the nature and rights of the social arrangement to be served)’ (Scruton, 2002, pp. 106–7). Second, I acknowledge that Ronald Dworkin insists that, whereas ‘The opinion is popular that some form of utilitarianism … is constitutive of liberalism … this opinion is mistaken’ (1985, pp. 201–2). That said, I argue that utilitarianism is characteristic of modern liberalism’s constitutive and derivative political positions (S4.2). I have emphasized that modern liberalism’s equal treatment construal ‘needs a scheme of civil rights whose effect will be to determine those political decisions that are antecedently likely to reflect strong external preferences and to remove those decisions from majoritarian political institutions altogether’ (Dworkin 1985, p. 197). It is beyond dispute that this rights as non-absolute trumps against external preferences construal is an attempt to perfect both majoritarian democracy and utilitarianism (S4.2). Moreover, modern liberalism’s impulse to reform the ‘economic market’ involves the economist’s utilitarian theory of the state (S4.2). It follows, pari passu, that utilitarianism is instrumental to the achievement of its constitutive political position; namely, ‘that government must be neutral on what might be called the question of the good life’ (Dworkin, 1985, p. 191). Finally, as I have emphasized, because it incorporates elements of right- and goal-based moral theories, modern liberalism is a hybrid moral theory (S4.2). While the logical opposition between liberalism and utilitarianism is the subject matter of Section 5.3, immediate interest centers on an adumbration of the fundamental elements of social welfare theory, the economist’s theory of the state.

5.2 The Economist’s Theory of the State Given its instrumental role in modern liberalism’s political morality and, as we shall see, its lack of correspondence with the Founders’ political economy (S1.7), it is appropriate to consider the theoretical, empirical, ontological and

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moral foundations of social welfare theory (SWT), the economist’s theory of the state. We begin by recalling that, whereas contractarians and, perforce, the Founders, do not start with a concept of the good, given independently of the right, consequentialists start with a theory of the good and insist that the proper response is to promote ‘the good’. Recall also that utilitarianism is the theory of the good that is most standardly deployed to fill out the consequentialist agenda. Finally, I emphasize, again, that utilitarianism, whether in hedonistic, preference or welfare form, is ‘first and foremost, a standard for judging public action’. Granting this, ‘the right action is that which maximizes utility (however construed), summed impersonally across all those affected by that action … . That is … the standard that public policy-makers are to use when making collective choices impinging on the community as a whole’ (Goodin, 1993, p. 245). It is in this sense that the economist’s approach to government finds expression in the normative use of utilitarian SWT.1 It is characteristic of this enterprise that economists identify ‘welfare’ or the ‘public good’ with utility (Warke, 2000, p. 374), and that, whereas Bentham’s hedonic utilitarianism contemplated constitutional reforms intended to ensure that ‘utilitarian processes would prevail in the public arena’ (p. 379), SWT is institutionless. Finally, while utilitarianism is part of the corpus of moral philosophy, SWT is intendedly value free. Were nothing else to be said, it is clear that SWT would be alien to the Founders’ imagination.2 This conclusion is reinforced, once account is taken of the distinction between economic and political efficiency on the one hand, and ‘equity’ and justice as impartiality on the other hand. Whereas the Founders’ republican self-government project seeks, through formal and informal institutional constraints, to reduce or eliminate self-interested rent seeking or ‘factious behavior’ (political efficiency),3 SWT understands economic efficiency to consist in first-best, Pareto optimal outcomes. And, whereas the Founders embraced the Smithian/Kantian, procedurally based justice as impartiality imperative, SWT construes ‘equity’ to consist – via the intermediation of the second fundamental welfare theorem – in the reconciliation of outcomesbased ‘competitive’ and ‘ethical’ equilibria. Because the competitive and ethical equilibria construals are reliant upon both the efficiency or welfare frontier and the social welfare function, I shall consider them seriatim. As is well known, the instantaneously prevailing efficiency frontier is determinate, given the behavioral and technological postulates that define SWT’s frictionless decision environment. Central to this paradigm is Homo economicus. Autonomous, atomistic, narrowly self-interested and classically rational, Homo economicus is presumed to be a constrained utility maximizer. Importantly, whereas the Founders regarded preference and value structures as endogenously

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determined, SWT assumes that economic man’s consistently ordered preferences are exogenously determined, intertemporally stable and defined on objects of choice whose technical, qualitative and property rights characteristics are known with certainty. For their part, producers are assumed to employ singleequation, flow–flow production functions that, inter alia, are presumed to be the only efficient or output-maximizing technical alternatives available. Finally, in the institutionless and intendedly value-free decision environment envisioned, classical (as opposed to relational) contracting proceeds on the assumption that instrumentally important property and exchange rights are unattenuated.4 Granting this, the duties correlative to property and exchange rights are implicitly assumed to be respected and, given that all transactions are instantaneous, ex ante and ex post transaction costs are zero. Given these assumptions, the achievement of first-best Paretian optima or, what is the same thing, points on the efficiency frontier, is predicated upon the satisfaction of three marginal equivalences or ‘Paretian conditions’. As is well known, a defining characteristic of long-run perfectly competitive equilibrium is that it is Pareto optimal. In effect, the fixity of product and input prices ensures the satisfaction of each of the three welfare conditions and, pari passu, the attainment of a point – a ‘competitive equilibrium’ – on the efficiency frontier. The unique competitive equilibrium to which the system is impelled is determined, given the initial and unexplained resource endowment, by the instantaneously prevailing product and input price vectors. Setting aside the empirical and other problems that inhere in this construal, it is on this logic that the first fundamental welfare theorem asserts that a perfectly competitive system will automatically move to a first-best, Pareto optimal or ‘efficient’ competitive equilibrium. It is in this sense that outcomes-based economic efficiency becomes an instrument of public policy appraisal: inter alia, violations of one or more of the three marginal equivalences or welfare conditions constitute ‘market failure’ and may, therefore, justify outcomes-based public policy intervention. As we have seen (S4.2), the second fundamental welfare theorem indicates that, no matter to which competitive equilibrium the perfectly competitive system is impelled, a ‘socially desired’ or ‘ethical’ equilibrium can be realized by appeal to a system of ‘lump-sum’ taxes and bounties. On this logic, ‘movements along the [efficiency] frontier … are secured by redistributions … which do not destroy the [three] marginal equivalences’ (Graaff, 1967, p. 63). While it is possible to call into question the ‘practicability of lump-sum redistributions’ (Graaff, 1967, p. 78), the essential point is that determination of the ‘socially desired’ or ‘ethical equilibrium’ is predicated on the existence of a single-valued, consistently ordered social welfare function. While it is not at all clear that the ontological, empirical and other problems attaching to the notional social welfare function can be overcome (Chapter 7), the second



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fundamental welfare theorem is regarded as having normative implications. Indeed, while neither of the outcomes-based theorems could find expression in the Founders’ procedurally based and outcomes-detached political economy (S1.7), both the first and the second fundamental welfare theorems are instrumental to modern liberalism’s political morality (S4.2).

5.3 Moral and Political Lacunae It must be acknowledged that a ‘New Political Economy’ literature has recently grown up that ‘departs from the assumption often made in conventional economics that policy is determined by maximizing a social welfare function’ (Saint-Paul, 2000, p. 915), and that ‘The central message of the New Institutional Economics is that institutions matter for economic performance’ (Furubotn and Richter, 2005, p. 1). That said, it remains true that in what may be regarded as mainstream theory through the 1980s (exemplified by welfare economics and the general equilibrium models of Arrow–Debreu), institutions play virtually no role at all. Emphasis is on allocative efficiency, and different institutional arrangements are seen merely as ‘alternative means’ for meeting the conditions required for Pareto optimality. (p. 1)

Thus, whereas the Founders’ political economy focused on formal and informal institutions (S1.7), the two fundamental welfare theorems have no institutional content. Inter alia, whereas the Pareto criterion – the first fundamental welfare theorem – relies on unattenuated property and exchange rights, the theory simply assumes that the duty to respect these rights will be respected. Yet, as we have seen (S3.4), whether expressed in hedonistic, preference or welfare form, utilitarianism cannot respect the moral force of rights. The problem for SWT, a hybrid moral theory – and, pari passu, for modern liberalism, for which SWT is instrumentally important – is that right- and goal-based theories are irreconcilable: utilitarian arguments for institutional design (the arguments that utilitarians might use in favor of establishing or maintaining certain legal rights) do not logically or morally exclude direct utilitarian arguments concerning the exercise of, or interference with, such rights. As a consequence, evaluation of conduct from a utilitarian standpoint is dominated by direct utilitarian arguments and therefore ignores the moral force of justified legal rights. (Lyons, 1982, p. 113)

Reduced to its essentials, the problem is that, in the utilitarian framework, utility trumps rights: ‘[Rights] appear to be unacceptable to utilitarians since they impede the unfettered pursuit of the social good’ (Almond, 1993, p. 266). While the Nobel laureate Amartya Sen agrees – he acknowledges that ‘no direct

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and basic importance is attached in the utilitarian framework to rights and liberties in the evaluation of states of affairs’ (1995, p. 13) – he asserts that ‘The need to guarantee some “minimal liberties” on a priority basis can be incorporated in social choice formulations’ (p. 13). Sen’s enterprise is motivated by his rejection of the notion of preference-independent, consequence-detached rights. On the logic that rights cannot be consequence-detached, Sen avers that utilitarian analysis can be employed in ‘inverse form’ to determine which rights to protect. While Sen’s idea is to embed rights in ‘states of affairs’ as consequences, the difficulty is that rights and their correlative duties ‘have a normative life of their own, with implications that are neither reducible to, nor traceable by, direct considerations of utility’ (Lyons, 1982, p. 133).5 On this logic, whether the rights one seeks to protect are intrinsically or instrumentally valuable, they cannot be derived from desired consequences or states of affairs. This objection applies, moreover, to rule-utilitarianism (S3.4). Sen’s rehabilitative project notwithstanding, it is clear that utilitarian considerations can always trump rights. It follows, pari passu, that the path to the social welfare theoretic frontier is not assured. This, along with an explicit accounting of some fundamental features of observable reality (Chapter 7), calls into question the only standard of normative appraisal to which SWT gives rise. As it happens, there is an additional conundrum of which account should be taken. If utilitarianism and, pari passu, SWT are not reconcilable with rights, respect for rights gives rise to a different problem: if agents possess ‘meddlesome’ or ‘nosy’ preferences – a plausible assumption – and minimal ‘privacy’ rights are respected, the ‘impossibility of the Paretian liberal’ militates against the use of a social welfare function as an interest-aggregation decision mechanism (Sen, 1995, p. 13).6 Add to this the force of Arrow’s Possibility Result (Arrow, 1951, pp. 24–31) and Buchanan’s ‘ontological objection’ (1954, p. 116) and it seems clear that the notional idea of ‘social preference’ has no empirical counterpart. While these ideas and their implications are more fully developed in Chapter 7, the essential point is this: even if one were to grant the existence of the efficiency frontier, social welfare theorists and, pari passu, modern liberals are confronted with a conundrum. On the one hand, the inability to accommodate the moral force of rights means that the path to the frontier, to one of an infinite number of ‘competitive equilibria’, is jeopardized. On the other hand, respect for minimal liberties over ‘personal domains’ militates against the determination, let alone the achievement of, ‘ethical’ equilibria. Granting this, social welfare theorists – and modern liberals – must make a choice: Either they shall consider efficiency the sole fundamental basis for normative appraisals … . Or they must accept the idea that there are other values to be served, beyond



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economic efficiency, in which case they must entertain the possibility of rights and obligations that are independent of social recognition and enforcement, rights and obligations that justified legal institutions ought to respect. (Lyons, 1982, p. 128)

To sum up, given that they deploy a hybrid moral theory, social welfare theorists and modern liberals must make a choice: either they must argue that the rights that they regard as important are morally exigent in themselves and reject the only standard of moral appraisal to which SWT gives rise (economic efficiency or Pareto optimality), or they must embrace the economic efficiency standard and deny the moral force of rights. There are, of course, other dimensions of moral appraisal. Given modern liberalism’s commitment to the equal treatment imperative (S4.2), and given social welfare theory’s instrumental role in modern liberalism’s political morality, particular interest centers on the following question: Can SWT accommodate any plausible understanding of justice? It is first of all clear that social welfare theorists, and those who deploy the theory – including, of course, modern liberals – cannot, in the manner of libertarians, regard justice as respect for rights (Nozick, 1974, pp. 150–53). As we have seen, the core problem is that utilitarian SWT cannot accommodate the moral force of rights. Yet, if the accommodation of rights, and of justice as respect for rights, pose intractable problems for SWT, so too do other justice construals. I emphasize, first, that SWT does not deploy an explicit definition of justice. The theory is silent about the procedural or the ‘distributive’ justice both of ‘competitive equilibria’ and of the initial endowments which, along with relative prices, determine the unique, first-best Paretian allocation. What, then, of the ‘ethical’ equilibrium? To answer the question I set aside, at least for the moment, both the indeterminacy of the efficiency frontier and of the social welfare function (Chapter 7), and the questions that attach to the path to the frontier. I begin with some preliminary observations. First, it is clear that preference satisfaction may not be an adequate conception of individual and, mutatis mutandis, ‘social welfare’. We know, for example, that preferences may be based upon false, idiosyncratic, highly contestable or malign beliefs. Moreover, as has been suggested, there may be circumstances in which preferences may have to be ‘laundered’ before they may be accorded moral weight. Granting this, the moral weight of the ethical equilibrium may be called into question. Second, whereas ‘social justice’ (Dworkin, 1985, pp. 212 and 214–20), a subject taken up in Chapter 6 is consequentialist, ‘justice’, whether of the distributive or the commutative type, is a procedural notion. Whatever else is said, it is clear that consequence-based, procedurally detached SWT cannot, logically, accommodate such a concept.

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With this as background, we have already encountered the two theories of procedural justice that have been styled the ‘leading contenders’ (Barry, 1989, p. XIII). The first characterizes justice as mutual advantage (S3.3), while the second, endorsed by the Founders, regards justice as impartiality (SS1.5, 1.6 and 1.7). Because these contractarian theories have been discussed in detail, it is sufficient for present purposes to emphasize that neither of the contending contractarian theories is reconcilable with utilitarian SWT. On the one hand, nothing in the mutual advantage approach suggests that particular outcomes ought to be promoted. On the other hand, we know that, properly construed, the Smithian/Kantian/Rawlsian justice as impartiality construal is relentlessly nonteleological and anti-utilitarian. If it is clear, then, that SWT can deploy only one dimension of moral appraisal, Pareto optimality or economic efficiency, the question becomes, Can any principle of justice be accommodated? In Robert Nozick’s account, the answer is ‘Yes’: Welfare economics is the theory of current time-slice principles of justice. The subject is conceived as operating on matrices representing only current information about distribution. This, as well as some of the usual conditions (for example, the choice of distribution is invariant under a relabeling of columns), guarantees that welfare economics will be a current time-slice theory, with all of its inadequacies. (1974, p. 154)

While much can be said about this, the essential point is that end-state or time-slice theories of justice are unhistoric. This is characteristic of SWT. On the one hand, SWT is silent about the morality either of the initial endowment or of the property and exchange rights structures which, along with relative prices, determine the unique ‘competitive equilibrium’. On the other hand, the implicit assumption that structurally identical distributions are equally just is a logical corollary of the theory’s utilitarian ontology. On utilitarian logic, Two distributions are structurally identical if they present the same profile, but perhaps have different persons occupying the particular slots. My having ten and you having five, and my having five and you having ten are structurally identical distributions. (Nozick, 1974, p. 154)

While Rawls has suggested that the indifference among structurally identical distributions is reflective of utilitarians’ propensity to mistake impersonality for impartiality (1971, p. 190), the essential point is that nothing in the theory justifies this view. Reduced to its essentials, the forward and backward myopia inherent in utilitarian SWT implies a principle of justice for which no justification is proffered and which, in any event, does not tell the whole story about distributive shares (Nozick, 1974, p. 154).



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Granting all of this, it is not clear that utilitarian SWT can be instrumental to the achievement of liberalism’s constitutive political position. On the one hand, the economist’s theory of the state cannot accommodate the moral force rights. It follows, pari passu, that nothing in the theory implies respect for the ‘rights against external preferences’ that are central to modern liberalism’s equal treatment construal. On the other hand, its inability to accommodate any plausible theory of justice should give anyone pause – including, presumptively, the modern liberal committed to ‘perfecting’ both majoritarian democracy and utilitarianism. Finally, the fact that Pareto optimality or economic efficiency is the only standard of moral appraisal to which SWT gives rise is itself debilitating. As we shall see (S7.4), the economic efficiency standard is itself indeterminate.

5.4 The Contrast to the Founders’ Political Economy If utilitarian SWT and modern liberalism make strange and ultimately incompatible bedfellows, there are no elements of correspondence between the economist’s theory of the state and the Founders’ political economy. I need not reprise the by now familiar argument that social welfare theory’s consequence-based, procedurally detached ontology is irreconcilable with the Founders’ Smithian/Kantian project. While, in principle, little more need be said, it is appropriate to emphasize that the Founders’ prior ethical commitment to the moral equivalence of persons finds no expression in the economist’s utilitarian theory of the state; that the Founders’ understanding of the self (S1.5) is incompatible with the economist’s Homo economicus construal (S5.2), and that the economist’s intendedly value-free enterprise would find no place in the Founders’ imagination. Equally important, the Founders would be confounded by an institutionless theory of the state that, inter alia, takes no account of constitutional and postconstitutional conflictual politics. Reduced to its essentials, SWT deploys a peculiar, truncated understanding of ‘government’. In the situation envisioned, a ‘benevolent despot’, informed by an ‘omniscient being – the observing economist – who possesses whatever information we may require about tastes, [production] techniques, the future, and anything else’ (Graaff, 1967, p. 13), engages in the single-minded pursuit of the instantaneously prevailing supraindividual socially desired ‘ethical optimum’ (p. 70).7 It is clear that, properly construed, the ‘omniscient being – the observing economist’ is an ‘expository device’ (p. 13). It is, in fact, an artifact of the economist’s positivist methodology; of the insistence that the test of a model is the correspondence of its predictions with reality, not the realism of its genera-

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tive assumptions. That said, it is at least arguable that, in the hands of welfare economists, a patently unrealistic generative assumption has metamorphosed into a presumptive description of reality. However this may be, it is safe to say that the omniscient economist has no analogue in the Founders’ political economy (S1.7). For its part, the benevolent despot formulation does not simply test credulity. While it reflects what could usefully be characterized as a romanticized view of politics, the essential point is that it is internally inconsistent. In effect, the benevolent despot is a bifurcated man. Whereas he is narrowly self-interested in his market activity, he ‘suppresses these motives and brings out the more “noble” ones’ in his political activity (Buchanan, [1962b] 1999, pp. 68–9). Suffice it to say that the ‘“benevolent despot” model of government … is hopelessly at odds with assumptions made elsewhere in economics about human motivations and social institutions’ (Brennan, 1995, p. 147). Whatever else is said, the benevolent despot construal is fundamentally at odds with the Founders’ understanding of postconstitutional conflictual politics, and of the concomitant need for informal and formal institutional constraints on discriminatory, self-interested factious behavior. The irremediable fact is that the behavioral postulates and institutional lacunae inherent in the economist’s theory of the state are debilitating. On the one hand, economic man’s exogenously determined and intendedly value-free preference structure can reflect neither the intervention of social norms nor the cultivation of respect for the moral law (S1.5). Stated differently, while social welfare theorists implicitly embrace utilitarian impersonality, their theory cannot logically accommodate the Founders’ Smithian/Kantian/Rawlsian impartiality imperative. On the other hand, SWT can neither accommodate, nor assess the political efficiency of, the Founders’ constitutionally embedded ‘auxiliary precautions’ (SS1.3 and 1.7). If this means that federalism and the separation of powers cannot find expression in the economist’s theory of the state, it also means that the imperative to promote just, in the sense of impartial, laws is alien to the social welfare theorist’s imagination. Given that economic efficiency is the theory’s only dimension of moral appraisal, it could not be otherwise. Finally, there is this: as utilitarians, social welfare theorists can, at best, provide a contingent defense of majoritarian democracy (SS3.4 and 4.2). This, it is clear, is inconsistent with the Founders’ republican self-government project.

NOTES 1. As Hahn has suggested, this is a reflection of economic theory’s ‘relentlessly utilitarian’ core ontology (1982, p. 187).



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2. See, especially, Sections 1.5, 1.6 and 1.7. 3. See, especially, Section 1.7. 4. For a discussion of the distinction between classical and relational contracting see Furubotn and Richter (2005). 5. For a discussion of the relationships among rights and utility, see Dworkin (1978, pp. 94–6). 6. See also Hausman and McPherson (1993, p. 716). For more on ‘Politics and Meddlesome Preferences’, see Buchanan ([1986b] 2000, pp. 410–18). 7. See also Sections 4.2 and 5.2.

6. A failed public philosophy 6.1 The Right vERSUS the Good If the argument developed in Chapter 4 is correct, ‘the political theory implicit in our practice, the assumptions about citizenship and freedom that inform [American] public life’ (Sandel, 1996, p. 4) is what I have styled ‘Dworkian’ or modern liberalism. Granting this, I take as my point of departure that it is this paradigm which accounts for what Nobel laureate economist James Buchanan has characterized as the erosion of our moral order ([1981] 2001, p. 197).1 While the Dworkian enterprise has implications for American jurisprudence, this discussion is deferred to Chapter 8. For the moment, I emphasize, again, that modern liberalism is a hybrid moral theory. On the one hand, it deploys a theory of the right, the equal treatment imperative. On the other hand, its derivative political positions consist in an attempt to ‘perfect’ both majoritarian democracy and utilitarianism, a theory of the good. And central to this enterprise is the commitment to the instrumental use of the economist’s theory of the state, utilitarian social welfare theory. If this means that modern liberalism is irreconcilable with the Founders’ non-teleological contractarian project (S4.2), it also means that no account is taken of the fundamental irreconcilability of rightand goal-based moral theories and, pari passu, of the logical opposition between modern liberalism and utilitarianism (S5.2). As it happens, these considerations do not exhaust the logical and other conundra which confront the Dworkian liberal. Recall first that, for modern liberals, the fundamental question is, ‘What does it mean for the government to treat its citizens as equals? … as free, or as independent, or with equal dignity’ (Dworkin, 1985, p. 191). For Dworkin, the answer is unambiguous. Whereas he rejects the view – which I ascribe to the Founders (S1.5) – that government ‘cannot treat its citizens as equal human beings without a theory of what human beings ought to be’, he endorses the view ‘that government must be neutral on what might be called the question of the good life’ (p. 191). Dworkin insists, in effect, that government should not employ a theory ‘of what human beings ought to be’. I acknowledge, first, that Dworkin is aware of the objection which this construal invites; namely, that modern liberalism ‘is self-contradictory because liberalism must itself be a theory of the good’. On his account, ‘[Modern] Lib

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eralism is not self-contradictory: the liberal conception of equality is a principle of political organization that is required by justice, not a way of life for individuals’ (p. 203). Dworkin’s position notwithstanding, we know that modern liberalism’s equal treatment construal, a concept of the right, requires the satisfaction of sanitized or non-external preferences, a concept of the good: [Modern liberalism] is anxious to protect individuals whose needs are special or whose ambitions are eccentric from the fact that more popular preferences are institutionally and socially reinforced, for that is the effect and justification of the liberal’s scheme of economic and political rights. (Dworkin, 1985, p. 204)

It is on this logic that the force of rights which liberalism seeks to protect ‘derives simply from the fact that the first premiss of Dworkin’s theory is the right to equality rather than anything else’ (Waldron, 1995a, p. 17). If it is clear that the ‘first premiss’ is a theory of the right, it is also clear that modern liberalism is consequentialist: the ‘special needs’ and ‘ambitions’ which are to be protected against ‘more popular preferences’ must be understood to be arguments of agents’ utility functions. Given its insistence ‘that government must be neutral on what might be called the question of the good life’, it is not surprising that modern liberalism’s political morality should embrace utilitarianism. As Goodin has emphasized, ‘by running everything through people’s preferences and interests more generally, [utilitarianism] is non-committal as between various more specific theories of the good that people might embrace, and it is equally open to all of them’ (1993, p. 242). Granting the logic of what has been said, it is somewhat anomalous that Dworkin denies that modern liberalism is ‘based on some form of preferenceutilitarianism’ (1985, p. 204). While his logic is that modern liberalism ‘does not make the content of preferences the test of fairness in distribution’ (p. 204), two observations are appropriate. Recall, first, that modern liberalism’s derivative political position explicitly invokes social welfare theory’s second fundamental welfare theorem (SS4.2 and 5.2). On the logic that the market ‘produces both the required and the forbidden inequalities’ (Dworkin, 1985, p. 196), the implicit assumption must be that the ethical equilibrium favored by modern liberalism does, in fact, contemplate ‘fairness in distribution’. Moreover, it is clear that the social welfare function implicit in the theory is defined on what I have characterized as ‘sanitized preferences’; preferences from which altruistic, moralistic and political ‘external’ preferences have been laundered. It follows, pari passu, that whereas Dworkin rejects the view that government should employ a theory ‘of what human beings ought to be’ (S6.1), his theory insists that government must promote the satisfaction of sanitized or non-external preferences. Semantics aside, it is clear, then that modern liberalism’s

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neutrality construal is a theory ‘of what human beings ought to be’. If this means that modern liberalism is self-contradictory, it also means that the Founders view of the self (S1.5) cannot be rejected because it incorporates a view ‘of what human beings ought to be’.

6.2 Modern Liberalism’s Conception of the Self As the argument developed in Section 1.5 suggests, the Founders embraced a Smithian/Kantian understanding of the self. In their account, the cultivation of virtue, of respect for the categorical imperative or moral law, requires a two person perspective. While this argument need not be reprised, the essential point is that the imperative to treat others impartially, as ends rather than as means, is the result of a thought experiment. On Kantian logic, the transcendental firstperson self, behind a veil of ignorance and freed of knowledge of his own contingent circumstance will, by practical reason, conclude that persons should be treated impartially. That said, both Kant, and Smith before him, understood that respect for the moral law – ‘what makes categorical imperatives possible’ (Kant [1785] 1988, p. 86) – is ‘to inquire whether we do not occupy different points of view when by means of freedom we think ourselves as causes efficient a priori, and when we form our conception of ourselves from our actions as effects’ (p. 82). For Kant, Smith and the Founders, it is the first-person self – the impartial spectator – who judges the third-person self, the person immersed in contingent circumstance who, by ‘examples of honesty of purpose, of steadfastness in following good maxims, of sympathy and general benevolence’ is encouraged to become the ‘better person … he imagines himself to be’ (p. 87). The problem for modern liberalism is that the conception that animates its equal treatment and rights as trumps construals is the transcendental or firstperson self. Because no account is taken of Kant’s (and Smith’s) two points of view, modern liberalism invokes a truncated image of the Smithian/Kantian understanding of the self. If, as I have suggested, this conception is irreconcilable with the Founders’ understanding of the self (S1.5), it is also true that it implicitly ignores the need to cultivate respect for the moral law and, simultaneously, gives rise to a logical conundrum. As it happens, these ideas are related. I emphasize, first, the logical conundrum. Whatever else is said, it is clear that the transcendental, autonomous self, ‘outside the “empirical conditions” of the human agent has no capacity to act here and now’ (Scruton, 2002, p. 189). On this logic, modern liberalism is confronted with an ‘irresoluble dilemma’:



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either I am a transcendental self, obedient to reason, in which case I cannot act, or else I am able to act, in which case my motives are part of my circumstance and history … . The supposition that I am a concrete, historical agent of change, and at the same time bound to recognize the rights of others, becomes contradictory. (p. 189)

At issue, then, is the following question: Recognizing that the veil-of-ignorance situated transcendental autonomous self has no motive to act, what is it that binds him to respect the moral law – or modern liberalism’s rights against external preferences – once the veil has been lifted? We understand, of course, that once the veil is lifted, the agent is immersed in contingent circumstance; in the web of attachments which characterize his local, transitory and path-dependent social bonds. Under the circumstances envisioned, Smith, Kant and the Founders would, I think, agree that The only justification that can be found for the virtuous stance that [the first-person perspective] recommends to me – the stance of justice, in which I extend toward others an active recognition of their rights – is to be found in the long-term benefit conferred upon humanity, by our desire to deal equitably with each other. But this justification is not a first-person reason for action. (p. 190)

The point is that respect for the moral law and, pari passu, for rights and their correlative duties, depends upon a third-person perspective. All of this found expression in Kant’s two points of view, in Smith’s ‘two persons’ construal, and in the Founders’ cultivation of virtue project (SS1.3, 1.4, 1.5, 1.6 and 1.7). For Kant, Smith and the Founders, the first-person self is not, and cannot be, a moral being. The problem is not only that the transcendental autonomous self has neither a motive to act nor a motive to respect the moral law. Equally important, the transcendental autonomous self-construal is incommensurable with the other dimensions of moral appraisal. The Founders would surely agree with Adam Smith’s view that the principle of approbation and disapprobation – the impartial spectator’s approval or disapproval of character and conduct – flows both from reason and from ‘immediate sense and feeling’ ([1759] 1976, pp. 320–21).2 In this account, The moral being is not merely the rule-governed [first-] person who plays the game of rights and duties; he has a distinctive emotional character, which both fits him for the moral life and extends and modifies its edicts. He is a creature of extended sympathies, motivated by love, admiration, shame, and a host of other social emotions. (Scruton 1996, pp. 113–14; emphasis mine)

In this view, virtues such as courage, loyalty, decency, and a sense of justice and charity – virtues that the Founders prized and sought to cultivate – enjoy a reciprocal relationship with civil society. On the one hand, they are ‘the qualities which preserve society’ and, as the Founders averred, are necessary to republi-

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can self-government. On the other hand, they are ‘shaped by material, spiritual and religious circumstances’ (p. 114). This, it seems to me, captures the essence of Kant’s two points of view, of Smith’s ‘civilizing project’ and of the Founders’ understanding of the self (S1.5). At least on one interpretation, adoption of the first- and third-person perspectives results in the emergence of ‘an entire system of common-sense morality [predicated on the Kantian] premise of transcendental freedom’ (Scruton, 1982, p. 67). It must be said, however, that this common-sense morality – the morality of the Founders – is not reconcilable with modern liberalism’s transcendental, autonomous first-person self construal. Whereas Kant, Smith and the Founders regard the third-person perspective as necessary both to animate action and to cultivate the first-person perspective, modern liberalism seeks to immunize the transcendental first-person self from the intervention of others’ moralistic, altruistic and political ‘external’ preferences (Dworkin, 1978, p. 235). In short, modern liberalism’s transcendental self-construal is neither Kantian (or Smithian) nor internally consistent. Equally important, the vision of the transcendental autonomous self is irreconcilable with what James Buchanan has called ‘moral community’ (S4.1). Indeed, given the institutional skepticism to which the construal gives rise – the ability always to ask ‘Why should I do that?’ (Scruton, 2002, p. 186) – the transcendental autonomous self is, at minimum, corrosive of what Buchanan has called ‘the abstract rules of behavior describing moral order’ (S4.1). Reduced to its essentials, it is clear that The liberal attempt to construe all obligation in terms of duties universally owed or obligations voluntarily incurred makes it difficult to account for civic obligations and other moral and political ties that we commonly recognize. It fails to capture those loyalties and responsibilities whose moral force consists partly in the fact that living by them is inseparable from understanding ourselves as the particular persons we are – as members of this family or city or nation of people, as bearers of that history, as citizens of this republic. Loyalties such as these can be more than values I happen to have, and to hold, at a certain distance. The moral responsibilities they entail may go beyond the obligations I voluntarily incur and the ‘natural duties’ I owe to human beings as such. (Sandel, 1996, p. 14)

Whatever else is said, it is clear that the Founders would not – could not – embrace modern liberalism’s understanding of the self. We know, for example, that Washington spoke of ‘using my utmost exertions to establish a national character’; that Noah Webster averred that ‘[Virtue] proceeds from early habits, and a strong attachment to the place where men are born and to the customs, manners and government, in which they are educated’; that Melancton Smith believed that a Bill of Rights was important ‘because, by repeated negociations and declarations, all parties are brought to realize them, and … to believe them to be sacred’; that Jefferson ‘consider[ed] man as formed by society, and endowed by nature with those dispositions which fit him for society’; that the



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Founders endorsed Montesquieu’s view that ‘virtue may be defined, as love of the laws and of our country [and that] this love requires a constant preference of public to private interest’; that the Founders insisted that there is a reciprocal relationship between constitutional and statutory law and preference and value structures; and that, above all, the Founders embraced the Smithian/Kantian view that respect for the moral law must be cultivated.

6.3 The Rights Problem As has been repeatedly emphasized, Dworkin’s explanation of the values that underlie modern liberalism’s natural rights construal relies upon persons’ fundamental right to equal treatment. In this account, persons possess natural rights – rights antecedent to civil society – as non-absolute trumps against welfarist calculations informed by external preferences (Waldron, 1995b, p. 582). I emphasize, first, that however rights are construed, modern liberalism’s transcendental, autonomous self has no motive to respect them. If this suggests that modern liberalism is internally inconsistent, its ‘utilitarian connection’ only serves to complicate matters. As we have seen, utilitarianism cannot accommodate the moral force of rights. That said, account should also be taken of Jeremy Bentham’s well known ontological objection to rights generally, and to natural rights in particular. In his utilitarian account, ‘The language of natural rights … “is from beginning to end so much flat assertion: it lays down as a fundamental and inviolable principle whatever is in dispute”’ (Waldron, 1995b, p. 581).3 Bentham notwithstanding, ‘the claim to “natural rights” has never been quite defeated’ (MacDonald [1947–8] 1995, p. 21). The notion that rights may be antecedent to civil society may be traced to John Locke. In this account, ‘“natural” rights attach, by virtue of his reason, to every man much as do his arms and legs. He carries them about with him from one society to another’ (ibid., p. 27). Yet, if the claim of natural rights ‘has never quite been defeated’, it is also true that the natural rights doctrine ‘has seemed particularly vulnerable to ethical skepticism’. As Jeremy Waldron has suggested, ‘The idea of natural rights is seen as a particularly glaring example of the “Naturalistic Fallacy”, purporting to derive certain norms or evaluations from descriptive premisses about human nature’. In the face of these epistemological difficulties, ‘it becomes important, in the area of rights as elsewhere, for philosophers to identify clearly the deep assumptions on which their theories depend’ (Waldron, 1995a, p. 3). As we have seen, in the case of modern liberalism, the ‘deep assumptions’ on which its natural rights theory is based reduce to a particular, truncated understanding of Kantian autonomy; an understanding that is logically inconsistent with rights protection, however rights are construed.

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The question, in short, is not whether the rights that modern liberalism seeks to protect are ‘natural’ rights; rights that can construed to be antecedent to civil society. The question is: Can modern liberalism protect the rights it regards as instrumentally or intrinsically valuable? The answer, as we have seen, is ‘No’. There is, however, another question. To paraphrase Mary Ann Glendon, the question is this: Why do we have rights, and why should some rights trump democratic decision-making? At least on one account, an account with which the Founders would, I think agree, the answer is that ‘Assertions about natural rights … are assertions of what ought to be as the result of human choice’ (MacDonald [1947–8] 1995, p. 34). In this account, ‘Standards are determined by human choice, not set by nature independently of men’ (p. 31).4 Granting this, ‘“natural rights” are the conditions of a good society. But what those conditions are is not given by nature or mystically bound up with the essence of man … but is determined by human decisions’ (p. 34). This, it seems to me, is reconcilable with H.L.A. Hart’s thesis that ‘if there are any moral rights at all, it follows that there is at least one natural right, the equal right of all men to be free’ ([1955] 1995, p. 77). If the Founders would associate themselves with this idea, their embrace of the Smithian/Kantian twoperson point of view and their persistent invocation of Americans’ English inheritance – the ‘rights of Englishmen’ (S1.4) – suggest that they would agree that ‘natural rights’ are, in fact, political claims asserting that In any society and under every form of government men ought to be able to think and express their thoughts freely; to live their lives without arbitrary molestation with their persons and goods. They ought to be treated as equal in value, though not necessarily of equal capacity or merit. (MacDonald, [1947–8] 1995, p. 33)

In her paean to ‘The Majesty of the Law’, former Supreme Court Justice Sandra Day O’Connor highlights Americans’ ‘English inheritance’: When it came time to draft our own Constitution and Bill of Rights, the founders adopted both certain concepts found in Magna Carta and the more general notion of a written statement of fundamental law binding upon the sovereign state. Examples of important provisions of our Constitution that draw from Magna Carta are the requirement of legislative approval of taxation, the guarantee of freedom of religion, the requirement of speedy trials in criminal cases, and the establishment of an independent judiciary. Especially significant, of course, is the due process clause of the Fifth Amendment. (2004, pp. 34–5)

If all of this is reminiscent of the argument developed in Sections 1.4 and 1.6 above, it is also consistent with the idea that the Constitution and Bill of Rights have a reciprocal relationship with a continuing, path-dependent process. On the one hand, they are reflections of antecedent norms and law. On the other hand, as ‘fundamental law’, they are both progenitors of, and, absent constitu-



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tional amendment, constraints upon, future norms and statutory laws (S1.4). Moreover, former Justice O’Connor’s invocation of Sir Winston Churchill is evocative of another, related idea: Magna Carta … expresses an idea that retains vitality today, more than 750 years after King John met the [estranged] barons at Runnymede. That idea, as described by Sir Winston Churchill, is the ‘sovereignty of the law’ as protection against attempts by governments ‘to ride roughshod over the rights or liberties’ of the governed. (2004, pp. 33–4)

If the Founders would agree with the former Justice, it is likely that they would associate themselves with at least this part of Alan Dershowitz’s ‘rights from wrongs’ construction: the theory presented in this book is that rights are those fundamental preferences that experience and history – especially of great injustices – have taught are so essential that the citizenry should be persuaded to entrench them and not make them subject to easy change by shifting majorities. (2004, p. 81; emphasis mine)

The essential point is that, informed by history and experience, the Founders codified a Constitution and Bill of Rights whose animating principles included the idea that The enjoyment of rights is inseparable from self-governance, and that means actual representation of those being governed. Those rights might be abridged or qualified in a number of ways, but the only legitimate manner of so doing would be to secure the consent of the holders of those rights. (Kurland and Lerner, 1987a, p. 424)

If this underscores the idea that ‘liberty depends on sharing in self-government’ (Sandel, 1996, p. 5), it also suggests that the character and content of rights and of rights restrictions are not, and cannot be, the exclusive province of the transcendental, autonomous self’s ‘pure practical reason’: To claim rights as an individual independently of society, a man must have reached a level of self-consciousness which enables him to isolate himself in thought from his social environment. This presupposes a considerable capacity for abstraction. To this extent natural rights, or the ability to claim natural rights, depends on reason. But it does not follow from this that reason alone constitutes the specific nature of man or that the worth of human beings is determined solely by their IQ’s. Reason is only one human excellence. (MacDonald [1947–8] 1995, p. 29)

From this perspective, rights and rights restrictions reflect the agency of third-person selves immersed in path-dependent contingent circumstance. Insofar as the web of social attachments ‘leads people to see the world in terms of value, and so to develop the transcendental perspective’ (Scruton, 2002,

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p. 192), rights and, it should be said, government policy, will come to reflect the moral law. As we have seen, the Founders understood this (S1.5). And it is precisely this understanding that informed their appreciation both of the nexus between selfgovernment and virtue and of the need to cultivate virtue. The Founders understood, in short, that Central to republican theory is the idea that liberty depends on sharing in self-government. This idea is not by itself inconsistent with liberal freedom. Participating in politics can be one among the ways in which people choose to pursue their ends. According to republican political theory, however, sharing in self-rule involves something more. It means deliberating with fellow citizens about the common good and helping to shape the destiny of the political community. But to deliberate well about the common good requires more than the capacity to choose one’s ends and to respect others’ rights to do the same. It requires a knowledge of public affairs and also a sense of belonging, a concern for the whole, a moral bond with the community whose fate is at stake. To share in self-rule therefore requires that citizens possess, or come to acquire, certain qualities of character, or civic virtues. (Sandel, 1996, pp. 5–6)

If this is evocative of Montesquieu’s view that ‘morals, customs, [and] received examples may give rise to [political liberty]’([1750] 1977, p. 216), it is also consistent with James Buchanan’s conception of moral community (S4.1).5 It seems safe to say that the vision of a self-governing ‘moral community’ is precisely what the Founders had in mind. Whatever else is said, it is a vision which is alien to the modern liberal’s imagination.

6.4 The Social Justice Imperative Writing in 1973, the Nobel laureate Friedrich Hayek observed that The appeal to ‘social justice’ has … by now become the most widely used and most effective argument in political discussion. Almost every claim for government action on behalf of particular groups is advanced in its name, and if it can be made to appear that a certain measure is demanded by ‘social justice’, opposition to it will rapidly weaken. ([1973] 1997, p. 325)

Continuing, Hayek insisted that, whereas ‘until recently one would have vainly sought … for an intelligible definition of the term’, it was nevertheless true that ‘scarcely anyone doubts that the expression has a definite meaning, describes a high ideal, and points to grave defects of the existing social order which urgently call for correction’ (p. 327). While Hayek may not have had it in mind, his formulation is clearly evocative of the posture of modern, Dworkian liberalism; the liberalism that has been



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characterized as the public philosophy of modern America (S4.1). It is, after all, its inherent institutional skepticism and ‘reforming spirit’ that accounts for modern liberalism’s commitment to ‘perfect’ both representative democracy and the market system (S4.2). Thus, if Hayek could not discern a ‘definite meaning’ for the term ‘social justice’, for Dworkin the meaning is unambiguous: During the long period of liberal ascendancy, from the New Deal through the 1960’s, liberals felt confident that the immediate reduction of poverty was in every way good for the larger community. Social justice would, in Lyndon Johnson’s phrase, make the society great. Liberals thus avoided the question of what liberalism requires when prosperity is threatened rather than enhanced by justice. They offered no coherent and feasible account of what might be called economic rights for hard times: the floor beneath which people cannot be allowed to drop for the greater good. (1985, p. 212; emphasis mine)

Having laid this predicate, Dworkin avers that ‘[Liberals] need not accept … that our future will be jeopardized if we try to provide everyone with the means to lead a life with choice and value’ (p. 212). It seems clear that this idea is difficult to reconcile with modern liberalism’s transcendental autonomous self-construal (S4.2). However this may be, Dworkin’s conception is drawn in sharp contrast to the understanding of justice as a procedural notion; as a characteristic of relations among men and women. Hayek’s argument is characteristic of this view: It might … be said that the main difference between the order of society at which classical liberalism aimed and the sort of society into which it is now being transformed is that the former was governed by principles of just individual conduct while the new society is to satisfy the demands for ‘social justice’ – or, in other words, that the former demanded just action by the individuals while the latter more and more places the duty of justice on authorities with power to command people what to do. ([1973] 1997, p. 326; emphasis mine)

In this account, it is not outcomes that matter. As the Founders understood, justice is a procedural notion. Animated as they were by a Smithian/Kantian understanding of the self (S1.5), the Founders embraced a procedural imperative to treat morally equivalent persons, whether as citizens or as neighbors, impartially. If this means that consequence-based, procedurally detached ‘social justice’ would find no place in the Founders’ imagination, it also means that they would associate themselves with what has come to be called ‘natural justice’: The principal application of ‘natural justice’ is to human actions, and, by extension, to the characters from which those actions spring. It has no application to a state of affairs as such, judged independently of the agency which produced it. The sense of justice, being founded in and expressive of our reciprocal dealings, arises only be-

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cause we can see the justice of individual actions, and feel drawn towards the will from which they spring. If, at some later stage, we come to extend the idea, and speak of the justice or injustice of social and political realities, we mean to refer, not to their nature, but to their cause. (Scruton, 2002, pp. 79–80)

Granting this, an ‘instinctive conception of what is just’ (p. 79) is reflective of the workings of ‘ordinary conscience’; of a conscience informed by the moral law, by sympathy, by piety and by the ethic of virtue (Scruton, 1996, pp. 120 and 126). In this account, ordinary conscience and its derivative, natural justice, are not, and cannot be, the province of modern liberalism’s transcendental, autonomous self. Instead, as the Founders understood, respect for the moral law must be cultivated. The propensity to treat others as ends rather than as means – the Kantian first-person perspective – is both animated and cultivated by the third-person perspective; by the web of social attachments which define the agent’s contingent circumstance (S6.2). In sharp contrast to the Founders’ procedural understanding of justice, an understanding that animated the Founders’ appreciation of the need to promote both respect for the moral law and just, in the sense of impartial, institutions, modern liberalism seeks to promote ‘egalitarian outcomes’. From this perspective, the ‘liberal lawgiver’ is presumed to be able to secure ‘social justice’ by appeal to the second fundamental welfare theorem or, more broadly, to the economist’s theory of the state (S4.2 and Chapter 5). While this is the subject matter of Section 7.4, it is sufficient for the moment to note that the theory’s fundamental constructs are indeterminate. It follows that social-justice-animated redistribution schemes must be regarded as ad hoc. Whatever else is said, this should give the ‘liberal lawmaker’ pause. So, too, should his propensity to regard differences in ability and inheritance as producing ‘forbidden inequalities’ (Dworkin, 1985, pp. 195–6). If, as I have suggested (S4.2), this idea would be alien to Thomas Jefferson’s imagination, it is also well established that ‘The natural distribution [of talents] is neither just nor unjust; nor is it unjust that persons are born into society at some particular position. These are simply natural facts’ (Rawls, 1971, p. 102). It follows, pari passu, that In order to employ this concept of ‘justice’ in political debate … the advocate of ‘social justice’ creates a peculiar unconscious fiction: the fiction that really all wealth, and perhaps all advantage, belongs to a single owner (society), which (in some inexplicable way) has the duty to ensure its ‘distribution’. (Scruton 2002, p. 80)

It is clear that the Founders never embraced this ‘fiction’. Their procedurally based, consequence-detached republican project did not contemplate the pursuit of ‘social justice’ or other ‘good ends’. For them, the imperative was not to ‘perfect’ the market system. Rather, given their understanding of the Smithian/



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Kantian two-person self, they sought to cultivate what we may now call ordinary conscience and its concomitant, ‘just dealing … between people’ (Scruton, 2002, p. 78). In short, they had in mind the cultivation of what James Buchanan has called a ‘moral community’ ([1981] 2001, p. 188).6 And, given their non-teleological conception of the state they sought, through Madison’s constitutional ‘auxiliary precautions’ (S1.3), to promote just, in the sense of impartial, institutions. If this had implications for the Founders’ vision of postconstitutional conflictual politics (S1.6), it also contemplated a non-teleological political economy (S1.7). In the event, the Founders would surely associate themselves with James Buchanan’s admonition that confusion between the constitutional stage of choice … and collective actions taken within ‘the law’ will almost necessarily arise as long as the objectives of the state are seen as those of promoting ‘social good’. To the extent that the institutions of law and government, along with the prevailing public attitudes toward these institutions, reflect this teleological conception of the state, constitutional order is necessarily undermined. In its most elemental meaning a constitution is a set of rules which constrain the activities of persons and agents in the pursuit of their own ends and objectives. To argue directly or by inference that the constitution in itself embodies or should embody a ‘social purpose’ is to negate its very meaning’. ([1977] 2001, p. 178)

NOTES 1. See also Section 4.1. 2. For more on Smith’s, Kant’s and the Founders’ view of the cultivation of virtue, see Section 1.5. 3. As is well known, Bentham ‘dismissed absolute natural rights as “nonsense upon stilts’” (Almond, 1993, p. 266). 4. MacDonald’s argument is based, in its essentials, on the ‘Naturalistic Fallacy’ to which Waldron refers. See MacDonald (1947–8, pp. 30–31). 5. If the Founders shared, with Montesquieu, the view that republican self- government and liberty depend on civic virtue, they also embraced his view that ‘political liberty is formed by a certain distribution of the three powers’; by the separation of powers among the ‘Judiciary Power’, the ‘Legislative Power’ and the ‘Executive Power’. See Montesquieu ([1750] 1977, p. 216 and Book XI, Chapters 1–7). See also Sections 1.7 and 8.4. 6. See also Section 4.1.

7. The decline of political economy 7.1 Introduction If modern liberalism, the public philosophy of modern America, would be alien to the Founders’ imagination, the same is true of the economic theory to which modern liberalism is conjoined.1 I emphasize, in particular, the lack of correspondence between the Founders’ political economy (S1.7) and the economist’s theory of the state, social welfare theory (S5.2). Equally important, the economist’s consequence-based, procedurally detached and intendedly value-free enterprise is far removed from the work of the great Scottish moral and political philosopher, Adam Smith. This is significant, because Adam Smith is standardly characterized as the ‘father of economics’ (Tribe, 1999, p. 609), because economists are wont to associate social welfare theory’s first fundamental welfare theorem with Smith’s ‘invisible hand’ metaphor (Pindyck and Rubinfeld, 2005, p. 590), and because Smith’s work either influenced, or was congruent with, the Founders’ thinking. On the one hand, Smith, in the manner of Jefferson and Madison (SS1.2, 1.6 and 1.7), abhorred discriminatory policies intended to promote manufacturing, foreign trade or agricultural ‘species of industry’. Like the Founders, Smith’s rejection of discriminatory policies was animated, in part, by his two-person perspective (S1.5); in part, by his concern that self-interested factious behavior find no expression in public policy and, in part, by his cognizance of what Hayek would later call the ‘errors of constructivism’ (S2.1). On the other hand, if Smith, like the Founders, was concerned with the discriminatory impulse inherent in postconstitutional conflictual politics, his non-teleological ‘political œconomy’ – a ‘branch of the science of a statesman or legislator’ ([1776] 1976, p. 428) – comports with the Founders’ procedurally based and consequence-detached enterprise. Thus, if for the Founders, all economic policy decisions involve the impartiality imperative (S1.5), for Smith, ‘justice and equality of treatment [is that] which the sovereign owes to all the different orders of his subjects’ ([1776] 1976, p. 654). And if the Founders endorsed Madison’s constitutional ‘auxiliary precautions’ both as restraints on factious behavior and as necessary but not sufficient guardians of liberty (SS1.3 and 1.6), Smith embraced the separation of legislative, executive and judicial powers and, like Madison and Jefferson (S1.6), promoted a circumspect view of judicial interpretation (S2.3). And if the Founders, in

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formed by a Smithian/Kantian understanding of the self (S1.5), envisioned a reciprocal relationship between law and virtue (SS1.3, 1.4 and 1.6), Smith insisted that law should both ‘prohibit mutual injuries among fellow citizens’ and promote virtue (S2.1). Finally, if the Founders regarded education and the promotion of virtue as intrinsically valuable to the cultivation of individuals capable of self-government (S1.3), Smith argued that ‘instructed and intelligent people … are always more decent and orderly than an ignorant and stupid one’, and that ‘They are more disposed to examine, and more capable of seeing through, the interested complaints of faction and sedition’ ([1776] 1976, p. 788).2 These ideas inform the balance of this chapter. What follows is a brief adumbration of what may be styled the decline of political economy or, more properly, of economists’ abandonment of the political economy of the Founders, and of the father of economics, Adam Smith.

7.2 The Rise of Logical Positivism I begin by emphasizing that Adam Smith, as moral philosopher, and as the ‘father of economics’, intended ‘not only to instruct legislators by enunciating general principles but to motivate them to pursue the common interest’ (Muller, 1993, p. 54). If this is evocative of the Founders’ concern that the peoples’ representatives (and the people themselves) be animated by ‘civic virtue’, Smith’s understanding of the ‘institution[s] of government’ is reconcilable with the Founders’ appreciation of the role of Madison’s ‘auxiliary precautions’ ([1759] 1976, p. 187): What institution of government could tend so much to promote the happiness of mankind as the general prevalence of wisdom and virtue? All government is but an imperfect remedy for the deficiency of these … what civil policy can be so ruinous and destructive as the vices of men? The fatal effects of bad government arise from nothing, but that it does not sufficiently guard against the mischiefs which human wickedness gives occasion to.

For Smith, then, the ‘science of the legislator’ contemplates a comprehensive role for the moral philosopher–economist. Inter alia, the moral philosopher– economist must ‘furnish maxims and criteria for judging the fitness of laws and institutions for the guidance of lawmakers’ (Muller, 1993, p. 54). As we have seen, because neither Smith nor the Founders embraced a teleological conception of the state, the ‘criteria for judging the fitness of laws and institutions’ were procedurally based and consequence-detached. For Smith and the Founders, the moral equivalence of persons demanded that government promote just, in the sense of impartial, institutions and policies.

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While this argument need not be reprised, the essential point is that, for Smith and the Founders, ‘political œconomy’ was, in its essentials, a branch of moral philosophy. With this as background, it is clear that the evolution of the history of economic thought and methodology – with the latter understood to consist in the logic behind model building – may be broadly characterized as an episodic, long-term displacement of Smith’s, and the Founders’, ‘political œconomy’ enterprise. At the heart of this secular trend is the gradual, intertemporal emergence of ‘positive’ economics, and of institutionless, intendedly value-free social welfare theory. Central to this process is the work of Nassau Senior (1790–1864) who, drawing in part on the work of David Ricardo (1772–1823), argued that economics is a purely deductive science, that ‘The business of a Political Economist is neither to recommend nor to dissuade, but to state general principles’ (Senior, [1836] 1938, pp. 2–3), and that economics should be a positive, value-free science. Finally, and equally important, he delimited the subject matter of economic inquiry. In his account, political economy is ‘the science which treats of the nature, the production, and the distribution of wealth’ (p. 2). If Senior was the first of the classical economists to aver that political economy must be a ‘scientific’, value-free positive science, he also gestured toward the consequentialist impulse that was, eventually, to dominate economists’ thinking (Landreth and Colander, 2002, p. 160). It was, however, the work of Jeremy Bentham (1748–1832), and his ‘attempt to measure economic welfare, in the scientific sense’ (Ekelund and Hebert, 1975, p. 112), that marked the formal beginning of social welfare theory. While the analytical, logical and other problems that attend his ‘felicific calculus’ are well known, it is nevertheless significant that his was the first attempt ‘To take an exact account … of the general tendency of any act, by which the interests of the community are affected’ (Ekelund and Hebert, 1975, p. 112). Whatever else is said, it is clear that Bentham’s consequence-based, procedurally detached utilitarianism marks a significant departure from Smith’s and the Founders’ understanding of political economy. If Senior and Bentham initiated the process, other economists, philosophers and engineers contributed to the displacement of political economy – as it was understood at the founding – by institutionless, intendedly value-free analysis. Of particular interest are Jules Dupuit (1804–66) who, it is sometimes claimed, established the foundations of social welfare theory; Stanley Jevons (1835–82), who built on Bentham’s work; Carl Menger (1840–1921), who provided one of the first clear discussions of the equimarginal principle of welfare maximization; Leon Walras (1834–1910) and Alfred Marshall (1842–1924) who, respectively, developed general and partial equilibrium analysis, and Vilfredo Pareto (1848– 1923) who, in contrast to Marshall (and A.C. Pigou), laid the foundations for a general equilibrium approach to social welfare theory.



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The evolutionary process culminated in the emergence of what has come to be characterized as the ‘new social welfare theory’, and in economists’ embrace of logical positivism. For its part, ‘the new welfare economics (as distinct from the welfare economics of Marshall and Pigou) concerned itself only with the requirements for achieving an ethically neutral optimum with respect to production and consumption’ (Rima, 1978, p. 332; emphasis mine). Animated by the so-called Vienna Circle, logical positivists formalized the distinction, first made by Senior, between positive and normative economics, and insisted both that ‘the ideal of all science, including economics, is to be “value-free”’ (ibid., p. 324), and that science consists in the development of deductive structures capable of generating empirically testable hypotheses (Landreth and Colander, 2002, p. 17). Significantly, logical positivists claim that the test of a theory is not the empirical content of its assumptions. Rather, the test of a theory is the correspondence of its predictions with observable reality (Friedman, 1953, pp. 8–9). Enthusiastically embraced by Lionel Robbins, and promoted by the future Nobel laureate Milton Friedman (1953), logical positivism became, as recently as 2002, ‘According to most economics textbooks, the reigning methodology in economics’ (Landreth and Colander, 2002, p. 21). This is true, despite the logical, empirical and other problems to which the approach gives rise, and despite the fact that ‘logical positivism reigned in the philosophy of science only from the 1920s through the 1930s’ (p. 17). Whatever the source of the intellectual inertia that is evidently at work, the brute fact is that ‘Logical Positivism … underlies … the new welfare economics’ (Rima, 1978, p. 325–6). I emphasize first that, social welfare theorists’ embrace of logical positivism notwithstanding, social welfare theory is not value free. As we have seen, it is an internally inconsistent, hybrid moral theory (S5.3). Second, and equally important, the analytical convenience or ‘simplicity’ of the positivist approach is not achieved without cost. As we shall see (S7.3) the behavioral, technological and other postulates that define social welfare theory’s frictionless decision environment (S5.2) are inconsistent with fundamental features of observable reality. On the positivist’s account, this is unexceptionable. Characteristically, emphasis is placed upon the scrupulous avoidance of explicitly normative statements, upon the permissibility – indeed, the desirability – of the employment of unrealistic generative assumptions, and upon the characterization of institutionless decision environments. That agents’ objective functions and constraints should neither affect, nor be affected by, formal or informal institutions is itself a reflection of the logical positivist methodology. On the one hand, while ‘frictionless’ transactions often have no empirical counterpart, an explicit accounting of institutional and other detail is, for the logical positivist, neither necessary nor sufficient for the generation of testable hypotheses. On the other hand, attention to institutional

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‘detail’ would contemplate both formal and informal institutions – including, inter alia, ethical norms. Given that this is inconsistent with ‘positive’ economic analysis, it is not surprising that social welfare theory is characterized by an institutional vacuum. At bottom, the logical positivist regards generative assumptions as merely instrumental to the derivation of empirically testable hypotheses. On this logic, the empirical confirmation (disconfirmation) of a theory depends not upon the realism of the theory’s generative assumptions, the statements that serve to derive hypotheses, but upon the realism of the theory’s auxiliary assumptions, the statements that specify that which is assumed to be constant (Melitz, 1965, pp. 42–6). While, in principle, the logical positivist or ‘instrumentalist’ position is logically unassailable (Nagel, 1963, p. 218), serious objections have been raised.3 The Nobel laureate Wassily Leontief argues, for example, that True advance [in economics] can be achieved only through an iterative process in which improved theoretical formulation raises new empirical questions and the answers to these questions, in their turn, lead to new theoretical insights. The ‘givens’ of today become the ‘unknowns’ that will have to be explained tomorrow. This, incidentally, makes untenable the admittedly convenient methodological position according to which a theorist does not need to verify directly the factual assumptions on which he chooses to base his deductive arguments, provided his empirical conclusions seem to be correct. (1971, p. 5)4

If this implies, as I suggest it does, that ‘any errors uncovered in assumptions may also be considered as clues regarding the possible improvement of the theory’ (Melitz, 1965, p. 49), it does not suggest that unrealistic generative assumptions may never be employed. It is relatively easy to show, for example, that mathematical exigency may impel the model builder to employ assumptions which are known a priori to be false.5 That said, as Koopmans has suggested, ‘The study of … simpler models is protected from reproach of unreality by the consideration that these models may be prototypes of more realistic, but also more complicated, subsequent models’ (1957, pp. 142–3). The presumption is, in other words, that the evolution of economic science contemplates the construction of progressively ‘more complicated’ models employing ‘more realistic’ assumptions.6 Inter alia, this calls into question Friedman’s familiar ‘as if’ construal (1953, pp. 16–23).7 Equally important, we know that ‘an economic theory (e.g. the neoclassical theory of consumer choice) is a set of statements … designed to serve as partial premises for explaining as well as predicting an indeterminately large (and usually varied) class of economic phenomena’ (Nagel, 1963, p. 212; emphasis mine).8 Friedman himself asserts that ‘Viewed as a body of substantive hypotheses, theory is to be judged by its predictive power for the class of phenomena it is intended to “explain”’ (1953, p. 8). In-



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deed, in Friedman’s account, ‘descriptively false’ assumptions are a sine qua non for ‘significant’ explanatory power: in general, the more significant the theory, the more unrealistic the assumptions … . A hypothesis is important if it ‘explains’ much by little, that is, if it abstracts the common and crucial elements from the mass of complex and detailed circumstances surrounding the phenomena to be explained and permits valid predictions on the basis of them alone. To be important, therefore, a hypothesis must be descriptively false in its assumptions. (p. 14)

The problem for Friedman and, pari passu, for logical positivists, is that explanation is not logically equivalent to prediction. Whereas the empirical confirmation (disconfirmation) of a predictive model requires only that the auxiliary assumptions be realistic (Melitz, 1965, pp. 43–4), explanation requires that auxiliary and generative assumptions be realistic: For a theory to be explanatory it must satisfy a number of conditions. The set of statements which forms the explanation (called the explanans) must logically entail the set of statements which describe what is to be explained (called the explanandum). The explanans must not be known to be false and be independently testable. To be independently testable the explanans must have testable consequences in addition to the explanandum … . Moreover, to preclude ad hoc explanations the explanans must also include at least one universal law. (Wong, 1973, p. 317)9

In effect, if a theory is to have explanatory power, the explanans – the generative assumptions – cannot be known to be false a priori. Moreover, the generative assumptions must be subject to independent, empirical test; they must, in other words, be ‘richer in explanatory power and empirical content’ than that which is to be explained (p. 317). Finally, as in the case of predictive models, a reduction in the ambiguity of test results requires that the auxiliary assumptions be realistic (Melitz, 1965, pp. 43–4). If all of this implies that social welfare theorists’ embrace of logical positivism is inimical to ‘improved theoretical formulation’, inconsistent with the explanation of economic phenomena, and irreconcilable with the Founders’ and Adam Smith’s political economy, there is an additional and, I suggest, decisive problem. Reduced to its essentials, the problem is that the relentless deployment of analytically convenient but patently unrealistic assumptions both denies fundamental features of observable reality and calls into question the normative use of social welfare theory’s fundamental welfare theorems. This is the subject matter of Section 7.3.

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7.3 Reality Intrudes It is useful to begin by recognizing that theories are representations of reality. If this means that there is no one-to-one correspondence between a theory and complex reality, it is also true that its logical form requires that a theory include at least one unrestricted universal statement; a statement with no spatio-temporal reference (Wong, 1973, p. 320). It follows, therefore, that theories do not describe reality. While these remarks apply with equal force to theories in the physical and the social sciences, immediate interest centers on the economist’s theory of the state, social welfare theory (SWT). Informed by received neoclassical economic theory, itself reflective of logical positivist methodology, SWT takes no account of the real and unavoidable constraints that, in part, define agents’ decision environments. While, as we have seen, theories do not describe reality, and while logical positivism endorses the employment of unrealistic generative assumptions, it does not follow that what Oskar Morgenstern has called ‘radical simplifications’ are necessarily justified: The abstraction made would be faulty if it bypasses a fundamental feature of economic reality and if the analysis of the radically simplified situation will never point towards its own modification in such a manner that eventually the true problem can be tackled … . Radical simplifications are allowable in science so long as they do not go against the essence of the given problem. (1964, p. 4)

If Morgenstern’s admonition gestures toward Leontief’s view of the advancement of science as an iterative process, more is ultimately at issue. The essential point is that, for social welfare theorists, competitive and ethical equilibria (SS4.2 and 5.2) are the normative benchmarks against which ‘imperfectly competitive’ outcomes are assessed and appraised. Yet, as we shall see, once account is taken of some fundamental features of observable reality, both the efficiency frontier and the social welfare function are indeterminate. Granting this, a comparison of observed outcomes with hypothetical and unrealizable benchmarks is unavailing. As Demsetz has observed, The view that now pervades much public policy economics implicitly presents the relevant choice as between an ideal norm and an existing ‘imperfect’ institutional arrangement. This nirvana approach differs considerably from a comparative institution approach in which the relevant choice is between alternative real institutional arrangements. In practice, those who adopt the nirvana viewpoint seek to discover discrepancies between the ideal and the real and, if discrepancies are found, they deduce that the real is inefficient. Users of the comparative institution approach attempt to assess which alternative real institutional arrangement seems best able to cope with the economic problem. (1969, p. 1; emphasis in original)



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Demsetz’s formulation is important because it highlights what has come to be called the nirvana fallacy. But it is also important because it draws a distinction between first-best Pareto optimality or ‘economic’ efficiency and institutional efficiency. As we have seen (S1.7), consequence-based, procedurally detached ‘economic’ efficiency was alien to the Founders’ imagination. For them – and for constitutional political economists – the explicitly normative process of institutional appraisal centers on political efficiency; on ‘the efficacy of differing institutions in reducing or eliminating incentives for participants to invest resources in rent seeking aimed to secure discriminatory advantage through majoritarian exploitation’ (Buchanan and Congleton, 1998, p. 40). With this as background, my interest centers on the fact that the nirvana approach is characteristic of SWT. As is well known, the logic of the efficiency frontier requires that the underlying utility and production functions exhibit orthodox, neoclassical properties, and that the decision environment be ‘frictionless’ (S5.2). And central to the neoclassical paradigm is Homo economicus. Autonomous, atomistic, narrowly self-interested and classically rational, Homo economicus seeks purposefully to maximize utility subject to one or more exogenously determined constraints. In this account, economic man’s preference structure is consistently ordered, exogenously determined, and intertemporally stable. For their part, the objects of choice are understood to be purchasable economic goods whose physical and technical properties are known with certainty, and whose associated property rights are both well-defined and unattenuated. Moreover, because agents are fully informed, information asymmetries and their concomitant, opportunistic behavior, are absent. It follows that there is a one-to-one correspondence between economic man’s objectively defined and subjectively perceived decision environments. Finally, in the situation envisioned, exchange is characterized by classical, as opposed to relational contracting (Furubotn and Richter, 2005, p. 549). Inter alia, because fully informed agents affect instantaneous exchange, transaction costs (p. 52) are zero. I emphasize, first, that the classical rationality postulate, a generative assumption, cannot be tested independently of stability of preferences, an auxiliary assumption (Robinson, 1962, p. 50). If this means that models which deploy these assumptions can neither be confirmed nor disconfirmed, itself a significant problem, there is more at issue. Consider first that the analytically convenient assumption that preference structures are exogenously determined and intertemporally stable would be alien to the Founders’ imagination (SS1.4, 1.5, 1.6 and 1.7). That said, it is clear that preference (and value) structures are endogenously determined (Buchanan, 1994b, pp. 76–7).10 We know, for example, that evolutionary11 and other path dependencies including the emergence of new products,12 learning, and the development of social norms13 influence preference and value struc-

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tures. Equally important, higher-order preferences (North, 1994) – in effect, ‘preferences for preferences’ – may, in the manner of the Founders, animate efforts to alter others’ preferences and values (Buchanan, 1994b, pp. 74–7). Whatever else is said, it is clear that, as the Founders and Adam Smith understood, economics must take explicit account of the relationships between preference and value structures and the setting within which such structures are shaped. As James Buchanan has suggested, ‘The methodological individualist must … acknowledge the relationships between individual utility functions and the socioeconomic–legal–political–cultural setting within which evaluations are made’ (Buchanan, 1991, p. 186). If, as has been suggested, path dependencies may account for the ‘anomalous behavior’ judged to be inconsistent with classical rationality (Tversky and Thaler, 1990), they also gesture toward a larger problem; a problem which has implications for SWT. On the one hand, social welfare theorists have long been aware that, if interpersonal utility comparisons (IUCs) are ruled out, there is no possible method of aggregating individual rankings of social alternatives which meets five apparently innocuous criteria (Arrow, 1951, pp. 24–31). On the other hand, they seem not to acknowledge that, in the presence of path dependencies, ‘essentially different individuals are in existence at different points in time’. A corollary of this is that ‘no consistent standards of reference are available with which to work, and there is no firm basis on which to make judgments about alternative economic plans. Preferences are simply not comparable from one period to the next’ (Furubotn and Richter, 2005, p. 545).14 If it is possible to question the neoclassical presumption that preference structures are exogenously determined and intertemporally stable, the same is true of the assumption that agents are autonomous and narrowly self-interested. At issue is the presumption, roughly congruent with modern liberalism’s transcendental autonomous self-construal, that Homo economicus has no ‘social identity’. While it is clear that meddlesome, nosy or external preferences pose a problem for both modern liberalism and utilitarian SWT (SS4.2, 5.3 and Chapter 6), we know that empirical findings in evolutionary and other branches of psychology suggest that One or more of [a] collection of distinct [cognitive] processing units weighs or tries to weigh economic goods according to the logical laws of transitivity, but other processors register utility in at least five other ways. (Aaron, 1994, p. 15)

In this interpretation, utility derives from the consumption of comestibles. But it also derives from self-reference, from helping (and hurting) others, from caring about others as ‘ends’, from interpersonal relationships, and from setting goals and achieving them.15 If this implies, as the Founders, Adam Smith and Immanuel Kant suggested, that man has an innate moral sense (S1.5),16 it also



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suggests that, logical positivist imperatives notwithstanding, ethical and other behavioral norms may appear as arguments of agents’ utility functions and/or as behavioral constraints (Buchanan, 1994a, pp. 128 and 133).17 Equally important, the theoretical problems which attend interpersonal utility functions notwithstanding, explicit account should be taken of what the Nobel laureate Amartya Sen has called ‘a sense of identity with others’. In his account, if ‘the rejection of purely self-interested behavior does not indicate that one’s actions are necessarily influenced by a sense of identity with others’, it is clear that That broad question also relates to another, to wit, the role of evolutionary selection of behavioral norms which can play an instrumentally important part. If a sense of identity leads to group success, and through that to individual betterment, then those identity-sensitive behavioral modes may end up being multiplied and promoted. Indeed, both in reflective choice and in evolutionary selection, ideas of identity can be important, and mixtures of the two … can also, obviously, lead to the prevalence of identity-influenced behavior. The time has certainly come to displace the presumption of ‘identity disregard’ from the exalted position it has tended to occupy in a substantial part of economic theory woven around the concept of ‘the economic man’, and also in political, legal, and social theory (used in imitative admiration – a sincere form of flattery – of so-called rational-choice economics). (2006, p. 23)18

If Sen’s ‘sense of identity’ conception is evocative of Washington’s concern with the establishment of a ‘national character’, of Hamilton’s observation that ‘members of Congress [evince] a strong and uniform attachment to the interests of their own state’ (S1.3), and of James Buchanan’s ‘moral community’ and ‘moral order’ construals (S4.1), the essential point is this: to the extent that SWT is, to paraphrase Sen, ‘woven around the concept of economic man’, it can accommodate neither the endogeneity of preferences nor the interpersonal effects and multiple preference domains which influence agents’ behavior. Whatever else is said, the single-equation, strictly personal, intertemporally stable and exogenously determined utility function of social welfare theorists’ imagination is ill-suited to accommodate any of these phenomena. There is, moreover, an additional, related problem. As the Nobel laureate Herbert Simon has observed, there is a discrepancy between the perfect human rationality that is assumed in classical and neoclassical economic theory and the reality of human behaviour … . The point [is] not that people are consciously and deliberately irrational … but that neither their knowledge nor their powers of calculation allow them to achieve the high level of optimal adaptation of means to ends that is posited in economics. (1992, p. 3)

At issue is the notion that, whereas for economic man, ‘there is no gap between [his] competence and the difficulty of the decision problem to be solved’ (Heiner, 1983, p. 562), cognitive limitations are the defining characteristic of

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the boundedly rational decision maker (Conlisk, 1996).19 While there is no generally accepted definition of bounded rationality (Furubotn and Richter, 2005, p. 47), there is general agreement that it implies a competence–difficulty (C–D) gap. In this view, optimization is ‘a special case occurring when uncertainty (the C–D gap) approaches zero’ (Wilde, LeBaron and Israelsen, 1985, p. 403). Thus, as Heiner has suggested, ‘behavior patterns are not an approximation to maximizing so as to always choose most preferred alternatives (i.e., behaving “as if” an agent could successfully maximize with no C–D gap)’ (1983, p. 568).20 Instead what emerges is a pattern of ‘“rule-governed” behavior, such as instinct, habits, routines, rules of thumb, administrative procedures, customs, norms, and so forth’ (p. 567).21 In sharp contrast to ‘what Hayek has called constructivist rationality (or “constructivism”)’ (Smith, 2003, p. 466), models of bounded rationality consist of simple step-by-step rules that function well under the constraints of limited search, knowledge and time … . The repertoire of these rules or heuristics, available to a species at a given point in its evolution is called its ‘adaptive toolbox’. The … toolbox … has the following characteristics: First, it refers to a collection of rules or heuristics rather than to a general-purpose decisionmaking algorithm … . Second, these heuristics are fast, frugal, and computationally cheap rather than consistent, coherent, and general. Third, these heuristics are adapted to particular environments, past or present, physical or social. This ‘ecological rationality’ – the match between the structure of a heuristic and the structure of an environment – allows for the possibility that heuristics can be fast, frugal, and accurate all at the same time … . Fourth, the bundle of heuristics in the adaptive toolbox is orchestrated by some mechanism reflecting the importance of conflicting motivations and goals. This mechanism is not yet well understood. (Gigerenzer and Selten, 2002, pp. 8–9)22

The essential point is that, once explicit account is taken of bounded rationality, human activity is diffused and dominated by unconscious, autonomic, neuropsychological systems that enable people to function effectively without always calling upon the brain’s scarcest resource – attentional and reasoning circuitry … . Imagine the strain on the brain’s resources if at the supermarket a shopper were required to explicitly evaluate his preferences for every combination of the tens of thousands of grocery items that are feasible for a given budget. Such mental processes are enormously opportunity-costly and implicitly our brain knows, if our conscious mind does not know, that we must avoid incurring opportunity costs that are not worth the benefit. The challenge of any unfamiliar action or problem appears first to trigger a search by the brain to bring to the conscious mind what one knows that is related to the decision context. Context triggers autobiographic experiential memory. (Smith, 2003, pp. 468–9)23

If the ‘adaptive toolbox’ is irreconcilable with Homo economicus’s constructivist, ‘classical’ rationality, it also underscores the role in decision making of



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‘autonomic, neuropsychological systems’ and of path dependencies; in particular, of subjective, ‘autobiographic experiential memory’. Equally important, emphasis is placed on the ‘importance of conflicting motivations and goals’. If, as we shall see, these considerations call into question the normative use of the economist’s theory of the state, social welfare theory, I emphasize, for the moment, that ‘welfare economics, and the entire ability of economists to make normative statements, is premised on the idea that giving people what they want makes people better off’ (Camerer, Loewenstein and Prelec, 2005, p. 37; emphasis mine). Difficulties arise because ‘there is considerable evidence from neuroscience and other areas of psychology that the motivation to take an action is not always closely tied to hedonic consequences’ (p. 37). In this account, ‘decision making involves the interaction of two separate, though overlapping systems, one responsible for pleasure and pain (the “liking system”), and the other for motivation (the “wanting system”)’. What seems increasingly to be appreciated is that ‘it is possible to be motivated to take actions that bring no pleasure’ and, conversely, to ‘feel quite unmotivated to engage in activities that, at a purely cognitive level, you are quite sure you would find deeply pleasurable’ (p. 37).24 At issue is not the off-cited indeterminacy of ends, but something equally fundamental – the notion that ‘the motivation to take an action is not always closely tied to hedonic consequences’ strikes at the heart of utilitarian SWT: Economics proceeds on the assumption that satisfying people’s wants is a good thing. This assumption depends on knowing that people like what they want. If likes and wants diverge, this would pose a fundamental challenge to standard welfare economics. Presumably, welfare should be based on ‘liking’. But if we cannot infer what people like from what they want and choose, then an alternative method for measuring liking is needed, while avoiding an oppressive paternalism. (p. 37)

Plainly stated, a lack of congruence between ‘likes’ and ‘wants’ raises questions about the ontological existence of both the efficiency frontier and the social welfare function. It follows, pari passu, that findings in neuroscience and other branches of psychology militate against the normative use of the first and second fundamental welfare theorems. If economic man’s single-equation, strictly personal, intertemporally stable and exogenously determined utility function has no empirical counterpart, the same is true of the single-equation, neoclassical production function. Inter alia, the flow–flow production function is presumed to be the only ‘efficient’ or output-maximizing technical alternative available to the representative producer. Moreover, in its ‘short-run’ configuration, production proceeds under conditions of ‘perfect adaptability’. In effect, the logic of the ‘efficiency’ postulate requires that, as movement along the short-run expansion path proceeds, the physical form of the capital stock that generates the fixed service flow must be instanta-

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neously and costlessly adapted to changing rates of use of the variable service flow (Furubotn, 1964, p. 22).25 What seems not to be acknowledged is that, as the physical form of the capital input type changes, the technical properties of the ‘fixed’ service flow must change. Given the logical positivist’s insistence that patently unrealistic generative assumptions are admissible, this is perhaps not surprising. That said, the logic of the model is internally inconsistent: it is an irremediable fact that, as ‘perfect adaptation’ proceeds, the production function changes, and movement along the short-run expansion path is a logical impossibility (Roth, 1973). The perfect adaptability conundrum has basic relevance to social welfare theory. Just as logical, empirical and other considerations suggest the implausibility of a single-equation utility function, elementary engineering considerations militate against the specification of a single-equation ‘output-maximizing’ production function. The brute fact is that, at a cross-section of time, human and non-human capital input types appear in differentiated forms. This, in turn, has clear implications for the firm’s technical options. Reduced to its essentials, the firm’s production function is properly characterized as a multi-equation construct. In this interpretation, each production subfunction is capable of producing the desired product, but each has as its parameters particular differentiates of the capital input types employed (Roth, 1979). Given this empirically observable understanding of the firm’s technical environment, the producer confronts a ‘choice of technique’ problem: given the producer’s desideratum, he must, somehow, choose among the competing production subfunctions or ‘techniques’ (Roth, 1972, 1977). In sharp contrast to the frictionless neoclassical decision environment (S5.2), the choice of technique problem is characterized by bounded rationality and positive transaction (decision) costs. In the situation envisioned, the producer must decide how to choose among the array of competing production subfunctions. Moreover, whatever decision rule is chosen, it is plausible to ask how it was selected. Yet, it is clear that the decision process that resulted in the emergence of the decision rule was itself the outcome of a prior decision process. But that process had also to be chosen, and so on. Given the juxtaposition of positive decision costs and uncertain benefits it is appropriate to ask, ‘how is the individual to resolve the infinite regress of whether it is worthwhile to obtain information concerning whether it is worthwhile to obtain information’ (Stiglitz, 1985, p. 23).26 The answer, it would seem, is that ‘the rational thing to do is to be irrational’ (at least in the sense of classical rationality), and simply ‘to choose a choice method without reason’ (Pingle, 1992, p. 11). A decision to ‘choose a choice method without reason’ is not implausible, once account is taken of two additional features of observable reality. First, the number of production subfunctions or ‘techniques’ confronting the decision maker is itself a function of the number of capital input types contemplated, and



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of the number of differentiates of each of the capital input types. It follows that, in many cases of practical importance, the decision maker cannot possess exhaustive knowledge of the technical array. Second, allowance must be made for the possibility of technical interaction among production subfunctions (Gort and Boddy, 1965, p. 395). There are, in brief, ‘strong logical and empirical grounds for believing direct linkages exist among the units forming a production complex’ (Furubotn, 1970, p. 22). Once explicit account is taken of extant and potential technical interactions, the effect is to expand the number of definable, competing, production techniques. Granting this, serious questions emerge as to whether the extent of the array, let along the technical characteristics of each of the production subfunctions, can be known. Given bounded rationality and positive decision costs, it seems clear that it is no longer possible to assume that each individual knows everything about existing technological alternatives … . The older formalism of the neoclassical case does not apply when individual knowledge endowments are limited, differ widely from person to person, and are subject to continuing change, and when the very process of decision making is costly and based on decision rules other than rational choice. (Furubotn, 1999, p. 183)

A corollary of all of this is that there is a divergence between the objective, but unknowable, decision environment, and its subjectively perceived counterpart.27 The complexity of the decision environment suggests that the decision maker cannot possess exhaustive knowledge of the technical array and that, pari passu, only a subset of the options will be considered.28 On this logic, there can be no presumption that either incumbent firms or de novo industry entrants will employ the same differentiates of the capital input types typically employed within an industry. Moreover, and of basic relevance to SWT, given that differentiated forms of capital input types generate technologically distinct service flows, it follows that the service flows employed across firms in the same industry need not be technologically homogeneous. Yet, if this is true within industries it must, mutatis mutandis, be true across industries. Granting the logic of what has been said, the firm-subjective production function is not reconcilable with the production-theoretic foundations of SWT. Given bounded rationality and positive decision costs, there can be no presumption that all firms will employ the same capital stocks, let alone the same service flows. Granting this, the space in which the production-theoretic contract curve might be defined is indeterminate. It follows, pari passu, that the production possibility frontier, a sine qua non for the derivation of the efficiency frontier, cannot be defined.

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7.4 Consequentialism Derailed If the production-theoretic foundations of the efficiency frontier are undermined by fundamental features of observable reality (S7.3), the same is true of its utility-theoretic foundations. As we saw in Section 7.3, the individual agent’s preference and value structures cannot adequately be represented by an intertemporally stable, exogenously determined, single-equation utility function. First, path dependencies and findings in neuroscience and other branches of psychology are inconsistent with the analytically convenient conception of economic man. Second, an emerging literature suggests that individual preference and value systems involve a number of utility domains. Each of these domains is representable by utility subfunctions defined for the same individual. While the arguments of some of these subfunctions include comestibles, one or more of the subfunctions contemplate arguments which are reflective, inter alia, of society’s view of acceptable behavior. In effect, the agent’s utility domains incorporate both tastes and preferences and values or moral tastes. On this logic, the attempted separation between economics and morals was, at best, an illusion that simply cannot be sustained. Economics models persons as maximizers of utility, but arguments in utility functions include rules that restrict the range of choices that are made. (Buchanan, 1994a, p. 128)

Indeed, in James Buchanan’s account, the ‘ecumenical utility-function approach’ ([1983a] 2000, p. 122) recognizes that There is, without doubt, an element of old-fashioned economic man in every one of us, and on the average this may be important for a lot of our ordinary behavior, but there are always other elements that operate alongside ‘old Adam’. There are several ‘non-economic’ men that live with Homo economicus, and it is folly to ignore their existence and their tempering influence because they are difficult to quantify. (p. 121; emphasis mine)

The essential point is that an explicit accounting of utility domains – of ‘the several “non-economic” men that live with Homo economicus’ – requires appeal to a multi-equation utility function. This, in turn, compromises the logic of contract curve derivation. Even if it were assumed that individuals’ preference and value structures are defined over the same utility domains, the space in which contract curves might be derived is indeterminate. In any case, the assumption is implausible. The juxtaposition of bounded rationality, information asymmetries and path dependencies would seem to ensure that individuals will possess disparate preference and value domains. Add to this the possible lack of congruence between ‘wants’ and ‘likes’ (S7.3), and the arguments of individuals’ utility subfunctions will differ. It follows that the contract curves



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which are a sine qua non for the derivation of the efficiency frontier are indeterminate. The indeterminacy of the efficiency frontier is underscored once account is taken of the complex nature of comestibles. The core problem is that product types typically appear in differentiated forms. Inter alia, the array of goods extant at a cross-section of time may be distinguished by their technical and aesthetic characteristics, by their associated property and exchange rights bundles, and by their ethical attributes, both in use and in acquisition (Buchanan, 1994a, p. 124; Furubotn and Pejovich, 1974; Roth, 1975). In effect, each differentiate of each distinguishable product type is characterized both by objectively defined, and subjectively perceived, charactertistics vectors. It follows that there can be no presumption that, for any two individuals, the ‘goods’ appearing as arguments in their respective utility subfunctions will be congruent. There can, in fact, be no presumption that a boundedly rational individual knows the number, let alone the objectively determinable characteristics, of the goods confronting him. Granting this, the arguments which appear in individuals’ utility subfunctions consist in a subjectively determined subset of the extant array of comestibles. Add to this the emergence of new products and differing patterns of information diffusion (Furubotn and Richter, 2005, p. 545), and there can be no one-to-one correspondence between the objectively defined and subjectively perceived decision environments. Finally, given that boundedly rational agents possess different stocks of knowledge, differ in their ability to process new and extant information, and are conditioned by disparate path dependencies, it follows that subjectively perceived decision environments will differ across individuals. A corollary is that, both at a cross-section of time and intertemporally, agents will be characterized by heterogeneous utility functions. In effect, individual agents’ multi-equation utility functions must be defined on disparate preference and value domains, and on different, subjectively perceived, subsets of the available comestibles. At issue is the failure of SWT to take account of real and unavoidable constraints. If, as we have seen, this is characteristic of the logical positivist enterprise, the irremediable fact is that fundamental features of objective reality militate against the specification of the efficiency frontier. Stated differently, it is appropriate to question the ontological existence of the efficiency frontier (Furubotn, 1994; Frank, 1996, p. 119). As it happens, even if the existence of the efficiency frontier were granted, fundamental logical problems remain. In particular, the path to first-best Paretian optima, to competitive equilibria, is not assured. Recall first that consequentialist SWT is a hybrid moral theory (S5.3). While it is outcomes-based and procedurally detached, the theory assigns an instrumental role to unattenuated property and exchange rights. In particular, the path to the efficiency frontier is reliant upon respect for agents’ rights. While the ar-

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gument need not be reprised, the problem is that SWT is formulated in utilitarian terms. As has been emphasized (S5.3), ‘evaluation of conduct from a utilitarian standpoint is dominated by direct utilitarian arguments and therefore ignores the moral force of justified legal rights’ (Lyons, 1982, p. 113). It follows that, insofar as ‘utility’ can always trump rights, the path to the frontier is not assured. Finally, there is this: if the irreconcilability of right- and goal-based moral theories jeopardizes the path to ‘competitive equilibria’, so too does the zero transaction cost assumption (S5.2). Whereas social welfare theorists regard costless transactions among autonomous, atomistic and narrowly self-interested agents as a necessary condition for the attainment of competitive equilibria, the zero transaction cost assumption leads to a logical conundrum. Reduced to its essentials, a decision environment characterized by costless transactions is congenial to the formation of coalitions that, effectively, rule out the satisfaction of the marginal equivalences needed to attain a first-best Paretian optimum (Furubotn, 1991). As is well known, the social welfare function is to ‘ethical’ equilibria what the efficiency frontier is to ‘competitive’ equilibria (S5.2). The utilitarian social welfare function is, first and foremost, an interest-aggregation decision mechanism which defines the optimal social outcome as the maximization of the sum of individual utilities. It is in this sense that it is understood to be a mechanism for choosing among end-states. Granting this, the social welfare function is the sine qua non for the determination of ethical equilibria. I begin by emphasizing, again, that preference satisfaction may not be an adequate conception of individual and, pari passu, ‘social’ well-being. As has been suggested (S5.3), preferences may be based on false, idiosyncratic, highly contestable or malign beliefs. Moreover, there may be circumstances in which preferences should have ‘to be “laundered” before becoming suitable objects to be accorded moral weight’ (Hausman and McPherson, 1993, p. 714). Indeed, as we have seen, while modern liberalism regards social welfare theory as instrumentally important to the achievement of its constitutive political position, its adherents insist upon ‘sanitizing’ external preferences (S4.2). Whatever else is said, these considerations suggest that, even if one were to suppose that the notional social welfare function has an operational counterpart, the ‘moral weight’ of the ethical equilibrium could be called into question. Were nothing else to be said, it is remarkable that social welfare theorists’ characterization of the ‘public good’ has become, for all practical purposes, the ‘received wisdom’. Yet more can be said. Recall first that Arrow’s Possibility Result (1951) established that, if interpersonal utility comparisons are ruled out, there is no possible method of aggregating individual rankings of social alternatives that meets five apparently innocuous criteria. Yet, as we have seen (S7.3), path dependencies and the inherent complexity of subjectively defined utility



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domains render interpersonal utility comparisons impracticable. This is true, moreover, both at a cross-section of time (across individuals), and intertemporally (for the same individual). If the interpersonal utility comparison problem militates against the specification of a social welfare function, the same is true of the impossibility of the Paretian liberal (S5.3). Roughly stated, the juxtaposition of meddlesome or ‘nosy’ preferences and respect for minimal privacy rights prevents the emergence of any social choice. The upshot is that, Amartya Sen’s efforts to expand the informational base of social welfare theory notwithstanding (Roth, 1999, pp. 59–63), Arrow’s Possibility Result and the impossibility of the Paretian liberal call into question the efficacy of the social welfare function as an interest-aggregation decision mechanism. Finally, if as I have suggested, it is possible to question the ontological existence of the efficiency frontier, the same is true of the social welfare function. As James Buchanan has suggested, the idea of ‘social preference’ imputes ‘rationality or irrationality as an attribute of a social group’. This, in turn, ‘implies the imputation to that group of an organic existence apart from that of its individual components’ (Buchanan, 1954, p. 116). Significantly, Amartya Sen finds this objection ‘quite persuasive’ when ‘social preference’ connotes the operation of social decision mechanisms such as voting procedures (1995, p. 5) In sum, the logical, empirical and ontological problems that attend the efficiency frontier and the social welfare function call into question the normative use of the first and second fundamental welfare theorems. Simply stated, government policy animated by either theorem must be regarded as ad hoc.

7.5 ‘Scientific’ Economics and the State Its ‘scientific’, logical positivist pretensions notwithstanding, social welfare theory is an internally inconsistent hybrid moral theory. Moreover, an explicit accounting of fundamental features of observable reality renders both the efficiency frontier and the social welfare function indeterminate (S7.4). That said, writing more than four decades ago, James Buchanan observed that ‘economists tend to be so enmeshed with efficiency notions that it seems extremely difficult for them to resist the ever-present temptation to propose yet more complex gimmicks and gadgets for producing greater “efficiency”’ ([1962b] 1999, p. 62). Given economist’s continuing propensity to invoke ‘market imperfections’ to justify government market interventions, the remark retains its basic relevance. Even if one were to set aside the indeterminacy of social welfare theory’s fundamental constructs, economists’ continuing embrace of their ‘theory of the state’ appears to take little account of the theory’s inherent limitations. Recall,

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first, that the theory is predicated upon the existence not only of a benevolent despot, but of an ‘omniscient being – the observing economist’ (S5.4). If, as I have suggested, the notion of a ‘benevolent despot’ finds no expression in postconstitutional conflictual politics (or, it should be said, in the Founders’ imagination), it is also clear that Since no one other than an omniscient ‘observing economist’ can have the information that would permit a system to reach full efficiency at the hypothetical, grand utility-possibility frontier, there is no chance for normal market participants to bring about the ideal results discussed in traditional welfare theory. (Furubotn and Richter, 2005, p. 528, footnote 12)

Consider, next, that James Buchanan’s ‘gimmicks and gadgets’ remark was published six years after the appearance of Lipsey and Lancaster’s ‘The General Theory of Second Best’ (1956). As is well known, the attainment of a first-best Paretian optimum or competitive equilibrium requires that three marginal equivalences or ‘Paretian conditions’ be satisfied (S5.2). With this as background, The general theorem for the second best optimum states that if there is introduced into a general equilibrium system a constraint which prevents the attainment of one of the Paretian conditions, the other Paretian conditions, although still attainable, are, in general, no longer desirable. In other words, given that one of the Paretian optimum conditions cannot be fulfilled, then an optimum situation can be achieved only by departing from all the other Paretian conditions. (Lipsey and Lancaster, 1956, p. 1)

The ‘negative corollary’ of the theorem is that ‘it is not true that a situation in which more, but not all, of the optimum conditions are fulfilled is necessarily, or is even likely to be, superior to a situation in which fewer are fulfilled’ (p. 12). Granting this, Lipsey and Lancaster suggest that It should be obvious … that the principles of the general theory of second best show the futility of ‘piecemeal welfare economics’. To apply to only a small part of an economy welfare rules which would lead to a Paretian optimum if they were applied everywhere, may move the economy away from, not toward, a second best optimum position. (p. 17)

Once again, the point at issue is not whether the efficiency frontier and, pari passu, the efficiency standard are determinate. In fact, they are not (S7.4). Instead, the point is that, if one accepts social welfare theory on its own terms, the general theorem of the second best ‘show[s] the futility of “piecemeal welfare economics”’. Yet, whatever else is said, it is clear that, whether diagnosed ‘market failures’ fall under the rubric of generalized externalities, public goods, or ‘monopoly elements’, public policy prescriptions are, inevitably, ‘piecemeal’:



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while consequentialist ‘regulatory’ policy may be informed by general equilibrium theory, explicit account cannot be taken of all of the interrelationships which characterize an economy (Salanié, 2000, p. 138).29 The implications for the application of the efficiency standard are straightforward. On the one hand, the ‘omniscient’ economist must apprehend all of the objective features of a ‘world where many imperfections exist and only a few can be removed at any one time’ (Lipsey and Lancaster, 1956, p. 13). On the other hand, this is precisely the decision environment to which the general theory of second best applies. Despite this logical conundrum, the view persists that Ideally, the purpose of antitrust and regulation policies is to foster improvements judged in efficiency terms. We should move closer to the perfectly competitive ideal than we would have in the absence of this type of intervention. The object is to increase the efficiency with which the economy operates, recognizing that we may fall short of the goal of replicating a perfectly competitive market, but nevertheless we can achieve substantial improvements over what would prevail in the absence of such government intervention. (Viscusi, Harrington and Vernon, 2005, p. 9)

The presumption that ‘[economists] can achieve substantial improvements over what would prevail in the absence of such government intervention’ is, in light of social welfare theory’s logical, empirical and other debilities, a metaphor for ‘the innocent sounding formula that, since man has himself created the institutions of society and civilisation, he must also be able to alter them at will so as to satisfy his desires or wishes’ (Hayek, [1970] 1997, p. 318). Granting the logic of what has been said, social welfare theory is animated by behavioral (and other) postulates that take little or no account of real and unavoidable constraints. Yet, as Vernon Smith has observed, the logical positivist’s ‘as if’ construal ‘helps not a wit to understand the well-springs of behavior’ (2003, p. 475). Thus, if the analytical convenience and theoretical tractability of social welfare theory’s behavioral and technological postulates is not in dispute, it is possible to conclude, again with Vernon Smith, that ‘Our bounded rationality as economic theorists is far more constraining on economic science, than the bounded rationality of privately informed agents is constraining on their ability to maximize the gains from exchange’ (p. 482). While ‘our bounded rationality as economic theorists’ may account for the continuing, normative use of the first and second fundamental welfare theorems, Richard Lipsey offers the following ‘Observation’: Because economists have the dual role of studying how well the system works and defending it against unreasonable criticisms, they often must strike an uneasy balance between calling things as they are and calling things so as to influence public opinion. (2001, p. 192)

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Given this predicate, Lipsey notes that After Lancaster and I published our general theory of second best, many of my senior [London School of Economics] colleagues responded: ‘But my dear Dick it is so nihilistic’. Few seemed to be persuaded by my reply that I wanted to understand the world as it is rather than as we would like it to be. I realized eventually that my colleagues were worried that second best theory would be used to justify all kinds of misguided government interventions. (p. 192; emphasis in original)

Considered in vacuo, Lipsey’s argument is not implausible. On the one hand, he suggests that his colleagues were not persuaded by his ‘reply that [he] wanted to understand the world as it is rather than as we would like it to be’. This, it may be argued, is reflective of economists’ embrace of logical positivism, and all that it implies. On the other hand, his colleagues’ concern that the general theory of second best might be used to ‘justify all kinds of misguided government interventions’ was not without foundation. That said, while the concern is legitimate, the point is not that the general theory of the second best may be used to justify ‘misguided government interventions’. Rather, the point is that social welfare theory cannot, legitimately, be used to justify either ‘market interventions’ or income redistribution policies (S7.4). As has been emphasized, the normative use of the economist’s theory of the state is compromised by its indeterminacy, by its peculiar benevolent despot – omniscient economist construal, by its inability to accommodate a procedural theory of justice (S5.3), and by its incorporation of irreconcilable rights- and goal-based moral theories. Granting this, if utilitarian, institutionless and intendedly value-free social welfare theory cannot be a theory of government, neither is it the political economy envisioned by the Founders (S1.7). The peculiar institutional lacuna that characterizes social welfare theory is also endemic to macroeconomics. Simply stated, the ‘science of macroeconomics’ is consequence-based and procedurally detached. Characteristically, macroeconomists argue that ‘The goal of [macroeconomic] policy is economic welfare … . Economic welfare can be thought of simply as happiness, the things that individual members of society want – stable prices, full employment, and a high standard of living’ (Gordon, 2000, p. 455).30 Given these utilitarian or welfare-theoretic desiderata, attention centers on ‘policy instruments’ and ‘targets’. In the situation typically envisioned, ‘policy instruments’ are related, through ‘structural relations’ to ‘target variables’, which, in turn, are thought to generate ‘economic welfare’: ‘Total economic welfare … depends on the achieved values of the target variables, and thus it depends on policymakers’ decisions about the settings of policy instruments’ (Gordon, 2000, p. 455). It seems clear that this formulation is a rough analogue for the economist’s consequence-based, procedurally detached microeconomic theory of the state.



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Inter alia, the macroeconomic literature takes little or no account of the formal and informal institutional arrangements that affect, and are affected by, both the ‘policy instruments’ and the ‘target variables’. It follows, pari passu, that the ‘structural relations connecting all the variables’ may be called into question. I note, first, that Section 1021 of the Employment Act of 1946 declares, in part, that it is the continuing policy and responsibility of the Federal Government to use all practicable means … to coordinate and utilize all its plans, functions, and resources for the purpose of creating and maintaining, in a manner calculated to foster and promote free competitive enterprise and the general welfare, conditions which promote useful employment opportunities, including self-employment, for those able, willing, and seeking to work, and promote full employment and production, increased real income, balanced growth, a balanced Federal budget, adequate productivity growth, proper attention to national priorities, achievement of an improved trade balance through increased exports and improvement in the international competitiveness of agriculture, business, and industry, and reasonable price stability. (U.S. Congress Joint Economic Committee, 2002, p. 3)

If serious questions attach, inter alia, to the meaning of such phrases as ‘balanced growth’ and ‘international competitiveness’ it is clear that, in Congress’s interpretation, the ‘continuing policy and responsibility of the Federal Government’ is consequentialist. The consequentialist imperative was reaffirmed in Sections 3101(a) and 3111 of the Full Employment Act of 1978. For its part, Section 3101(a) codifies Congress’s ‘findings’: The Congress finds that the Nation has suffered substantial unemployment and underemployment, idleness of other productive resources, high rates of inflation, and inadequate productivity growth, over prolonged periods of time, imposing numerous economic and social costs on the Nation. (p. 18)

In light of these findings, Congress ‘require[s] the President to initiate, as the President deems appropriate, with recommendations to the Congress where necessary, supplementary programs and policies to the extent that the President finds such action necessary to help achieve these goals’ (p. 21; emphasis mine). Implicit in all of this is ‘the assumption often made in conventional economics that policy is determined by maximizing a social welfare function’ (Saint-Paul, 2000, p. 915). Whether ‘elected officials’ and ‘bureaucrats’ have in mind the constrained maximization of a social welfare function – as it is conceptualized by social welfare theorists – is irrelevant. What is clear is that both the Congress and macroeconomists construe the federal government’s policies and responsibilities in consequentialist, utilitarian terms. That said, it is also clear that ‘The great majority of modern economists do not really think much about the process

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of government’ (Buchanan, [1968] 2000, p. 13; emphasis mine). Little or no account is taken, for example, of the federal government’s byzantine ‘budget process’. An artifact, inter alia, of the Congressional Budget Act of 1974 (U.S. Congress Joint Economic Committee, 2002, pp. 30–61), the arcane ‘budget process’ formalizes ‘on-budget’, ‘off-budget’ and ‘off-off-budget’ activity, strips the president of impoundment authority, and institutionalizes fundamentally discriminatory ‘tax expenditures’, ‘government sponsored enterprises’, and ‘entitlement’ and ‘credit authority’. While it is possible to argue that the primary effect of the ‘budget process’ is to increase the cost of monitoring federal on-, off- and off-off budget ‘activity’ and, pari passu, to encourage opportunistic rent-seeking behavior (Roth, 1994), the essential point is that, whatever the intent of extant budget process law, ‘no Congress can bind a succeeding Congress by a simple statute’ (U.S. Senate Committee on the Judiciary, 1981, p. 42). The proliferation of fundamentally discriminatory ‘earmarks’, ‘tax expenditures’, ‘omnibus reconciliation bills’, and federal credit and insurance activity is prima facie evidence of the impotence of statutory budget process law in constraining both the scale and the content of federal activity. If this suggests that a generality or impartiality constraint should be embedded in the Constitution (S8.3), it also underscores the efficacy of public choice economists’ efforts to ‘puncture the “benevolent despot” image or model of government’ (Buchanan, [1983a] 2000, p. 113). Embraced by social welfare theorists and macroeconomists,31 the model denies fundamental features of observable reality. Inter alia, no account is taken of the ‘concentrated benefit-dispersed cost phenomenon’; of ‘the fact that the benefits of any given spending program normally are concentrated within a relatively small class of beneficiaries, while the costs of such a program are dispersed throughout a relatively large class of persons, i.e., the taxpayers’. While the same may be said of tax policy and of off- and off-off budget programs and entities, the essential point is that ‘those parties who benefit from a particular spending measure stand to benefit greatly while those who bear the costs are affected insignificantly’ (U.S. Senate Committee on the Judiciary, 1981, pp. 4– 5). Add to this the incentive32 and the ability, via the simple expedient of on- and off-budget deficits, to shift costs to future generations, an impenetrable ‘budget process’, and the scope and range of federal on- and off-budget activity33 and it is clear that individual voters cannot, effectively, monitor the behavior either of their elected representatives or of appointed bureaucrats.34 If, in the circumstances, the ‘ideal’ government of social welfare theorists’ and macroeconomists’ imagination has no empirical counterpart, it is a government that is congenial to the ‘factious’ or discriminatory rent-seeking behavior that so concerned the Founders.35 Both their Madisonian commitment to constitutional auxiliary precautions and their preoccupation with the cultivation of civic virtue were animated by their prior ethical commitment to the moral



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equivalence of persons, and by the concomitant imperative to promote just, in the sense of impartial, informal and formal institutions (Chapter 1). On the one hand, informed by their Smithian/Kantian understanding of the self (S1.5), they appreciated that ‘civic virtue’, a concern for the public good, could be cultivated. On the other hand, they shared, with Madison, the view that ‘experience has taught mankind the necessity of auxiliary precautions’ (Carey and McClellan, 2001, p. 269). Because both are consequence-based and procedurally detached, none of this finds expression in macroeconomics or in the economist’s microeconomic theory of the state, social welfare theory. Equally important, because both deploy a narrowly construed understanding of the self, Homo economicus, neither can countenance what the Founders understood. Reduced to its essentials, Homo economicus, conceived as a transcendental, autonomous self, is irreconcilable with the Founders’ Smithian/Kantian conception of the two-person self (S1.5). As James Buchanan has emphasized, Adam Smith did not construct his system of market order on any presumption that Homo economicus dominated all aspects of human behavior. Persons behaved in accordance with law and within the constraints of custom; perhaps exhibited ‘moral sentiments’ one for another, which included sympathy and fellow-feeling. A legal order was a necessary part of the environment of a workable market economy. But, to Smith, the market did offer a unique setting within which men, acting in their own private interest, did not run squarely afoul of the like interests of their fellows. There seemed to be no political–governmental counterpart; to the extent that our affairs are subject to the decisions of persons in political office, be they bureaucrats, legislators, or judges, we necessarily depend on their willingness and proclivity to sublimate their own private interest to more ‘general interest’ at least to some degree. ([1983a] 2000, p. 123; emphasis mine)

If this is evocative of Madison’s invocation of ‘this great republican principle, that the people will have virtue and intelligence to select men of virtue and wisdom’ ([1788b] 1999, p. 398),36 it also, indirectly, affirms Smith’s (and, implicitly, Kant’s) influence on the Founders. Equally important, as we have seen, the Founders’ ‘Smithian/Kantian connection’ accounts, in significant measure, for their non-teleological, procedurally based political economy (S1.7). Recognizing this, James Buchanan has suggested that When persons are modelled as self-interested in politics … the constitutional challenge becomes one of constructing and designing framework institutions or rules that will, to the maximum extent possible, limit the exercise of such interest in exploitative ways and direct such interest to furtherance of the general interest. It is not surprising, therefore, to discover the roots of a public choice perspective which contains both elements here identified are to be found implicitly in the writings of the American Founders, and most notably in James Madison’s contributions to The Federalist Papers. ([1983b] 2000, p. 23; emphasis mine)37

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Implicit in Buchanan’s formulation is the idea, developed in Sections 1.6 and 1.7, that the Founders’ republican project did not involve the specification of ‘goals’ or ‘optimal end-states’. Whereas, for social welfare theorists and macro­ economists, attention centers on ‘policy choice by existing agents within existing rules’ (Brennan and Buchanan, [1988] 2000, p. 87), the Founders’ project reduced to ‘constructing and designing framework institutions or rules that will, to the maximum extent possible, limit the exercise of [self-interest in politics] and direct such interest to furtherance of the general interest’ (Buchanan, [1983b] 2000, p. 23). On the one hand, the Founders regarded virtue as a prerequisite for republican self-government (S1.2). At the same time, their understanding of the self (S1.5) allowed both for the cultivation of virtue (SS1.3, 1.4, 1.6 and 1.7) and for a reciprocal relationship between law and virtue (SS1.3, 1.4, 1.5, 1.6, and 1.7). If, as I have suggested, this means that ‘scientific’, intendedly value-free economics would be alien to their imagination, the Founders would surely associate themselves with Buchanan’s view that The scope for an individualistic, voluntaristic ethics must, of necessity, be progressively narrowed through time. As individuals, increasingly, find themselves caught in the large-number dilemma with respect to ethical choices, a possible logical explanation is provided for resort to political–governmental processes which can, effectively, change the rules and impose standards of conduct common to all individuals. In this respect, [constitutional political economy] analysis yields helpful insights concerning the ‘legislation of morals’. ([1965] 1999, p. 327)38

On the other hand, the distinctive features of the Founders’ Constitution – federalism, the separation of powers, bicameralism, the electoral college, and staggered elections – reflect Madison’s admonition that Ambition must be made to counteract ambition … . It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary … . In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government, but experience has taught mankind the necessity of auxiliary precautions. (Carey and McClellan, 2001, pp. 268–9)

Paraphrasing Madison, and drawing on Chapter 1, it is clear that the Founders sought to frame a government that would both cultivate respect for the moral law and set ambition against ambition. Nothing in their republican self-government project contemplated the predesignation and promotion of desirable ‘goals’ or the maximization of a social welfare function. Thus, if their enterprise has nothing in common either with macroeconomic ‘targets’ and ‘policy instruments’, or with ‘competitive’ and ‘ethical equilibria’, the Founders’ political



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economy finds expression in the work of the constitutional political economist (S1.7). The constitutional political economist ‘does not envisage his “science” as offering a base for “preaching to the players” on how to maximize welfare functions’. Rather, as Brennan and Buchanan have suggested, His task is that of advising all citizens on the working of alternative constitutional rules. We suggest that this methodological stance is that which informed both the classical political economists and the political philosophers of the eighteenth century. ([1988] 2000, pp. 87–8)

I agree. As I have suggested (S1.5), the Founders’ prior ethical commitment to the moral equivalence of persons, their understanding of the self, and their respect for the imperative to promote just, in the sense of impartial, institutions are consonant with Smithian/Kantian moral and political philosophy. Because constitutional political economists embrace the same commitments and understandings, it should come as no surprise that, in their The Calculus of Consent, James Buchanan and Gordon Tullock employed a Smithian/Kantian/Rawlsian justice as fairness criterion to derive ‘the “logical foundations of constitutional democracy”’. Their effort resulted in the characterization ‘of a political structure not grossly divergent from that envisioned by the Founding Fathers and embodied in the United States Constitution’ (Buchanan, [1972] 2001, p. 353). Writing more than two decades later, Buchanan reflected on ‘the Buchanan– Tullock “classic book”’. He emphasized that ‘The Calculus of Consent, was the first attempt to derive what we called an “economic theory of political constitutions’”, adding that ‘The maximizer of social welfare functions could never have written such a book, and, indeed, even today, the maximizer of such functions cannot understand what the book is all about’ ([1983b] 2000, p. 20). To this, I would add that the same can be said of the modern liberal. Reliant as he is upon a truncated understanding of the self, and committed to the instrumental deployment of the first and second fundamental welfare theorems (S4.2), it could not be otherwise.

NOTES   1. See Chapters 4 and 5 and, especially, Sections 4.2 and 5.3.   2. See also Section 2.2.   3. See, for example, Wong (1973, p. 323). While the internal consistency of the instrumentalist position is not at issue, philosophers are increasingly troubled by the hostility to “‘metaphysics”, that [the instrumentalist] sees everywhere’ (McCloskey, 1983, p. 486). In this view, metaphysics – in the sense of value judgments, prior beliefs and subjective knowledge – permeates economics and the other sciences (pp. 486–93).

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  4. In Melitz’s view, ‘any errors uncovered in assumptions may also be considered as clues regarding the possible improvement of the theory’ (1965, pp. 49 and 52).   5. See, for example, the discussion of Lancaster’s ‘consumption technology’ in Roth (1998, Chapter 3).   6. For more on the ‘progressive dialogue’ between theory development and empirical results, see Smith (1989, p. 168).   7. For critical assessments of ‘as if’ statements, see Nagel (1963, pp. 216–17) and Melitz (1965, p. 50). As it happens, ‘as if’ statements can serve neither to predict nor to explain. For a discussion of ‘breakdowns’ of the ‘as if’ principle, see DePalma, Myers and Papageorgiou (1994, pp. 433–4). For more on the ‘as if’ construal, see Russell and Thaler (1985, pp. 1080–81) and Mayer (1993, pp. 51–2).   8. Indeed, some economists are persuaded that the scope of the phenomena that can be explained using the ‘economics tool kit’ is so broad that it ‘suggests the possibility of unifying [all of] the social sciences in an economics-led hegemony’ (Demsetz, 1996, p. 1). For a discussion of the impact of economics on political science and on sociology, see Miller (1997) and Baron and Hannan (1994).   9. See also Keita (1992, pp. 74–5). 10. See also Furubotn and Richter (2005, pp. 542–6). 11. Recent experimental results involving equity, reciprocity and competition have been rationalized by appeal to evolutionary biology (Bolton and Ockenfels, 2000). Because, in his account, ‘The histories of economics and biology intertwine’, Robson ‘advocates consideration of the biological basis of behavior’ (2001, p. 11). 12. See, for example, Furubotn and Richter (2005, p. 545). 13. For experimental evidence on the effect of group attachment and social learning on economic behavior, see Harbough and Krause (2000). See Ostrom (2000) for a survey of game-theoretic and empirical efforts that suggest that cooperative behavior may be attributed to the development of social norms. See also Fehr and Gächter (2000). For a characterization of a sociological view of the endogeneity of preference structures, see Baron and Hannan (1994, p. 1117). For his part, Heinrich (2000) presents evidence that ‘economic decisions and economic reasoning may be heavily influenced by cultural differences – that is, by socially transmitted rules about how to behave in certain circumstances (economic or otherwise) that may vary from group to group as a consequence of different cultural evolutionary trajectories’. Given this ‘social learning’, Heinrich concludes that ‘the assumption that humans share the same economic decision-making process must be reconsidered’ (p. 973). Finally, for a discussion of the empirical problems associated with efforts to distinguish among endogeneity interactions, ‘contextual interactions’ and ‘correlated effects’, see Manski (2000, pp. 128–30). 14. The Founders would likely agree with this assessment. Inter alia, they assumed not only that preference and value structures are path dependent, but that there is a reciprocal relationship between virtue and society’s formal and informal institutions. See, for example, Sections 1.5, 1.6 and 1.7. 15. See also Hausman and McPherson (1993, p. 688). 16. Indeed, Michael S. Gazzainga, a noted Professor of Cognitive Neuroscience, ‘support[s] the idea that there could be a universal set of biological responses to moral dilemmas, a sort of ethics, built into our brains’ (2005, p. XIX). Interestingly, building on the work of Adam Smith (and others), Brennan and Pettit develop a model contemplating the demand for, and the supply of approbation or, in their language, ‘esteem’. In their account,



The forces of esteem are distinctively associated, not with the market, and not with the state, but with what is nowadays often described as civil society. One of the most interesting projects in institutional design is to investigate the conditions under which the intangible hand [the demand for approbation] can be expected to work well and, in particular, to work for the production of … the common good. (2004, p. 5)

It is, I believe, plausible to suggest that the Founders, Adam Smith and Immanuel Kant would find the Brennan–Pettit project appealing. See, especially, Section 1.5.



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17. For a model that incorporates moral concerns in utility functions and constraints, see Dowell, Goldfarb and Griffith (1998). 18. Interestingly, Sen suggests that, in addition to ‘a sense of identity with others’,



19.

20. 21.

22. 23.

24.

25. 26. 27.

28. 29.

30.

a person’s behavior may be swayed by other types of considerations, such as her adherence to some norms of acceptable conduct … or by her sense of duty … toward others with whom one does not identify in any obvious sense. Nevertheless, a sense of identity with others can be a very important … influence on one’s behavior which can easily go against narrowly self-interested conduct. (2006, p. 23)

Using, ‘random assignment[s] to real social groups’, Goette, Huffman and Meier find that ‘membership in a social group transforms individuals, leading to internalized roles, norms and values that affect behavior. This view has been advanced in social identity theory’ (2006, p. 212). For their part, Bernhard, Fehr and Fischbacher find that ‘in-group favoritism is a strong force in altruistic norm enforcement and sharing decisions’ (2006, p. 221). Richard Thaler (2000) has predicted that ‘Homo Economicus Will Begin Losing IQ, Reversing a 50-year Trend’ (p. 134), that ‘Economists Will Study Human Cognition’ (p. 137), and that ‘Homo Economicus Will Become More Emotional’ (p. 139). He predicts, in effect, that ‘over the next couple decades’, ‘Homo Economicus will evolve into Homo Sapiens’ (p. 140). The Nobel laureate Vernon Smith has written that ‘I have no disagreement with Heiner’s critique of classical preference theory, which is among the roots that should be reexamined’ (1985, p. 271). For evidence in support of Heiner’s theory of rule-governed behavior, see Kaen and Rosenman (1986) and Wilde, Le Baron and Israelsen (1985). For critiques of his approach, see Bookstaber and Langsam (1985) and Garrison (1985). For his reply, see Heiner (1985b). For ‘Further Modeling and Applications’ of the theory, see Heiner (1985a). Finally, the Nobel laureate Douglass North suggests that ‘Ronald Heiner (1983), in a path-breaking article, not only made the connection between the mental capacities of humans and the external environment, but suggested the implications for arresting economic progress’ (1994, p. 363, footnote 7). For more on ecological rationality, see Smith (2003, pp. 469–71). In this and similar situations, “‘behavioral rules” … arise because of uncertainty … . Such uncertainty requires … mechanisms that restrict the flexibility to choose potential actions, or which produce a selective alertness to information that might prompt particular actions to be chosen. These mechanisms simplify behavior to less-complex patterns, which are easier for an observer to recognize and predict’ (Heiner, 1983, p. 561). An example due to Berridge is cited by Camerer, Loewenstein and Prelec: ‘Berridge believes that the later stages of many drug addictions present prototypical examples of situations of what he terms “wanting” without “liking”; drug addicts often report an absence of pleasure from taking the drugs they are addicted to, coupled with an irresistible motivation to do so’ (2005, p. 37). See also Stigler (1987, pp. 136–8), Furubotn (1965) and Roth (1974). See also Winter (1964, 1975) and Conlisk (1988). This phenomenon, referred to earlier as the competence–difficulty gap, has as one of its corollaries uncertainty about how to use information. Indeed, in the face of complexity, decision makers ‘systematically restrict the use and acquisition of information compared to that potentially available’ (Heiner, 1983, p. 564). See also Wilde, LeBaron and Israelsen (1985, p. 407). For an approach to the choice of technique problem, see Roth (1977). Just, Hueth and Schmitz’s 2004 book, The Welfare Economics of Public Policy, is subtitled A Practical Approach to Project and Policy Evaluation. Given their avowed purpose, it is interesting that the authors concede that ‘the simplistic partial equilibrium models of Pigou and Marshall … may not account for significant interactions’, while ‘the full general equilibrium models of Arrow and Debreu … are typically not estimable (except under crude assumptions regarding, for example, substitution or applicability of a representative consumer model)’ (p. 641). As we shall see, the Congress has declared that the promotion of ‘stable prices’, ‘full employ-

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ment’ and ‘increased real income’ is the ‘continuing policy and responsibility of the Federal Government’. 31. N. Gregory Mankiw notes, for example, that ‘As long as policymakers are intelligent and benevolent, there might appear to be little reason to deny them flexibility in responding to changing conditions’ (2003, p. 391; emphasis mine). That said, he acknowledges that ‘the problem of time inconsistency’ and ‘incentive[s] to renege’ on policy announcements may mean ‘that policymakers can sometimes better achieve their goals by having their discretion taken away from them’ (p. 392). What is in any case clear is that the contemplated rules are consequence driven. 32. Writing in 1962, James Buchanan observed that



If political reality is recognized at all (and it seldom is by academic scribblers), surely it suggests the strong bias of fiscal policy towards the creation of budget deficits rather than budget surpluses … . Constant pressure is exerted upon them to reduce (not to increase) the level of taxes, and, at the same time, to expand (not to reduce) both the range and the extent of the various public services. ([1962a] 2000, pp. 437–8)

Of course, some economists have recognized the need to take account of ‘political constraints’. See, for example, Saint-Paul (2000, p. 916).

33. For Fiscal Year 2007, federal on- and off-budget outlays are estimated to be in excess of 2.7 trillion dollars (Office of Management and Budget, 2006, p. 22). Official estimates of off-offbudget activity, the so-called ‘Regulatory Budget’, are unavailable – this, despite the fact that a 1996 federal statute requires that it be produced. 34. This argument, it should be noted, is not the same as the ‘“information failure” hypothesis … which is often cited as one of the basic sources of “government failure”’. The ‘hypotheses states that, even for those persons in a large electorate who do vote, there is no economic incentive for them to invest resources in becoming informed about the choice alternatives that the group confronts’ (Buchanan, [1983a] 2000, p. 119). 35. For more on rent seeking, see Buchanan ([1978] 2000, pp. 49–50). For an overview of rent seeking, see Tullock ([1989] 2005, pp. 3–10). For more on ‘factious behavior’, see Sections 1.3, 1.6 and 1.7. 36. See also Section 1.2. 37. It is useful to think of ‘public choice’ as ‘the analysis of politics as it is’, and ‘constitutional political economy’ as ‘the analysis of politics as it should be’. See Charles K. Rowley’s ‘Introduction’ to the Selected Works of Gordon Tullock, Volume 2, The Calculus of Consent (2004, p. IX). 38. The Founders and the founding generation were somewhat conflicted about the relationship between virtue and the number of citizens. Thomas Jefferson spoke for many of the AntiFederalists when, in a December 20, 1787 letter to James Madison, he wrote that ‘When [the people] get piled upon one another in large cities, as in Europe, they will become corrupt as in Europe’ ([1787a] 1984, p. 918). For his part, Zephaniah Swift Moore said, in ‘An [1802] Oration on the Anniversary of the Independence of the United States of America’, that the need for vigilance against ‘impurity … will increase with our numbers and wealth’ ([1802] 1983, p. 1217). In contrast, and in opposition to Montesquieu ([1750] 1977, p. 176), Madison insisted that ‘it is [the greater number of citizens] principally which renders factious combinations less to be dreaded in the [republican], than in the [democratic government]’ (Carey and McClellan, 2001, p. 47). In the event, Buchanan’s hypothesis reduces to this: ‘for any given individual who may … follow … [the moral law] in his small-group interactions, there is some increase in group size that will cause him to modify his ethical rule and become a private maximizer’ ([1965] 1999, p. 322).

8. ‘Auxiliary precautions’ in our time 8.1 Introduction Writing in 1985, Geoffrey Brennan and James Buchanan argued that Anglo-American jurisprudence emphasizes the rule of reason; it grossly neglects the reason of rules. We play socioeconomic–legal–political games that can be described empirically only by their rules. But most of us play without an understanding or appreciation of the rules, how they came into being, how they are enforced, how they can be changed, and, most important, how they can be normatively evaluated. Basic ‘constitutional illiteracy’ extends to and includes both the learned and the lay. ([1985b] 2000, p. XV; emphasis in original)

Continuing, Brennan and Buchanan aver that, whereas ‘James Madison, Benjamin Franklin, Thomas Jefferson, and their peers are distinguished by their essential understanding of the reason of rules in political order’, that understanding has been eroded.1 In their account, The wisdom and understanding of the Founders have been seriously eroded in our time. The deterioration of the social–intellectual–philosophical capital of Western civil order is now widely, if only intuitively sensed. At the most fundamental level, rules find their reason in the never-ending desire of people to live together in peace and harmony, without the continuing Hobbesian war of each against all. How can social order be established and preserved? All social science and philosophy must address this question either directly or indirectly. (p. XV)

I take as my point of departure that Brennan and Buchanan are right; that the ‘wisdom and understanding of the Founders have been seriously eroded’. I suggest, moreover, that the erosion may be attributed to the embrace of a public philosophy, modern liberalism, which, on the one hand, insists that agents possess antecedent or ‘natural rights’ against others’ political, altruistic or moralistic preferences (Chapter 4) and, on the other hand, regards the economist’s intendedly value-free, institutionless and relentlessly utilitarian theory of the state as instrumental to the ‘perfectibility’ of the market system (Chapters 4 and 5). While the logical, empirical and ontological problems that attend modern liberalism (Chapter 6) and its concomitant, social welfare theory (Chapter 7),

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need not be reprised, the essential point is this: the transcendental, autonomous or first-person self which lies at the heart of both construals is inconsistent with the Founders’ Smithian/Kantian understanding of the self (S1.5), and incompatible either with ‘moral community’ or with ‘moral order’ (S4.1). If this means, as Buchanan suggests, that ‘Larger and larger numbers of persons seem to become moral anarchists; they seem to be losing a sense of mutual respect one for another along with any feeling of obligation to abide by generalizable rules and codes of conduct’ ([1981] 2001, p. 197), it also means that neither modern liberalism nor social welfare theory can reach the question that Brennan and Buchanan insist ‘All social science and philosophy must address’: ‘How can social order be established and preserved?’ For the Founders, as we have seen, this was the fundamental question. Theirs was not a teleological conception of the state. They did not imagine a state inhabited by ‘bifurcated men’ who are narrowly self-interested utility maximizers in their market behavior, but benevolent and other-regarding in their pursuit of the ‘public good’.2 Informed by their understanding of the self, they recognized both that virtue can be cultivated and that ‘factious behavior’ is endemic to postconstitutional, conflictual politics. On this logic, their procedurally based, consequence-detached project focused, precisely and single-mindedly, on the sustainability of the social order of their imagination: republican self-government. And central to this enterprise was the cultivation of respect for the moral law and the design of constitutional ‘auxiliary precautions’ intended to set ambition against ambition and, pari passu, to mitigate the effects of discriminatory, factious behavior. At least on one account, the Founders’ approach to the establishment and preservation of social order reflects a recognition that ‘man’s natural proclivity is to pursue his own interests and that different persons’ interests almost inevitably come into conflict’. On this logic, Two broadly defined escape routes have offered hope to scholars and citizens through the ages. One of them is man’s capacity for moral improvement … . The second … does not require that people become ‘better’ in some basic moral sense. This approach starts with the empirical realities of persons as they exist, moral warts and all. These realities … limit the attainable states of social harmony. But even within such constraints, hope emerges for sustainable social order through the appropriate design, construction, and maintenance of rules that set limits on the way in which each person is allowed to order his conduct toward others. (Brennan and Buchanan, [1985b] 2000, p. XVI)

While it is possible to argue that the two-pronged approach to the establishment and preservation of social order reflects ‘some substitutability between rules for behavior which reflect moral norms and [behavioral constraints] which are explicitly chosen as constraints’ (Buchanan, [1985] 2000, p. 491),3 the es-



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sential point is that both the Founders and constitutional political economists embrace the idea that moral and constitutional constraints on discriminatory factious behavior are a sine qua non for social order generally, and for republican self-government in particular (SS1.7 and 7.5). Indeed, it seems reasonable to suggest that the Founders would associate themselves with Buchanan’s claim that The Madisonian vision, with its embodied ethic of constitutional citizenship, is difficult to recapture once it is lost from the public consciousness. The simple, yet subtle, distinction between strategic choices within rules and constitutional choices among sets of rules … must inform all thinking about policy alternatives … . Constitutional citizenship requires that the individual also seek to determine the possible consistency between a preferred policy option and a preferred constitutional structure. ([1989a] 1999, p. 372)

For the Founders and, pari passu, for constitutional political economists, the ‘preferred constitutional structure’ is one that respects the moral equivalence of persons.

8.2 The Ethical Imperative I emphasize first that, in the spirit of the Founders, we, as citizens, have ‘an ethical obligation to enter directly and/or indirectly into an ongoing and continuing constitutional dialogue that is distinct from but parallel to the patterns of ordinary activity carried on within those rules that define the existing regime’ (Buchanan, [1989a] 1999, p. 369). That this is so follows from the distinctly Smithian/Kantian nature of the Founders’ enterprise; an enterprise animated by the idea that a prior ethical commitment to the moral equivalence of persons implies an institutional imperative. In effect, each of us, as a citizen, has a duty to respect and to promote just, in the sense of impartial, institutions (SS1.5, 1.6, 1.7 and 7.5). This idea finds modern expression in John Rawls’s ‘duty of justice’: From the standpoint of justice as fairness, a fundamental natural duty is the duty of justice. This duty requires us to support and to comply with just institutions that exist and apply to us. It also constrains us to further just arrangements not yet established, at least when this can be done without too much cost to ourselves. Thus if the basic structure of society is just, or as just as it is reasonable to expect in the circumstances, everyone has a natural duty to do his part in the existing scheme … . The principles that hold for individuals, just as the principles for institutions, are those that would be acknowledged in the original position. (1971, p. 115)

As has been repeatedly emphasized, the Founders’ procedurally based, consequence-detached contractarian enterprise represented an attempt to

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institutionalize a Kantian-style social contract. Simply stated, it is ‘as if’ the Founders employed a veil-of-ignorance or original-position situated ‘contract device’ to frame a Constitution that both respected and promoted the Smithian/ Kantian duty of justice as impartiality.4 Importantly, if this means that we, as citizens, must respect and promote just, in the sense of impartial, fundamental and statutory laws, it also means that, for the Founders and, pari passu, for us, discriminatory or ‘factious’ ends are not permissible (S1.5) and, equally important, ‘ends do not justify means’ (S1.6). With this as background, I emphasize, again, that these ideas find no expression in the economist’s intendedly value-free, consequence-based and procedurally detached theory of the state (Chapters 5 and 7). This may, at least in part, account for the fact that Economists of the garden variety seem to have little or nothing to contribute to the discussion of the various proposals to impose constitutional limits on the powers of government … most economists are inhibited because constitutional ‘policy’, as distinct from ordinary legislative policy, lies outside their familiar framework for discussion. Economists are usually quite willing to advise or to criticize officials in making ordinary, postconstitutional policy. But constitutional constraints are viewed negatively because they would necessarily restrict the ability of policy makers to follow the proffered advice of economists. (Buchanan, [1980] 2001, [p. 307)

Given that the economist’s theory of the state is a logically inconsistent, hybrid moral theory; that its fundamental theoretical constructs are indeterminate, and that policy ‘advice’ informed by the first and second fundamental welfare theorems must be regarded as ad hoc (SS5.2, 5.3, 7.3, 7.4 and 7.5), it is clear that economists should not be so ‘willing to advise or to criticize officials in making ordinary, postconstitutional policy’. However this may be, whether or not ‘policy makers … follow the proffered advice of economists’, it is clear that Much of what we have observed in modern politics is best described as action taken without understanding or even consideration of the rules that define the constitutional order. I have referred to this politics as ‘constitutional anarchy’, by which I mean a politics that is almost exclusively dominated by and derivative from the strategic choices made by competing interests in disregard of the effects on political structure. This politics has come to its current position because we, as citizens, have failed to discharge our ethical obligations. We have behaved as if the very structure of our social order, our constitution defined in the broadest sense, will remain invariant or will, somehow, evolve satisfactorily over time without our active participation. Simple observation of the behavior of our political and judicial agents should indicate that such a faith is totally without foundation … . We must attend to the rules that constrain our rulers, and we must do so even if such attention may not seem to be a part of a rational-choice calculus. (Buchanan, [1989a] 1999, pp. 372–3)



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If the ‘constitutional anarchy’ to which James Buchanan refers may be interpreted as subsuming ‘encroachments’ and other judicial ‘failings’, a subject momentarily deferred, it also gestures toward the rent-seeking and majoritarian cycling that characterize modern American postconstitutional, conflictual politics (S7.5). And if, as I have suggested (SS1.7 and 7.5), the continuing metastasization of ‘earmarks’, ‘tax expenditures’ and other patently discriminatory on-, off- and off-off-budget activities imply that the Founders’ ‘auxiliary precautions’ have been unavailing, it also suggests the efficacy of a constitutional generality or impartiality constraint; a constraint that ‘is met when political actions apply to all persons independently of membership in a dominant coalition or an effective interest group’ (Buchanan and Congelton, 1998, p. XI). What is required, in short, is another, constitutional, ‘auxiliary precaution’.

8.3 A Proposed ‘Auxiliary Precaution’ I take as my point of departure that For precisely the same reasons applicable to law, a politics that fails to satisfy some variant of the generality–equality norm cannot be deemed to be legitimate. Such a discriminatory politics cannot pass the contractarian test. In reflective equilibrium and behind a veil of ignorance/uncertainty, persons could never agree to the establishment of political institutions that are predicted to discriminate explicitly in their operation. The politics of discrimination would not meet the agreement criterion that defines fairness or justice. And, also importantly, such a politics would necessarily be inefficient in a resource-wasting sense. (Buchanan and Congleton, 1998, p. 11)

This formulation is, in turn, broadly consistent with Hayek’s admonition, informed, in part, by Montesquieu and, interestingly, Rousseau (Hayek, 1960, pp. 193–4) that The great aim of the struggle for liberty has been equality before the law. This equality under the rules which the state enforces may be supplemented by a similar equality of the rules that men voluntarily obey in their relations with one another. This extension of the principle of equality to the rules of moral and social conduct is the chief expression of what is commonly called the democratic spirit – and probably that aspect of it that does most to make inoffensive the inequalities that liberty necessarily produces. (1960, p. 85)

If Hayek’s characterization of the ‘democratic spirit’ is reminiscent of the Founders’ preoccupation with the cultivation of respect for the moral law (Chapter 1), it also, indirectly, responds to modern liberalism’s ‘forbidden inequalities’ construal (S4.2).5 Equally important, Hayek’s formulation is congruent

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with the Founders’ Smithian/Kantian and, it should be said, Rawlsian, understanding of the connection between the rule of law and liberty: Liberty … is a complex of rights and duties defined by institutions … . The principle of legality has a firm foundation … in the agreement of rational persons to establish for themselves the greatest equal liberty. To be confident in the possession and exercise of these freedoms, the citizens of a well-ordered society, will normally want the rule of law maintained. (Rawls, 1971, pp. 239–40; emphasis mine)

The principle of equal liberty, or of equal participation when applied to the political procedure defined by the constitution (Rawls, 1971, p. 221), finds its normative basis in the Smithian/Kantian idea of the moral equivalence of persons (S1.5). For its part, the categorical imperative, or moral law, requires that we respect the autonomy, agency, independence, self-determination and dignity of morally equivalent persons (S1.5).6 The substantive values or aims that, on contractarian terms, the law ought to promote – its ‘external morality’ – find expression in these ideas (Ten, 1995, p. 397). In this account, ‘the conception of formal justice, the regular and impartial administration of public rules, becomes the rule of law when applied to the legal system’ (Rawls, 1971, p. 235; emphasis mine). On this logic, the external morality of law demands that the greatest possible equal liberty be promoted, both at the constitutional (Rawls, 1971, pp. 221–8), and at the postconstitutional stage.7 At the constitutional stage, the principle of equal liberty, or equal political participation when applied to political procedure, means that each vote has approximately the same weight, that members of the legislature, with one vote each, represent the same number of electors, and that all citizens have equal access to public office (p. 223). For its part, the extent of equal liberty or of equal participation is understood to consist in ‘the degree to which the procedure of (bare) majority rule is restricted by the mechanisms of constitutionalism’ (p. 228). Importantly, majorities have ‘final authority’ with respect to ‘devices [that] serve to limit the scope of majority rule’, subject to the constraint that ‘limits on the extent of the principle of participation … fall equally upon everyone’ (p. 228; emphasis mine). In the event, the justification for limits on the scope of majority rule is that they ‘protect the other freedoms’ (p. 229). Thus, as the Founders understood, ‘A bill of rights may remove certain liberties from majority regulation altogether, and the separation of powers with judicial review may slow down the pace of legislative change’ (p. 228). Finally, the worth or value of equal political participation requires that the constitution ‘underwrite a fair opportunity to take part in and to influence the political pro­ cess’ (p. 224). This requires, inter alia, that the constitution protect freedom of speech, assembly, thought and conscience, and that all citizens ‘should have the means to be informed about political issues’ (p. 225). That said,



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The liberties protected by the principle of participation lose much of their value whenever those who have greater private means are permitted to use their advantages to control the course of public debate. For eventually these inequalities will enable those better situated to exercise a larger influence over the development of legislation. (p. 225)

On this logic, ‘Compensating steps must, then, be taken to preserve the fair value for all of the equal political liberties’ (p. 225). Whatever the form of the ‘devices’ or, as the Founders might say, the ‘auxiliary precautions’, the imperative is to prevent the pleadings of the ‘more advantaged social and economic interests’ from receiving ‘excessive attention’; an outcome that ‘is all the more likely when the less favored members of society, having been effectively prevented by their lack of means from exercising their fair degree of influence, withdraw into apathy and resentment’ (p. 226). The essential point is that ‘democratic political process is at best regulated rivalry’; an environment in which ‘Political power rapidly accumulates and becomes unequal; and making use of the coercive apparatus of the state and its law, those who gain the advantage can often assure themselves of a favored position’ (p. 226). It follows, pari passu, that promotion of the greatest possible equal liberty (or, at the level of political procedure, the greatest possible equal political participation) may sometimes require that ‘the scope of majority rule’ be limited. In effect, limits on the extent of equal liberty or of equal political participation may increase the worth or value of equal political participation. Plainly, the Founders understood this. Informed by their prior ethical commitment to the moral equivalence of persons and the concomitant imperative to promote just, in the sense of impartial, institutions, the Founders sought, through a system of constitutional restraints, to ensure what Rawls has called ‘the fair value of political liberty’ (p. 226). On the one hand, they sought, through the Bill of Rights, to protect ‘other freedoms’. On the other hand, federalism, the separation of powers and the other constitutional ‘auxiliary precautions’ were intended to set ‘ambition against ambition’ and so to mitigate the effects of intendedly discriminatory, factious behavior. Stated differently, the Founders sought, through constitutional restraints on majoritarian democracy, to mitigate the effects of what we today call rent-seeking and majoritarian cycling. It seems clear that the Founders’ Smithian/Kantian moral and political philosophy gestured toward contemporary understandings both of the relationship between liberty and constitutional and statutory law, and of the meaning, extent and worth of equal political liberty. Yet, if all of this is alien to the imagination of economists enamored of institutionless, intendedly value-free ‘positive’ economic analysis, it is the currency of the constitutional political economist. Broadly speaking, the constitutional political economist’s enterprise (S1.7) is ‘predicated on the maintenance of majoritarianism as the basic [political] decision rule, while opening up the possibility of constraining the operation of this

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rule by restrictions on the set of feasible outcomes’ (Buchanan, [1997b] 1999, p. 421).8 Like the Founders, constitutional political economists understand that constitutional restrictions on majoritarian democracy may increase the ‘worth’ or value of equal political liberty/participation. It is in this spirit that the constitutional political economist endorses a generality or impartiality constraint on majoritarian democracy. To this, I need only add that By way of summing up the account of the principle of participation, we can say that a just constitution sets up a form of fair rivalry for political office and authority … rival parties seek the citizens’ approval in accordance with just procedural rules against a background of freedom of thought and assembly in which the fair value of political liberty is assured … . Representatives are not, to be sure, mere agents of their constituents, since they have a certain discretion and they are expected to exercise their judgment in enacting legislation. In a well-ordered society they must, nevertheless, represent their constituents in the substantive sense: they must seek first to pass just and effective legislation, since this is a citizen’s first interest in government, and, secondly they must further their constituents’ other interests insofar as these are consistent with justice … . Since the constitution is the foundation of the social structure, the highest-order system of rules that regulates and controls other institutions, everyone has the same access to the political procedure that it sets up. When the principle of participation is satisfied, all have the common status of equal citizen. (Rawls, 1971, p. 227; emphasis mine)

If this comports with Madison’s view that justice is ‘the end of government … the end of civil society’ (S1.6), it also affirms that legislators have a duty to pass ‘just’, in the sense of impartial, legislation, and that a ‘just constitution’ is one ‘in which the fair value of political liberty is assured’. The essential idea is that, from the contractarian perspective, ‘Law … becomes legitimate only if all persons could have agreed conceptually, and such agreement is most likely when all persons affected are generally and reciprocally constrained in their behavior’ (Buchanan and Congleton, 1998, p. 8). In this account, liberty and the ‘stability of social cooperation’ (Rawls, 1971, p. 240) require agreement on behavioral constraints (p. 235); constraints that are mutually beneficial to all parties. These constraints, in turn, must find expression in constitutional and statutory law. Simply stated, absent generality or impartiality under and by it, law cannot be regarded as just. It cannot, in short, be consistent with the moral equivalence of persons. Whatever else is said, it is clear that if the idealized rule of law embodies a generality or impartiality constraint, the same cannot be said of postconstitutional, conflictual politics. If this suggests that the Founders’ ‘auxiliary precautions’ have not been entirely effective in setting ambition against ambition, it also suggests that, because of the continuing dominance of the economist’s consequence-based and procedurally detached theory of the state,



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‘romanticized politics remains monolithic; the “good” is defined uniquely by the collective agency of the state’ (Buchanan and Congleton, 1998, p. XI). Inter alia, the ‘benevolent despot’, informed by the omniscient economist, is presumed to act in the supraindividual interest of the majority.9 Yet there is no denying that ‘As it operates, [because] postconstitutional politics is majoritarian, [it is], naturally, discriminatory to the extent that participants promote separable interests’ (p. 12). I emphasize, in particular, that, as George Washington acknowledged (S1.5), majoritarian cycling is characteristic of majoritarian democracy (Arrow, 1951; Black, 1958). In effect, majority coalitions may extract in-period benefits from, and/or impose costs upon, members of the extant minority. Yet, if this in-period discrimination is accepted on the ‘implicit understanding [that] dominant coalitions rotate sequentially over electoral periods’ (Buchanan and Congleton, 1998, pp. 19–20), the essential point is that the ‘cycling’ of discriminatory treatment may properly be characterized as ‘Politics as Taking’ (p. 19). If it is clear that ‘politics as taking’ is plainly unjust and resource-wasting, it is also clear that majoritarian agreement does not contemplate any ‘protected sphere of activity’ (p. 19). That said, the moral equivalence of persons, the duty of justice, the external morality of law, and the ‘constitutional anarchy’ inherent in postconstitutional politics argue for an additional ‘auxiliary precaution’: a constitutional generality or impartiality constraint. While a discussion of ‘the generality constraint in action’ is beyond the scope of this book,10 I emphasize that, while a veil-of-ignorance/uncertainty situated agreement on a generality or impartiality constraint is not possible at the postconstitutional or conflictual politics stage, it is possible at the constitutional level. As Buchanan and Tullock long ago suggested, The constitutional choice of a rule is taken independently of any single specific decision or set of decisions and is quite rationally based on a long-term view embodying many separate time sequences and many separate collective acts disposing of economic resources … . At the constitutional level, identifiable self-interest is not present in terms of external characteristics. The self-interest of the individual participant at this level leads him to take a position as a ‘representative’ or ‘randomly distributed’ participant in the succession of collective choices anticipated. Therefore, he may tend to act, from self-interest, as if he were choosing the best set of rules for the social group. Here the purely selfish individual and the purely altruistic individual may be indistinguishable in their behavior. ([1962] 1999, pp. 95–6)

Let us be clear. The feasibility of a constitutional generality constraint does not depend upon the intervention of the ‘bifurcated man’ of social welfare theorists’ imagination. Instead, participants at the constitutional stage are taken to reflect ‘the empirical realities of persons as they exist, moral warts and all’

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(Brennan and Buchanan, [1985b] 2000, p. XVI). If this comports with the Founders’ understanding of the self (S1.5), it also gestures toward the Founders’ insistence that, given the moral equivalence of persons, citizens have a duty to promote just, in the sense of impartial, institutions (SS1.5, 1.6 and 1.7) Equally important, it is consonant with one of the Founders’ fundamental insights; namely, that constitutional restraints on majoritarian democracy are instrumentally important to the survival of republican self-government. Inter alia, impartial treatment of persons at the postconstitutional stage provides a raison d’être for majoritarian democracy. Rather than facilitating the cyclical extraction of value by one coalition from another, generality-constrained majoritarian democracy may properly be regarded as the deus ex machina for impartial deliberation. Equally important, the formal institutionalization of a generality or impartiality constraint may accomplish what the Founders envisioned. Given their understanding of the self (S1.5), and their appreciation of the reciprocal relationship between law and moral norms, the Founders imagined that the Bill of Rights would have ‘educative value’ (S1.4), and that the Constitution would promote both ‘a constant preference of public to private interest’ and ‘the love of the laws and of our country’ (SS1.3 and 1.5).11 And, finally, whereas modern liberalism and utilitarian social welfare theory can, at best, provide contingent defenses of democracy (SS3.4 and 4.2), a constitutional generality constraint would affirm majoritarian democracy’s respect for the moral equivalence of persons.

8.4 Federalism and Other ‘Auxiliary Precautions’ If a constitutional generality constraint would, as I have suggested, be consonant with the Founders’ republican self-government project, a question remains: What has been the fate of the Founders’ ‘auxiliary precautions’? I do not intend to reprise the argument for an additional auxiliary precaution (S8.3). Instead, I take as my point of departure that the ‘constitutional anarchy’ to which James Buchanan referred (S8.2) relates both to postconstitutional politics and to constitutional jurisprudence. Recall, first, that the Founders acknowledged their ‘English inheritance’; that they regarded the Constitution as fundamental law; that they believed that selfgovernance implied a correlative duty to respect the Constitution; that they regarded the Constitution as ‘fixed’; that they therefore rejected the idea of a ‘living’ or ‘adaptive’ Constitution, and that, whereas they believed that constitutional interpretation should be informed by ‘the state of things at [the] time’ of the framing, they insisted that the Supreme Court was given to ‘forcing the meaning of words, hunting after possible constructions, and hanging inference



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on inference, from heaven to earth, like Jacob’s ladder’. Moreover, we know that the Founders insisted that the federal government’s jurisdiction ‘extends to certain enumerated objects only, and leaves to the several states, a residuary and inviolable sovereignty over all other objects’. All this notwithstanding, we know that Madison (1823) had concluded that ‘the [Supreme] Court, by some of its decisions, still more by extrajudicial reasonings & dicta, has manifested a propensity to enlarge the general authority in derogation of the local, and to amplify its own jurisdiction’. And, finally, we know that Jefferson and the other Founders emphasized that the Constitution provided for its own amendment. Thus, whereas under the existing Constitution, neither legislative nor judicial ‘encroachments’ are to be tolerated, the people are sovereign, and it is they who ‘can change the constitution if they please’ (SS1.4 and 1.6). With this as background, I return to an issue briefly discussed in Section 1.2. In Hamilton’s account, whereas ‘A Question has been made concerning the Constitutional right of the Government of the United States’ to provide ‘bounties, premiums and other artificial encouragements’ to the ‘manufacturing branches’, ‘there is certainly no good foundation for such a question’. Jefferson held a decidedly different view of the ‘Constitutional right of the Government of the United States’. For Jefferson, Hamilton’s Report on the Subject of Manufactures ‘meant to establish the doctrine that the power given by the Constitution to collect taxes to provide for the general welfare of the U.S., permitted Congress to take everything under their management which they should deem for the public welfare, & which is susceptible of the application of money’. In short, in Jefferson’s account, a system of federal ‘bounties, premiums and other artificial encouragements’ would represent a congressional ‘encroachment’ of powers reserved to the states.12 If, as Madison insisted, ‘The “Federalist” may fairly enough be regarded as the most authentic exposition of the text of the federal Constitution, as understood by the Body which prepared & the Authority which accepted it’ ([1825] 1999, p. 808), it is significant that Hamilton’s Federalist No. 33 avers that a [federal] law abrogating or preventing the collection of a tax laid by the authority of a state (unless upon imports and exports) would not be the supreme law of the land, but an usurpation of a power not granted by the constitution … . The inference … is … that the individual states would, under the proposed constitution, retain an independent and uncontrolable authority to raise revenue to any extent of which they may stand in need, by every kind of taxation, except duties on imports and exports. (Carey and McCllellan, 2001, p. 161)

Interestingly, a May 15, 2006 Supreme Court decision appears, at least superficially, to affirm states’ ‘independent and uncontrolable authority to raise revenue … by every kind of taxation, except duties on imports and exports’. In Daimler Chrysler Corp. Et Al. v. Cuno Et Al., the Court unanimously dismissed

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a taxpayer challenge to an Ohio program intended to attract companies with state franchise tax credits and property tax abatements (547 U.S. (2006)). In so doing, the Supreme Court vacated a Sixth Circuit judgment in favor of the taxpayer plaintiffs who had claimed both that the tax credit program violated the Constitution’s interstate commerce clause and, indirectly, raised their tax rates. While some might argue that its decision affirms the states’ right to use lower tax rates in order to compete with other states, the Court’s finding is narrowly tailored. In fact, the Court determined that Plaintiffs’ principal claim that the franchise tax credit depletes state funds to which they contribute through their taxes, and thus diminishes the total funds available for lawful uses and imposes disproportionate burdens on them, is insufficient to establish standing under Article III. This Court has denied federal taxpayers standing under Article III to object to a particular expenditure of federal funds simply because they are taxpayers. (547 U.S. (2006), Syllabus, p. 2)

In effect, because it found that the plaintiffs lacked ‘standing’, the Court never reached the Commerce Clause and state sovereignty questions. While much can be said about this, I emphasize, first, that tax incentives targeted at individual companies are patently discriminatory and, pari passu, immoral. Given their prior ethical commitment to the moral equivalence of persons (S1.5), the Founders may, Hamilton perhaps aside, have found such tax incentives objectionable. However this may be, it is clear that ‘targeted’ tax incentives would be inconsistent with a constitutional generality constraint. Second, recent cases suggest that the Supreme Court’s federalism jurisprudence may best be described as ambiguous. In Gonzalez, Attorney General, Et Al. v. Raich Et Al., the Supreme Court held 6-3 that ‘Congress’ Commerce Clause authority includes the power to prohibit the local cultivation and use of marijuana in compliance with California law’ (545 U.S. (2005), Syllabus, p. 1). At issue was California’s Compassionate Use Act, voted in by ballot initiative in 1996. The Supreme Court stipulates that the Act ‘authorizes limited marijuana use for medicinal purposes [and that] Respondents Raich and Monson are California residents who both use doctor-recommended marijuana for serious medical conditions’ (545 U.S. (2005), Syllabus, p. 1). Moreover, the Court affirms that ‘respondents brought this action seeking injunctive and declaratory relief prohibiting the enforcement of the federal Controlled Substances Act (CSA)’ (Syllabus, p. 1). Importantly, the CSA ‘repealed most of the earlier antidrug laws in favor of a comprehensive regime to combat the international and interstate traffic in illicit drugs’ (Opinion, p. 9; emphasis mine). Writing for the majority, Justice Stevens avers that



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limiting the activity to marijuana possession and cultivation ‘in accordance with state law’ cannot serve to place respondents’ activities beyond congressional reach. The Supremacy Clause unambiguously provides that if there is any conflict between federal and state law, federal law shall prevail. It is beyond peradventure that federal power over commerce is ‘superior to that of the States to provide for the welfare or necessities of their inhabitants’, however legitimate or dire those necessities may be. (Opinion, p. 26)

In Justice Stevens’ account, then, the federal government’s Commerce Clause powers trump the states’ ‘police powers’; powers that ‘have always included authority to define criminal law and to protect the health, safety and welfare of [the States’] citizens’ (O’Connor, Dissent, p. 1). Implicit in Stevens’ formulation is the presumption that the Commerce Clause applies in the instant case. Yet, he asserts that In assessing the scope of Congress’ authority under the Commerce Clause, we stress that the task before us is a modest one. We need not determine whether respondents’ activities, taken in the aggregate, substantially affect interstate commerce in fact, but only whether a ‘rational basis’ exists for so concluding … . Given the enforcement difficulties that attend distinguishing between marijuana cultivated locally and marijuana grown elsewhere … and concerns about diversion into illicit channels, we have no difficulty concluding that Congress had a rational basis for believing that failure to regulate the intrastate manufacture and possession of marijuana would leave a gaping hole in the CSA. (Opinion, p. 19)

At least in two accounts, Justice Stevens’ ‘rational basis’ standard for assessing ‘whether respondents’ activities … substantially affect interstate commerce’ is not persuasive. Justice O’Connor, in Dissent, is clear: because … medical marijuana users may be limited in number and California’s Compassionate Use Act and similar state legislation may well isolate activities relating to medicinal marijuana from the illicit market, the effect of those activities on interstate drug traffic is not self-evidently substantial. (Dissent, p. 12)

On this logic, Justice O’Connor argues that Today’s decision allows Congress to regulate intrastate activity without check, so long as there is some implication by legislative design that regulating intrastate activity is essential … to the interstate regulatory scheme. (p. 5)

If this construction gestures toward Jefferson’s admonition that we ‘not make [the Constitution] a blank paper by construction’, it also calls to mind Hamilton’s counsel that ‘To avoid an arbitrary discretion in the courts, it is indispensable that they should be bound down by strict rules and precedents’ (S1.6). Citing James Madison’s The Federalist No. 45, Justice O’Connor admonishes us to recall that ‘The powers reserved to the several States will extend

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to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State’ (p. 16).13 The essential point is that We enforce the ‘outer limits’ of the Congress’ Commerce Clause authority not for their own sake, but to protect historic spheres of state sovereignty from excessive federal encroachment and thereby to maintain the distribution of power fundamental to our federalist system of government … . One of federalism’s chief virtues, of course, is that it promotes innovation by allowing for the possibility that ‘a single courageous State may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.’ (O’Connor Dissent, p. 1)

At issue, in short, is the ‘limited constitution’ of Hamilton’s imagination, and Madison’s concern both with ‘legislative encroachments’, and with the possibility that ‘the Judicial Department … may exercise or sanction dangerous powers beyond the grant of the constitution’ (S1.6). Justice Thomas’s Dissent in Raich is consistent with this interpretation: This Court has carefully avoided stripping Congress of its ability to regulate interstate commerce, but it has casually allowed the Federal Government to strip States of their ability to regulate intrastate commerce – not to mention a host of local activities, like mere drug possession, that are not commercial. (p. 14)14

Equally important, Justice Thomas cites the 1819 case of McCulloch v. Maryland to emphasize that, ‘under the Necessary and Proper Clause, … Congress must select a means that is “appropriate” and “plainly adapted” to executing an enumerated power; the means cannot be otherwise “prohibited” by the Constitution; and the means cannot be inconsistent with “the letter and spirit of the [C]onstitution”’ (Dissent, pp. 3–4). On this logic, Justice Thomas rejects the federal government’s contention ‘that banning Monson and Raich’s intrastate drug activity is “necessary and proper for carrying into Execution” its regulation of interstate drug trafficking’ (p. 4). Whatever the merits of Justice Thomas’s argument, there is little doubt that his concern with ‘means [which are] “appropriate” and “plainly adapted” to executing an enumerated power’ is consistent with Madison’s account, already cited in Section 1.6: Much of the error in expounding the Constitution has its origin in the use made of the species of sovereignty implied in the nature of Govt. The specified powers vested in Congress, it is said, are sovereign powers, and that as such they carry with them an unlimited discretion as to the means of executing them. It may surely be remarked that a limited Govt. may be limited in its sovereignty as well with respect to the means as to the objects of his powers; and that to give an extent to the former, superseding the limits to the latter, is in effect to convert a limited into an unlimited Govt. ([1819] 1999, p. 736)15



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Plainly, the issue adumbrated by Justices O’Connor and Thomas is not whether Californians should have voted in favor of the state’s Compassionate Use Act. Justice O’Connor makes it clear that, were she a California citizen, she would not have voted for the Act and that, were she a California legislator, she would not have supported the Act. That said, she avers that whatever the wisdom of California’s experiment with medical marijuana, the federalism principles that have driven our Commerce Clause cases require that room for experiment be protected in this case. (Dissent, p. 17)

For his part, Justice Thomas insists both that Congress’s Controlled Substance Act ‘has encroached on States’ traditional police powers to define the criminal law and to protect the health, safety, and welfare of their citizens’ (Dissent, p. 9), and that One searches the Court’s opinion in vain for any hint of what aspect of American life is reserved to the States. Yet this Court knows that ‘[t]he Constitution created a Federal Government of limited powers’ … . That is why today’s decision will add no measure of stability to our Commerce Clause jurisprudence: This Court is willing neither to enforce the limits on federal power, nor to declare the Tenth Amendment a dead letter … . Congress may regulate interstate commerce – not things that affect it, even when summed together, unless truly ‘necessary and proper’ to regulating interstate commerce. (pp. 14–15)16

If Raich may, at least in the account of Justices O’Connor and Thomas, be understood as endorsing federal encroachment on state sovereignties, other Supreme Court decisions seem to affirm Federalist principles. I acknowledge, first, that the stare decisis doctrine – the following of Supreme Court precedent – has, as Justice Scalia suggests, been ‘appreciably eroded’ (1997, p. 12). That said, it is clear that ‘Originalism, like any other theory of [constitutional] interpretation put into practice in an ongoing system of law, must accommodate the doctrine of stare decisis; it cannot remake the world anew’ (pp. 138–9). Indeed, in a ‘Response’ to Professor Laurence Tribe, Justice Scalia writes: Professor Tribe appears to believe that there is something uniquely inappropriate about the acceptance of stare decisis by an originalist. Surely not. The whole function of the doctrine is to make us say that what is false under proper analysis must nonetheless be held to be true, all in the interest of stability. It is a compromise of all philosophies of interpretation, his no less than mine. The demand that originalists alone ‘be true to their lights’ and forswear stare decisis is essentially a demand that they alone render their methodology so disruptive of the established state of things that it will be useful only as an academic exercise and not as a workable prescription for judicial governance. (p. 139; emphasis mine)17

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The essential point is that ‘originalism’ – the Founders’ view of constitutional interpretation (S1.6) – can be reconciled with stare decisis.18 Moreover, Scalia’s ‘established state of things’ metaphor is consistent with James Buchanan’s ‘rational expectations’ construction: My argument suggests that if the prior judicial interpretations have been in place sufficiently long for these interpretations to have formed part of the rational expectations of both the citizenry and the acting political agents, it would not be appropriate … to change the rules. To move beyond such deference to the status quo and to assume an activist role in deconstruction, as guided by some ideal, even if this ideal is contractarian, opens up judicial review to precisely those dangers of abuse that Scalia warns against. ([1988] 2001, pp. 65–6)19

All this notwithstanding, it is clear that, as Justice Scalia suggests, stare decisis has been ‘appreciably eroded’. Indeed, in Buchanan’s account, ‘Modern legal–judicial practice places us all in an ongoing game where the umpires themselves continually change the rules and, indeed, openly proclaim this to be their anointed social role’ ([1986a] 2001, p. 217). The Supreme Court’s federalism jurisprudence is illustrative. Only six months after deciding in Raich that California’s Compassionate Use Act did not bar prosecution under the federal Controlled Substances Act (CSA), the Supreme Court’s 6–3 Opinion in Gonzalez, Attorney General, Et Al. v. Oregon Et Al. held that ‘The CSA does not allow the Attorney General to prohibit doctors from prescribing regulated drugs for use in physician-assisted suicide under state law permitting the procedure’ (546 U.S. (2006) Syllabus, p. 2); a finding that is consistent with the fact that, ‘Over the years, the Supreme Court repeatedly has deferred to states in end-of-life-decisions’ (Bravin, 2006a, p. A3). Interestingly, writing for the majority, Justice Kennedy invokes the states’ police powers – powers the Court’s majority implicitly denied in Raich: In deciding whether the CSA can be read as prohibiting physician-assisted suicide, we look to the statute’s text and design. The statute and our case law amply support the conclusion that Congress regulates medical practice insofar as its bars doctors from using their prescription–writing powers as a means to engage in illicit drug dealing and trafficking … . Beyond this, however, the statute manifests no intent to regulate the practice of medicine generally. The silence is understandable given the structure and limitations of federalism, which allow the States ‘great latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet of all persons’ (Opinion, p. 23)

Writing in Dissent, Justice Scalia avers that ‘The fact that many in Oregon believe that the boundaries of “legitimate medicine” should be extended to include assisted suicide does not change the fact that the overwhelming weight



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of authority (including the 47 states that condemn physician-assisted suicide) confirms that they have not yet been so extended’ (Dissent, p. 13). That said, it is the contrast with the Court’s holding in Raich that is of immediate interest. Justice Thomas’s Dissent summarizes the point at issue: the Raich majority concluded that the [federal Controlled Substances Act] applied to the intrastate possession of marijuana for medicinal purposes authorized by California law because ‘Congress could have rationally’ concluded that such an application was necessary to the regulation of the ‘larger interstate marijuana market’ … . Here, by contrast, the majority’s restrictive interpretation of the CSA is based in no small part on ‘the structure and limitations of federalism, which allow the States “great latitude under their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet of all persons.”’ (Dissent, pp. 2–3; emphasis mine)

If the apparently contradictory opinions in Raich and Oregon are confusing to the layman, they are no less ‘perplexing’ to Justice Thomas: ‘The Court’s reliance [in Oregon] upon the constitutional principles that it rejected in Raich – albeit under the guise of statutory interpretation – is perplexing to say the least’ (Dissent, p. 4). Moreover, confusion only deepens when account is taken of the Supreme Court’s holdings in United States v. Lopez (514 U.S. (1995)) and in United States v. Morrison (529 U.S. (2000)). In Lopez, the Court held that the federal Gun Free Zones Act of 1990, which prohibited the possession of firearms in school zones, exceeded the Congress’s Commerce Clause authority. Similarly, in Morrison the Court held that the federal Violence Against Women Act of 1994 exceeded Congress’s authority under the Commerce Clause. For Justice O’Connor, the Court’s holding in Raich is ‘irreconcilable with our decisions in Lopez … and United States v. Morrison’.20 As it happens, Justice Scalia’s Dissent in Oregon only compounds the confusion. Having voted in the majority in Lopez and Morrison – though he voted with the majority in Raich – Justice Scalia proffers an expansive interpretation of the Commerce Clause: The Court’s decision today is perhaps driven by a feeling that the subject of assisted suicide is none of the Federal Government’s business. It is easy to sympathize with that position. The prohibition or deterrence of assisted suicide is certainly not among the enumerated powers conferred on the United States by the Constitution, and it is within the realm of public morality (bonos mores) traditionally addressed by the socalled police power of the States. But then, neither is prohibiting the recreational use of drugs or discouraging drug addiction among the enumerated powers. From an early time in our national history, the Federal Government has used its enumerated powers, such as its power to regulate interstate commerce, for the purpose of protecting public morality – for example, by banning the interstate shipment of lottery tickets, or the interstate transport of women for immoral purposes … . Unless we are to repudiate a long and well-established principle of our jurisprudence, using the federal commerce power to prevent assisted suicide is unquestionably permissible. The question

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before us is not whether the Congress can do this, or even whether Congress should do this; but simply whether Congress has done this in the CSA. I think there is not doubt that it has. If the term ‘legitimate medical purpose’ has any meaning, it surely excludes the prescription of drugs to produce death. (p. 25)

While it is clear that the Founders insisted that there is a reciprocal relationship between morality and law, and that virtue ought to be promoted (SS1.3, 1.4, 1.6 and 1.7), it is not clear that the Founders intended that Congress’s commerce power extend to the ‘power to regulate interstate commerce, for the purpose of protecting public morality’. And, while it has been argued that, since its holding in NLRB v. Jones & Laughlin Steel Corp. (301 U.S. (1937)), the Court has both ‘turned the commerce power into the equivalent of a general regulatory power’, and ‘invoked [the Commerce Clause] to expand federal criminal legislation, as well as for major social reforms such as the Civil Rights Act of 1964’ (Forte, 2005, p. 104), constitutional scholars are divided as to the meaning of the Commerce Clause. Richard Epstein has argued, for example, that the 1937 constitutional revolution … (mistakenly in my view) ceded under the Commerce Clause … virtually comprehensive power to the national government to regulate any and all productive activities, no matter how local. (2003, p. 126)

For his part, whereas Raoul Berger refers to the Constitution’s ‘commerce’ provision as ‘amorphous’ (1997, p. 308), he argues that ‘the Founders’ jealous attachment to State sovereignty … [an] attachment [that] was made explicit by the Tenth Amendment’ cannot be reconciled with an expansive reading of the federal government’s Commerce Clause powers (p. 308, footnote 4). In contrast, Grant Nelson and Robert Pushaw … interpret the founding documents as providing Congress the authority to regulate or prohibit ‘any market-based activity that affects more than one state’, which includes the manufacturing, farming, environmental, safety, financial, and labor effects of commercial activity. (Forte, 2005, p. 104)

What is in any case clear is that ‘in United States v. Lopez (1995) and United States v. Morrison (2000), the Supreme Court limited Congress’s power under the Commerce Among the States Clause for the first time since in the 1930s’ (Forte, 2005, p. 104). To Lopez and Morrison we can now add the Supreme Court’s decision in Oregon, a holding which, like Lopez and Morrison, is difficult to reconcile with Raich. There is little doubt that the Court’s conflicting Commerce Clause holdings are animated, in part, by the fact that Commerce Clause questions frequently implicate the Necessary and Proper and Supremacy Clauses of the Constitution. Whereas the former (Article I, Section 8, Clause 18) enables the Congress ‘To



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make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof’, the latter (Article VI, Clause 2) ‘is a conflict-of-laws rule specifying that certain national acts take priority over any state acts that conflict with national law’ (Lawson, 2005, p. 291). Writing for the majority in Gibbons v. Ogden (1824), Chief Justice Marshall gave expression to the Necessary and Proper Clause: The genius and character of the whole government seem to be, that its action is to be applied to all the external concerns of the nation, and to those internal concerns which affect the States generally; but not to those which are completely within a particular State, which do not affect other States, and with which it is not necessary to interfere, for the purpose of executing some of the general powers of the government. The completely internal commerce of a State, then, may be considered as reserved for the State itself. (Kurland and Lerner, 1987b, p. 499; emphasis mine)

Importantly, a federal statute cannot, under the Supremacy Clause, arbitrarily ‘preempt’ a state law: ‘[F] or an explicitly preemptive statute to be constitutional, it must be “necessary and proper for carrying into Execution” some enumerated federal power, subject, of course, to the constitutional limits of the Necessary and Proper Clause itself’ (Lawson, 2005, p. 293). It is not my purpose here to adumbrate the Supreme Court’s Necessary and Proper and Supremacy Clause jurisprudence. Rather, it is to emphasize that, as in Lopez, Morrison, Raich and Oregon, ‘At times, the Supreme Court is called upon to determine if there is a conflict between state and federal laws, even when Congress has not explicitly decided to preempt state action in the field’ (Lawson, 2005, p. 293). The essential point is that, ‘Congress, under its delegated powers, or a state, under its police power, may establish legal rules dealing with the same subject’ (p. 293). In that event, ‘It … falls to the courts to determine, under the Supremacy Clause, whether the state and federal rules are in conflict’ (p. 293). Indeed, as Forte has emphasized, It was inevitable that the states, even in the honest exercise of their police powers, would trench on interstate commerce. How far the states even incidentally intrude upon interstate commerce has been the subject of literally hundreds of Supreme Court cases, often with inconsistent holdings. (2005, pp. 105–6)21

There is a sense in which the Court’s conflicting opinions in Lopez, Morrison, Raich and Oregon are a metaphor for Forte’s ‘often … inconsistent holdings’ observation. That the Court’s inconsistency is problematic is self-evident. That inconsistency has emerged is perhaps not surprising. Writing in 1824, Chief Justice Marshall characterized our federal system as ‘complex … presenting the rare

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and difficult scheme of one general government, whose action extends over the whole, but which possesses only certain enumerated powers; and of numerous State governments, which retain and exercise all powers not delegated to the Union’ (Kurland and Lerner, 1987b, p. 501). Given this inherent complexity, the Chief Justice averred that ‘It would be in vain to deny the possibility of a clashing and collision between the measures of the two governments’, and that ‘The line cannot be drawn with sufficient distinctness between the municipal powers of the one, and the commercial powers of the other. In some points they meet and blend so as scarcely to admit of separation’ (p. 509). Whether an apparently elusive ‘bright-line’ between the states’ ‘municipal powers’ and the federal government’s ‘commercial powers’ might have been divined in Lopez, Morrison, Raich and Oregon is not immediately clear. What is clear is that, writing in 1792, James Madison proffered both a reminder and some prescient advice: The power delegated by the people is first divided between the general government and the state governments; each of which is then subdivided into legislative, executive, and judiciary departments. And as in a single government these departments are to be kept separate and safe, by a defensive armour for each; so, it is to be hoped, do the two governments possess each the means of preventing or correcting unconstitutional encroachments of the other.22

With this in mind, Madison suggests that It must not be denied that the task of forming and maintaining a division of power between different governments, is greater than among different departments of the same government; because it may be more easy (though sufficiently difficult) to separate, by proper definitions, the legislative, executive, and judiciary powers, which are more distinct in their nature, than to discriminate, by precise enumerations, one class of legislative powers from another class, one class of executive from another class, and one class of judiciary from another class; where the powers being of a more kindred nature, their boundaries are more obscure and run more into each other. If the task be difficult however, it must by no means be abandoned. Those who love their country, its repose, and its republicanism, will therefore study to avoid the alternative, by elucidating and guarding the limits which define the two governments; by inculcating moderation in the exercise of the powers of both, and particularly a mutual abstinence from such as might nurse present jealousies, or engender greater. ([1792a] 1999, pp. 508–9)

Madison’s position, adumbrated in a February 6, 1792 National Gazette article styled ‘Government of the United States’ centers on two of the Founders’ constitutional ‘auxiliary precautions’, federalism and the separation of powers. If it is clear from the discussion of Lopez, Morrison, Raich and Oregon that



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‘maintaining a division of power between different governments’ is as difficult as Madison suggests, it is not clear that maintaining the same division between ‘different departments of the same government’ is, as Madison avers, a less difficult task. With this in mind, I return to Justice Scalia’s Dissent in Oregon; a construction that involves both federalism and the separation of powers. He begins by observing that ‘The Court [in its majority opinion] concludes that the Attorney General lacked authority to declare assisted suicide illicit under the [federal] Controlled Substances Act (CSA), because the CSA is concerned only with “illicit drug dealing and trafficking”’. This ‘question-begging conclusion’, he says, ‘is obscured by a flurry of arguments that distort the statute and disregard settled principles of our interpretive jurisprudence (546 U.S. (2006), Dissent, p. 1; emphasis mine). If Justice Scalia believes that the Court ‘distorts’ the GSA, he also avers that the Attorney General’s Interpretive Rule or Directive, ‘that assisting suicide is not a “legitimate medical purpose”’ under the CSA (p. 2), is ‘controlling unless plainly erroneous or inconsistent with the regulation’ (p. 3). Given this predicate, he insists that ‘the Directive’s construction of “legitimate medical purpose” is a perfectly valid agency interpretation of its own regulation; and if not that, a perfectly valid agency interpretation of the statute’ (p. 10; emphasis mine). Justice Scalia’s deference in Oregon to the Attorney General’s Interpretive Rule or Directive – ‘unless plainly erroneous or inconsistent with the [agency’s] regulation’ – is animated by his concern that the Court’s opinion be consistent with ‘settled principles of [the Court’s] interpretive jurisprudence’. It is, however, characteristic of Justice Scalia and, as we shall see, of the other Justices, that they are not always deferential to federal agency rulemaking. For example, in Mistretta v. United States (488 U.S. (1989)), Justice Scalia dissented from the Supreme Court’s holding that ‘creation of the U.S. Sentencing Commission – an entity in which federal judges are authorized to act in an executive policymaking capacity – did not violate the independent authority of the judiciary under Article III of the Constitution’ (Ring, 2004, p. 43). Justice Scalia’s Dissent, it is claimed, was motivated by his insistence that ‘the Constitution does not allow for the branches to “share” authority specifically given to one branch’ (p. 44). In this account, Justice Scalia is not … adamantly opposed to the exercise of lawmaking power by executive agencies because he has high regard for the Congress. Rather, he believes first that the text of the Constitution demands clear separation … . Equally important to Scalia, it seems, are the practical reasons for dividing power cleanly and evenly; he recognizes and fears that any one of the branches, if not strictly limited, will seek greater power. To Scalia, as with Madison and the other Framers, the concentration of power in any one branch poses a threat to individual liberty. (p. 44; emphasis mine)23

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At issue is the Nondelegation Clause, Article I, Section 1 of the Constitution: ‘All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives’.24 It was in this context that, in Oregon and, as we shall see, in Rapanos ET UX., ET AL. v. United States (547 U.S. (2006)) Justice Scalia invoked the rulemaking authority of administrative agencies. The essential point is that Many agencies exercise legislative, executive, and judicial powers. They can issue regulations having the same force and effect as statutes, impose fines and penalties for violations of their regulations, and conduct trial-type proceedings that affect the rights and interests of particular parties. (Uhlmann, 2005, p. 229; emphasis mine)

The orthodox explanation for Congress’s willingness to delegate broad rulemaking authority to administrative agencies is that ‘In a complex society, Congress cannot specify every detail of legislative policy’. In this account, ‘Room must be left for the exercise of discretionary judgement, which means that legislative delegation is inevitable if Congress decides to regulate many subjects extensively’ (p. 230). With this as background, I emphasize first, that the separation of powers principle ‘necessarily limits the extent to which Congress may delegate its legislative authority’ (p. 230) and, second, that Administrative agencies are usually justified in terms of their ability to redress perceived or actual market failures: for example, controlling monopoly power, ‘windfall’ profits, or ‘excessive’ competition; or compensating for externalities, inadequate information, or unequal bargaining power. (p. 229; emphasis mine)

As we have seen, the economist’s theory of the state, social welfare theory (SS5.2, 5.3 and 5.4) cannot legitimately be employed to justify ‘market failure’animated government market interventions. On the one hand, the theory’s benevolent despot – omniscient advising economist construal is prima facie implausible (SS5.4 and 7.5). On the other hand, the indeterminacy of the efficiency frontier and the social welfare function call into question the normative use of the first and second fundamental welfare theorems (SS7.3, 7.4 and 7.5). Moreover, as Brennan and Buchanan have emphasized, So-called market-failure problems (attributable to public goods, generalized externalities, and monopoly elements in private-goods supply), although sufficient to indicate the presence of unrealized gains from exchange, are now widely recognized as constituting an inadequate normative case for government intervention in market processes. There is no necessary presumption that simply because markets are imperfect, political processes will work better. On the contrary, as public-choice theory reminds us, there are very good reasons for doubting the capacity of political processes to achieve Pareto optimality. ([1985c] 2000, pp. 129–30)25



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All this notwithstanding, whether explicitly or implicitly, social welfare theory is employed to ‘justify’ both the ‘modern regulatory state’ and its ‘hallmark institutions’, administrative agencies.26 As it happens, a recent Supreme Court holding implicates environmental law, agency rulemaking, the Commerce Clause, and property rights. The case, John A. Rapanos, ET UX., ET AL., Petitioners v. United States, together with June Carabell ET AL., Petitioners v. United States Corps of Engineers ET AL., was decided on June 19, 2006. In one account, ‘A splintered Supreme Court rolled back coverage of the Clean Water Act, ruling that federal regulators had gone too far in protecting wetlands lying more than 10 miles from navigable waters’ (Bravin, 2006b, p. A3). In fact, as Chief Justice Roberts observed in his concurring Opinion, the Court’s 4–1–4 ruling covering two separate but related cases was ‘unfortunate’. In his account, It is unfortunate that no opinion commands a majority of the Court on precisely how to read Congress’ limits on the reach of the Clean Water Act. Lower courts and regulated entities will now have to feel their way on a case-by-case basis. (Concurring Opinion, p. 2)

At issue in the case is the Corps of Engineers’ interpretation of a provision of the Clean Water Act that ‘makes it unlawful to discharge dredged or fill material into “navigable waters” without a permit … and defines “navigable waters” as “the waters of the United States, including the territorial seas”’. Importantly, The Army Corps of Engineers (Corps), which issues permits for the discharge of dredged or fill material into navigable waters, interprets ‘the waters of the United States’ expansively to include not only traditional navigable waters … but also other defined waters … ‘[t]ributaries’ of such waters … and wetlands ‘adjacent’ to such waters and tributaries … ‘[A]djacent’ wetlands include those ‘bordering, contiguous [to], or neighboring’ waters of the United States even when they are ‘separated from [such] waters … by man-made dikes … and the like’. (Syllabus, p. 1)

Reduced to its essentials, the Supreme Court ‘ordered a lower court to reconsider its decisions barring the backfilling of wetlands on property belonging to [petitioners Rapanos and Carabell] in Michigan’ (Bravin, 2006b, p. A3). Announcing the judgment of the Court, Justice Scalia delivered an Opinion in which Chief Justice Roberts and Justices Thomas and Alito joined. Justice Kennedy, concurring in the judgment, wrote a separate Opinion. It is perhaps not by accident that, in writing the Court’s Opinion, Justice Scalia employs language that is evocative of the economist’s theory or the state: The burden of federal regulation on those who would deposit fill material in locations denominated ‘waters of the United States’ is not trivial. In deciding whether to grant

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or deny a permit, the U.S. Army Corps of Engineers (Corps) exercises the discretion of an enlightened despot, relying on such factors as ‘economics,’ ‘aesthetics,’ ‘recreation,’ and ‘in general, the needs and welfare of the people.’ (Opinion, pp. 1–2; emphasis mine)

Whether Justice Scalia intends the phrase ‘enlightened despot’ as an invective is not clear. What is clear is that Justice Scalia and, presumptively, the concurring Justices, are aware of the Corps’ expansive rulemaking: The enforcement proceedings against Mr. Rapanos are a small part of the immense expansion of federal regulation of land use that has occurred under the Clean Water Act – without any change in the governing statute – during the past five Presidential administrations. (pp. 2–3; emphasis mine)

If it is possible, under the Constitution’s Nondelegation Clause, to question the constitutionality of the Corps’ and other agencies’ ‘essentially open-ended authority to make and enforce rules’, an idea with which the Supreme Court has struggled (Uhlmann, 2005, p. 230), it is also clear that the Clean Water Act raises questions about states’ rights and the ‘ultimate scope’ of Congress’s Commerce Clause power: The [Clean Water] Act also states that ‘[i]t is the policy of Congress to recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution, to plan the development and use (including restoration, preservation, and enhancement) of land and water resources, and to consult with the [Environmental Protection Agency’s] Administrator in the exercise of his authority under this chapter. (Opinion, pp. 3–4)

Emphasizing that, in Solid Waste Agency of Northern Cook County v. Army Corps of Engineers (531 U.S. (2001)) (SWANCC), the Supreme Court concluded that ‘the Government’s expansive interpretation [of the phrase ‘the waters of the United States’] would ‘result in a significant impingement of the States’ traditional and primary power over land and water use’, Justice Scalia adds that ‘as we noted in SWANCC, the Corps’ interpretation stretches the outer limits of Congress’s commerce power and raises difficult questions about the ultimate scope of that power’ (Opinion, pp. 19–20). Unfortunately, as Justice Roberts’ Concurring Opinion in Rapanos suggests, because ‘no opinion commands a majority of the Court on precisely how to read Congress’ limits on the reach of the Clean Water Act’ (p. 2), constitutional questions contemplating the separation of powers (the Nondelegation Clause), federalism (the Commerce Clause) and property rights remain unsettled. Whatever else is said, it is clear that, with respect to each of these questions, the Supreme Court has provided no bright interpretative lines. With respect to agency rulemaking and, pari passu, the separation of powers, we know that



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the judiciary at first allowed agencies great leeway in interpreting their own statutory authority. The courts later began to second-guess the interpretative license it had previously granted to agencies, only to revert to a modified version of the older rule … . The Justices also seem to be of two minds concerning congressional delegation generally. (Uhlmann, 2005, p. 230)

The Court’s federalism jurisprudence has fared no better. The Court’s fundamentally irreconcilable findings in Lopez, Morrison, Raich and Oregon, discussed above, are heuristic. And, if Rapanos does not directly address the question of the petitioners’ property rights, the Supreme Court’s June 23, 2005 holding in Kelo ET AL. v. City of New London ET AL. (545 U.S. (2005)) raises questions about its interpretation of the Fifth Amendment’s Takings Clause.27 Writing for the Court’s 5–4 Kelo majority, Justice Stevens finds that The City [of New London, Connecticut] has carefully formulated an economic development plan that it believes will provide appreciable benefits to the community, including – but by no means limited to – new jobs and increased tax revenue … . To effectuate this plan, the City has invoked a state statute that specifically authorizes the use of eminent domain to promote economic development. Given the comprehensive character of the plan, the thorough deliberation that proceeded its adoption, and the limited scope of our review, it is appropriate for us, as it was in Berman, to resolve the challenges of the individual owners, not on a piecemeal basis, but rather in light of the entire plan. Because that plan unquestionably serves a public purpose, the takings challenged here satisfy the public use requirement of the Fifth Amendment. (Opinion, p. 13; emphasis mine)

At issue is the Court’s holding that a ‘plan [that] unquestionably serves a public purpose … satisf[ies] the public use requirement of the Fifth Amendment’. In dissent, Justice O’Connor, joined by Justices Rehnquist, Scalia, and Thomas observes that When interpreting the Constitution, we begin with the unremarkable presumption that every word in the document has independent meaning, ‘that no word was unnecessarily used, or needlessly added’ … . In keeping with that presumption, we have read the Fifth Amendment’s language to impose two distinct conditions on the exercise of eminent domain: ‘the taking must be for a “public use” and “just compensation” must be paid to the owner.’ (O’Connor Dissent, pp. 3–4)

Justice Thomas, in a separate Dissent, shares Justice O’Connor’s view that ‘every word in the [Constitution] has independent meaning’, adding that The most natural reading of the [Takings] Clause is that it allows the government to take property only if the government owns, or the public has a legal right to use, the property, as opposed to taking it for any public purpose or necessity whatsoever … . When the government takes property and gives it to a private individual, and the public has no right to use the property, it strains language to say that the public is ‘employing’ the property. (Dissent, p. 4)

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That said, Justice Thomas insists that ‘Our current Public Use Clause jurisprudence, as the Court notes, has rejected this natural reading of the Clause … . The Court adopted its modern reading blindly, with little discussion of the Clause’s history and original meaning, in two distinct lines of cases’ (p. 10). The cases, cited by the Court (Opinion, pp. 10–11), and by Justice O’Connor (Dissent, p. 6), adopt the ‘“public purpose” interpretation of the Clause’ and/or ‘[defer] to legislatures’ judgments regarding what constitutes a valid public purpose’ (Thomas Dissent, p. 10). In Justice Thomas’s account, ‘Those questionable cases converged in the boundlessly broad and deferential conception of “public use” adopted by this Court in Berman v. Parker, 348 U.S. 26 (1954), and Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984), cases that take center stage in the Court’s opinion’ (p. 10). If it is clear that Kelo raises questions about the stare decisis desideratum, it is also clear that, from the originalist’s perspective, Kelo is problematic. Recognizing that the Court’s holding affirms the Supreme Court of Connecticut’s judgment that a group of plaintiffs led by homeowner Susette Kelo may be evicted from their properties to make way for private development including a hotel and a Pfizer Corporation Office (Dissent, p. 10), Justice O’Connor avers that the Court today … holds that the sovereign may take private property currently put to ordinary private use, and give it over for new, ordinary private use, so long as the new use is predicted to generate some secondary benefit for the public – such as increased tax revenue, more jobs, maybe even aesthetic pleasure … . Thus, if predicted (or even guaranteed) positive side-effects are enough to render transfer from one private party to another constitutional, then the words ‘for public use’ do not realistically exclude any takings, and thus do not exert any constraint on the eminent domain power. (pp. 8–9)

It seems clear that, in their Kelo Dissents, Justices O’Connor and Thomas gesture toward Madison and Jefferson’s arguments against ‘misconstruction’ or ‘broad construction’ of the Constitution (S1.6). Recall that, for Madison, ‘It is but too common to read the expressions of a remote period thro’ the modern meaning of them, & to omit guards agst. misconstruction not anticipated’, and that, for Jefferson, ‘Our peculiar security is in possession of a written Constitution. Let us not make it a blank paper by construction’. Equally important, Justices O’Connor and Thomas implicitly invoke Alexander Hamilton’s admonition that ‘judges may be an essential safe-guard against the effects of occasional ill humors in the society. These sometimes extend no farther than to the injury of the private rights of particular classes of citizens, by unjust and partial laws’ (S1.6). In Justice O’Connor’s account, Today nearly all real property is susceptible to condemnation on the Court’s theory.



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Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms … . The Founders cannot have intended this perverse result. ‘[T]hat alone is a just government, wrote James Madison, ‘which impartially secures to every man, whatever is his own.’ (Dissent, pp. 12–13; emphasis in original)

If Justice O’Connor’s explicit invocation of Madison’s justice as impartiality construal (SS1.3, 1.5, 1.6 and 1.7) is revealing, so, too, is her allusion to postconstitutional ‘factious’ behavior, a concern that animated the Founders’ cultivation of virtue and ‘auxiliary precautions’ enterprise (SS1.1, 1.3, 1.4, 1.5, 1.6 and 1.7); a concern shared, moreover, by Justice Thomas: Allowing the government to take property solely for public purposes is bad enough, but extending the concept of public purpose to encompass any economically beneficial goal guarantees that … losses will fall disproportionately on poor communities. Those communities are not only systematically less likely to put their lands to the highest and best social use, but are also the least politically powerful. If ever there were justification for intrusive judicial review of constitutional provisions that protect ‘discrete and insular minorities,’ … surely that principle would apply with great force to the powerless groups and individuals the Public Use Clause protects. (Dissent, pp. 17–18; emphasis mine)

It seems clear that, as Justice O’Connor suggests, ‘The Founders cannot have intended [the] perverse result’ in Kelo. Indeed, the same might be said of the Supreme Court’s indeterminacy in Cuno, its irreconcilable holdings in Lopez, Morrison, Raich and Oregon, and its ambiguity in Rapanos. There is, moreover, the unsettled question of the constitutionality of federal ‘bounties, premiums and other artificial encouragements’; an issue that pitted Hamilton against Jefferson and Madison (SS1.2 and 1.6). At issue is the constitutionality of energy, farm, environmental, housing, ‘innovation’, ‘investment’, ‘saving’, credit, insurance and other on-, off- and off-off budget federal subsidies. If, as I have suggested, the mestastasization of these fundamentally discriminatory direct and indirect subsides and ‘tax expenditures’ is both inconsistent with the moral equivalence of persons and justificatory of a constitutional generality constraint (S7.5), it is also clear that they are evocative of the ‘legislative encroachments’ against which Madison and Jefferson inveighed (S1.6). What lessons are we to draw from all of this? Recall, first, that the Founders did not countenance the idea of a ‘living’ or ‘adaptive’ Constitution. Second, we know that, for them, the Constitution, as fundamental law, was both intrinsically and instrumentally valuable; the former, because of the procedural restraints it formalized, the latter because it reflects a reciprocal relationship with virtue. In the Founders’ account, the Constitution would serve both as a restraint on narrowly self-interested ‘factious’ behavior, and as a vehicle for the

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promotion of a ‘constant preference of public to private interest’ and of ‘the love of the laws and of our country’. Yet, we know that Madison and Jefferson grew increasingly impatient with the judicial and legislative ‘encroachments’ that, in their view, characterized the early years of the republic. For Madison, ‘what is of most importance is the high sanction given to a latitude in expounding the Constitution which seems to break down the landmarks intended by a specification of the Powers of Congress’. For Jefferson, ‘The judiciary of the United States is the subtle corps of sappers … construing our constitution from a co-ordination of a general and special government to a general and supreme one alone’ (S1.6). Viewed from this perspective, it is possible to conclude that the ‘constitutional anarchy’ described by James Buchanan (S8.2) is not endemic to the modern era. Yet there is an important sense in which this misses the point. Given ‘the jealousies prevailing against the General Government, at the adoption of the constitution’ (Jefferson, [1823] 1984, p. 1475), it is not surprising that the judicial and legislative encroachments that animated Madison’s and Jefferson’s concern centered, for the most part, on states’ rights and the limited prerogatives of the federal government. That said, it is likely that the Founders could not have foreseen the emergent and, it is fair to say, ‘creative’ tension between the federal government’s Commerce Clause powers and the states’ police powers, the emergent and sometimes conflicting interpretations of the Necessary and Proper and Supremacy Clauses, and the erosion, inter alia, through administrative rulemaking, of the separation of powers. If I am right, that the Founders could not have anticipated all of this, it is, I suggest, because they could not have imagined the eventual displacement of their Smithian/Kantian understanding of the self (S1.5), of their non-teleological, procedurally based conception of the state, and of what we may now call their constitutional political economy (SS1.7 and 7.5). Whatever else is said, it is indisputable that the proliferation of asserted rights – rights which must be adjudicated28 – has found expression in an expansion of statutory, common, and constitutional law. For its part, the imperative to ‘perfect’ the ‘economic market’ has been a catalyst to a growing body of tax, regulatory, labor and other law.29 If the increase in the volume, scope and reach of federal and state statutory law may be expected to increase both the incidence of litigation and the probability of conflicting Supreme Court holdings, it is virtually certain that the Founders would find all of this objectionable. Writing six months before the Constitution was ratified, and four years before the first ten Amendments to the Constitution were ratified, Thomas Jefferson shared this ‘P.S.’ with James Madison: The instability of our laws is really an immense evil. I think it would be well to provide in our constitutions that there shall always be a twelvemonth between the



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ingrossing a bill & passing it; that it should then be offered to [its] passage without changing a word: and that if circumstances should be thought to require a speedier passage, it should take two thirds of both houses instead of a bare majority. ([1787c] 1993, p. 213)

Whether this implies that Jefferson had in mind another ‘auxiliary precaution’ cannot be known with certainty. Neither, absent a counterfactual, can it be said that John Rawls’s hypothesis that ‘the separation of powers with judicial review may slow down the pace of legislative change’ (1971, p. 228) has been empirically disconfirmed. What can be said with certainty is that the Founders would be confounded by a public philosophy that embraces both values ‘neutrality’ and a teleological conception of the state, and by an institutionless, intendedly value-free ‘political’ economy for which ‘want and need’ satisfaction is the ultimate desideratum; a political economy that, inter alia, emphasizes in-period gratification at the expense of intergenerational equity, and that, effectively, treats national defense spending as a ‘discretionary’ residual.30 For those of us who share the Founders’ prior ethical commitment to the moral equivalence of persons, their Smithian/Kantian understanding of the self and of justice as impartiality, and their non-teleological, procedurally based conception of the state and of political economy, the implication is clear. Like the Founders and, it should be said, like James Buchanan and other, contemporary, constitutional political economists, we acknowledge the moral force of the Kantian/Rawlsian duty of justice; the duty both to respect and to promote just, in the sense of impartial, institutions. If, as I have suggested, we must therefore reject modern liberalism’s peculiar transcendental autonomous self-construal, we must also work to replace the economist’s relentlessly utilitarian, institutionless and intendedly value-free theory of the state with a procedurally based, consequence-detached political economy; a constitutional political economy that embraces both the Founders’ understanding of the reciprocal relationship between virtue and law, and their recognition of the need to institutionalize formal, ‘auxiliary precautions’ against discriminatory, rent-seeking, ‘factious’ behavior. And, if this means that we have a moral duty to promote a constitutional generality constraint, it also means that we should heed an admonition articulated by George Washington in his 1796 Farewell Address: It is important … that the habits of thinking in a free Country should inspire caution in those entrusted with its administration, to confine themselves within their respective Constitutional spheres; avoiding in the exercise of the Powers of one department to encroach upon another. The spirit of encroachment tends to consolidate the powers of all the departments in one, and thus to create whatever the form of government, a real despotism. ([1796a] 1997, pp. 970–71)

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NOTES   1. For more on Buchanan’s view that ‘It is not an exaggeration to say that we have now, in the United States, lost our constitutional way’, see Buchanan ([1997a] 2001, pp. 225–34). See also Buchanan ([1989a] 1999, p. 371).   2. For more on ‘the myth of government benevolence’, see Brennan and Buchanan ([1985a] 2000, pp. 38–52).   3. See also Brennan and Buchanan ([1985b] 2000, p. XVI) and Section 3.5.   4. Recall that, for James Madison, ‘the perfect equality of mankind … to be sure is an absolute truth’ ([1789b] 1999, p. 445), and that ‘that alone is a just government, which impartially secures to every man whatever is his own’ ([1792b] 1999, p. 515). For more on this, see Sections 1.5, 1.6, 1.7 and 7.5).   5. James Buchanan has written that ‘The most direct precursor’ of his work on the generality principle ‘is F.A. Hayek in his 1960 treatise, The Constitution of Liberty’. In Buchanan’s account, ‘Hayek’s main theme is the necessary place of the rule of law in any liberal order – with the rule of law defined in terms of the generality norm. Persons are to be equal before the law and are to be treated equally by the law. Everyone is to play by the same rules: there are no persons or groups who are to be either specially privileged or specially disadvantaged’ ([1997b] 1999, p. 420).   6. I emphasize, again, that the Smithian/Kantian understanding of ‘autonomy’, an understanding embraced by the Founders (S1.5) is not congruent with modern liberalism’s and the social welfare theorist’s transcendental, autonomous self-construal (SS3.5, 4.1, 4.2, 6.2, 6.3, 7.3 and 7.5). For his part, James Buchanan emphasizes that, for the constitutional political economist,

  7.   8.

  9. 10. 11.

12.

Individual autonomy … does not … imply that the individual chooses and acts as if he or she exists in isolation from and apart from the community or communities of other persons with whom he or she may be variously associated. Any form of community or association of individuals may reflect some sharing of values, and, further, any individual’s formation of values may be influenced by the values of those with whom he or she is variously associated in communities ([1990] 1999, p. 390)

See Section 3.5 for a discussion of the fundamental difference between modern and classical liberalism’s understanding of the self and, pari passu, of autonomy. For a discussion of ‘the precepts of justice associated with the rule of law’, its internal morality, see Fuller (1971) and Rawls (1971, pp. 236–40). While Buchanan intends the remark to refer, specifically, to his ‘present effort’ with Roger Congleton (1998), I believe that it captures, in broad outline, the nature of his contractarian enterprise; a project that is informed by a prior ethical commitment to the moral equivalence of persons, by a concomitant commitment to political equality, and by an insistence that ‘the [Kantian/Rawlsian contract device] will tend to exclude from consideration decision rules that explicitly deny some persons or groups ex ante access to political process’ (Buchanan, [1986a] 2001, p. 219). For a critique of the ‘omniscient, omnipotent, benevolent’ government see Dixit (1996). See also Sections 5.4 and 7.5. For discussions of applications of the generality principle, see Buchanan ([1993] 2001, pp. 148–54); Brennan and Buchanan ([1980] 2000, pp. 218–38); Buchanan and Congleton (1998) and Roth (2002, Chapter 9). There is a literature that suggests that the ‘propensity to cooperate’ may be based, in part, on the development and growth of informal institutions or social norms (Ostrom, 2000). It is clear that the Founders assumed that a similar relationship exists between the cultivation of civic virtue and constitutional and statutory law. It is on this logic that I suggest that a constitutional generality or impartiality constraint may engender respect for the moral law. Recall also that Madison regarded congressional grants of monopoly as unconstitutional (S1.6).



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13. See also Section 1.6. 14. In Justice Thomas’s account, interstate commerce does not contemplate activities like the medicinal use of marijuana:



As I explained … in United States v. Lopez … the Commerce Clause empowers Congress to regulate the buying and selling of goods and services trafficked across state lines … . The Clause’s text, structure, and history all indicate that, at the time of the founding, the term ‘“commerce” consisted of selling, buying, and bartering, as well as transporting for these purposes’ … . Throughout founding-era dictionaries, Madison’s notes from the Constitutional Convention, The Federalist Papers, and the ratification debates, the term ‘commerce’ is consistently used to mean trade or exchange – not all economic or gainful activity that has some attenuated connection to trade or exchange. (Dissent, p. 2)

Whatever else is said, Justice Thomas’s construction appears to be consistent with Madison’s 1833 observation that ‘It is but too common to read the expressions of a remote period thro’ the modern meaning of them, & to omit guards agst. misconstruction not anticipated’ ([1833] 1999, p. 865). See also Jefferson and Hamilton’s comments on judicial interpretation (S1.6).

15. For more on Madison’s, Jefferson’s and Hamilton’s views on the limits of the federal government’s authority, see Section 1.6. 16. For Madison’s understanding of the Tenth Amendment, see Section 1.6. 17. In fact, Justice Scalia, in his own account, is a ‘textualist’. Inter alia, this means that he is impatient with the notion that ‘the judge’s objective in interpreting a statute is to give effect to “the intent of the legislature”’ (1997, p. 16). Neither does he subscribe to the view that judicial interpretation should draw upon ‘legislative history’:

18. 19.

20. 21.

22. 23. 24. 25.

My view that the objective indication of the words, rather than the intent of the legislature, is what constitutes the law leads me, of course, to the conclusion that legislative history should not be used as an authoritative indication of a statute’s meaning. This was the traditional English, and the traditional American, practice. (pp. 29–30; emphasis mine)

Whatever else is said, Scalia’s ‘textualist’ approach is reconcilable with the Founders’ view of judicial interpretation (S1.6). For more on the Founders’ ‘originalism’, see Mary Ann Glendon’s ‘Comment’ in Scalia (1997, p. 107). This is not intended to suggest that stare decisis trumps all other considerations. Inter alia, the doctrinal basis of prior decisions may be eroded because of subsequent developments. We know, for example, that Brown v. Board of Education ‘sounded the death knell of Plessy v. Ferguson’ (Friedman, 1985, p. 672), and that West Coast Hotel Co. v. Parrish ‘marked the end of the Lochner era’ (Sandel, 1996, p. 42). See Justice O’Connor’s Dissent in Gonzalez, Attorney General, ET Al. v. Raich ET Al. (545 U.S. (2005), p. 2). It is interesting to note that, whereas Forte asserts that ‘No clause in the 1787 Constitution has been more disputed, and it has generated more cases than any other’ (2005, p. 101), Raoul Berger insists that ‘the [Fourteenth] Amendment is probably the largest source of the [Supreme] Court’s business’ (1997, p. 3). For more on Madison’s and the other Founders’ views on federalism and unconstitutional ‘encroachments’, see Section 1.6. See Section 1.7 for a discussion of federalism’s place in the constitutional political economist’s enterprise. For more on the Founders’ view of the importance of the separation of powers to liberty and to republican self-government generally, see Section 1.6. For more on the Constitution’s Nondelegation Clause, see Kurland and Lerner (1987b, pp. 24–40). See also Sandmo (1990, p. 58) and Section 7.5. Economists engaged in social welfare theoretic public policy appraisal are cognizant of the theory’s ‘rather rosy view of government’ (Rosen, 1999, pp. 112 and 123–4).

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26. Michael Uhlmann tells us that ‘Administrative agencies, the hallmark institutions of the modern regulatory state, vary by form and function in accordance with the tasks they are asked to perform’ (2005, p. 229). 27. For a discussion of the Fifth Amendment’s Takings Clause, see Kmiec (2005, pp. 341–5). 28. I have not, in this connection, addressed the Supreme Court’s Fourteenth Amendment jurisprudence. Whatever else is said, it is clear that this jurisprudence has, at various times, in various contexts, and in various ways, been informed by modern liberalism’s transcendental autonomous self-construal. Writing for the majority in Lochner v. New York (198 U.S. (1905)), Justice Peckham invoked ‘the general right of an individual to be free in his person’. While he rejected the Lochner precedent, Justice Douglas’s Opinion in Griswold ET AL. v. Connecticut (381 U.S. (1965)) suggested ‘that specific guarantees in the Bill of Rights have penumbras formed by emanations’ which, in turn, imply a ‘right of privacy’ under the First, Third, Fourth, Fifth and Ninth Amendments and [an ‘incorporated’] Fourteenth Amendment. For a discussion of the ‘incorporation’ controversy, see Berger (1997, pp. 155–89). And, finally, writing for the majority in Lawrence ET AL. v. Texas (539 U. S. (2003)), Justice Kennedy averred that ‘Freedom extends beyond spatial bounds. Liberty presumes an autonomy of self that includes freedom of thought, belief, expression, and certain intimate conduct. The instant case involves the liberty of the person both in its spatial and more transcendent dimensions’. At least in one account, ‘In its transformation of the Fourteenth Amendment, the [Supreme] Court has soared beyond the confines of the Bill of Rights to fashion a congeries of individual rights undreamed of by the Founders’ (Berger, 1997, p. 186). 29. For a discussion of ‘American law in the 20th Century’ which, inter alia, emphasizes ‘the rising level of demands upon government’ see Friedman (1985, pp. 655–95). In Friedman’s account, ‘federal law is infinitely more important than a century ago – in taxation, regulation of business, civil rights, protection of the environment. [The federal government] is now massive, dominant, overbearing’ (p. 660). 30. The federal Unified Budget, the sum of on- and off-budget receipts and outlays, has, since Fiscal Year 1940, been in deficit in all but twelve years (Council of Economic Advisers, 2006, p. 375). For its part, ‘Discretionary’ National Defense outlays have fallen from 49.2 percent of federal outlays in fiscal 1962 to 19.6 percent in fiscal 2006 (Office of Management and Budget, 2006, p. 135). Moreover, National Defense is projected to fall, by fiscal 2011, to 16.0 percent of federal outlays. Given that The Federalist No. 45 avers that ‘The powers delegated by the proposed constitution to the federal government, are few and defined’, and that the powers of the federal government ‘will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected’ (Carey and McClellan, 2001, p. 241), this cannot be what the Founders intended. For more on this, see Section 1.6.

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Index Aaron, H.J. 114 Adams, John 20–21 adaptive toolbox 116–17 administrative agencies 157, 158–9 agency 21, 65, 77, 96–7, 101, 143, 155 Alien and Sedition Acts 28, 32–3 Alito, Justice 157 altruism 1, 43, 135, 143 American inheritance 14 ancient Greek philosophers 64–5 Anti-Federalists 6, 8–9, 13–14, 17 approbation 97 Aristotle 64 Arrow, K.J. 42, 114, 143 Possibility Result 88, 122–3 Arrow–Debreu model 87 Articles of Confederation 1 ‘as if’ 39, 110, 116, 125, 138 assisted suicide case 150–55, 159, 161 Atwater, Jeremiah 17–18 autonomous self see transcendental autonomous self autonomy 64–73, 99 ‘auxiliary precautions’ 73, 105 commercial republic 59–62, 64 declining political economy 106, 128–30 Founders’ project 7, 8, 37, 39, 42–4, 46–7 in our time 135–63 bargaining 66–7 Barry, William 7 benevolent despot 45, 62, 91–2, 124, 126, 128, 143, 156 Bentham, Jeremy 69, 85, 99, 108 Berger, Raoul 15–16, 28, 30, 31, 152 Berman case 159, 160 bicameralism 7, 27, 130 bifurcated man 92, 136, 143

Bill of Rights 1, 6, 8, 13–18, 78, 98, 100–101, 140, 141 Black, Duncan 42, 143 ‘bootstrap ethics’ 48 bounded rationality 45, 55, 66, 116, 118, 119, 120, 121, 125 bounties 5, 39, 81, 86, 145, 161 Bravin, Jess 150, 157 Brennan, Geoffrey 47, 71, 81, 92, 130–31, 135–6, 144, 156 Buchanan, James 37, 41–9, 56, 71–3, 75–7, 88, 92, 94, 98, 102, 105, 113–15, 120, 123, 128–31, 135–9, 142–4, 150, 156, 162–3 budget process 128 Calculus of Consent, The (Buchanan and Tullock) 131 capital 117–19 Carey, George W. 3, 7–9, 10, 14, 25–32, 44–5, 59, 74, 129–30, 145 Carr, Peter 23 categorical imperative 21–3, 24, 26, 78, 96, 140 Churchill, Winston S. 101 citizenship 94, 137 civic virtue 1, 3–4, 5, 7, 9, 102, 107, 128–9 civil rights 17, 82, 84, 152 civil society 9, 10, 12, 26, 28, 77, 79, 97, 99, 100, 142 classical contracting 86 classical liberalism 72–3, 78, 103 classical rationality 113, 114, 115–18 Clean Water Act 157–8 Colander, David C. 108, 109 Collins, Nicholas 21 commercial republic 3–5, 53–63 Commerce Clause 25, 45, 130, 135–42, 146–9, 151–3, 157–8, 162 common defence 4 187

188

Morality, political economy and American constitutionalism

comparative institution approach 112 Compassionate Use Act 146, 147–9, 150 competence–difficulty gap 116, 119 competitive equilibrium 85–6, 88–90, 112, 121–2, 124, 130 Congleton, Roger 42–3, 45–6, 113, 139, 142 consequentialism 25–6, 39, 41, 44, 47, 55, 57–8, 60, 66, 85, 95, 108, 120–23, 127 Constitution 78 auxiliary precautions see main entry Convention 13, 14–15, 27 of Founders 27–36, 100–101, 105–7, 124, 130, 135–42, 144–5, 150, 152, 161–3 see also Commerce Clause constitutional anarchy 138–9, 143–4, 162 constitutional democracy 41, 70, 71, 131 constitutional political economy 41–9, 62, 113, 130–31, 137, 141–2, 162–3 constructivism 55, 60, 106, 116 contract device 38–9, 43–4, 48, 138 contractarianism 41, 43, 85, 90 Hobbesian 65–7, 71, 72 Kantian 37, 39, 69, 137–8, 140 contracting 86, 113 Controlled Substances Act 146–7, 149, 150–52, 155 corruption 5, 9, 61 cultural transmission 77 Cuno case 161 decision costs 118, 119 democracy constitutional 41, 70, 71, 131 majoritarian 72, 74, 78–9, 82, 84, 91, 92, 94, 141–2, 143, 144 representative 80, 103 democratic spirit 139 Demsetz, H. 112–13 despotism 42, 77, 163 elective 6, 7 see also benevolent despot disapprobation 97 discrimination 25, 27, 30, 43, 139, 143 see also factious behavior distributive justice 39,4 41, 47, 89 division of labor 59 Dupuit, Jules 108

duty 27, 28, 54 of government 56, 57–60 of justice see justice Dworkin, G. 79 Dworkin, Ronald 68–9, 72, 78–82, 84, 89, 94–5, 98–9, 103–4 ecological rationality 116 economic analogue 84–92 economic efficency 42, 81, 85–6, 89, 90, 91, 92, 113 see also Pareto optimality economic market 80, 81, 84, 162 economic system 1, 5, 6, 80–81 economics, scientific 123–31 economist’s theory of the state see utilitarian social welfare theory education 57–60 efficiency 37, 82 economic see economic efficiency frontier 81, 85, 86, 88, 89, 112, 113, 117, 119–23, 124, 156 political 42, 85, 92, 113 egoism 23 Ekelund, Robert B. 108 elective despotism 6, 7 electoral college 7, 27, 130 Employment Act (1946) 127 ‘endorsement constraint’ 79 English inheritance 1, 14–16, 17, 27, 30–31, 35, 60, 70, 78, 100, 144 ‘enlightened despot’ 158 Enlightenment 18–19 Epstein, Richard 152 equal liberty 140, 141 equal treatment 11, 56, 78, 79, 84, 89, 94–5, 96, 99, 106 moral equivalence and 37, 64, 80, 91 equality 78, 80–81, 95, 139 equity 85, 163 ethical commitment 131, 146 to moral equivalence 46, 60, 64, 67, 69, 71, 80, 91, 128–9, 137, 141, 163 ethical equilibrium 85–6, 88–9, 95, 112, 122, 130 ethical imperative 137–9 ethics 48 exchange rights 86, 87, 90, 121 exit option 45 explanation 111



Index

factious behavior 1, 3, 8, 18, 27, 36–7, 39, 46–7, 128, 137, 141, 161, 163 majoritarian exploitation 42, 113 self-interested 54, 56–7, 60, 73, 77, 85, 92, 106, 136 see also rent seeking fairness 95, 139, 141 justice as 37, 41, 43, 131, 137 Federal Farmer 17 federalism 1, 7, 27, 46, 92, 130, 141, 144–63 Federalists 6, 8–10, 13–14, 17, 31, 35–6, 59, 74 ‘felicific calculus’ 108 firearms case 151–4, 159, 161 first-person self see self Fleischacker, Samuel 53, 56, 60 forbidden inequalities 81, 104, 139 formal restraints 6–13 Forte, David A. 152, 153 Founders commercial republic and 53–63 Constitution see main entry moral law 21–7, 36–9, 46, 64 political economy 37–49, 56, 64, 84–7, 90–92, 105–8, 111, 126, 129–31, 163 public philosophy of modern America and 75–7, 79–82, 163 view of self see self see also republic self-government Franklin, Benjamin 1 free rider problem 48 freedom from restraint 11, 13 Friedman, Milton 109, 110–11 Full Employment Act (1978) 127 fundamental law 13, 16, 27, 28, 35, 47, 100–101, 144, 161 Furubotn, E.G. 87, 113, 114, 116, 118–19, 121, 122, 124 Gauthier, David 66, 67 general equilibrium model 87, 108, 124–5 general welfare 4, 5 generality principle 43, 45, 46, 49, 139, 142, 143, 144, 163 Glendon, Mary Ann 100 goals 66–7, 94, 114, 122, 126, 127, 130 golden rule 20–21, 24, 37, 39

189

good public 3, 40, 56, 63, 71, 85, 122, 129, 136 social 44, 105 theory of the 25–6, 38, 68, 80, 83, 85, 94–6, 143 Goodin, R.E. 68, 69, 85, 95 goods 121, 124 private 156 public 124, 156 Gordon, Robert J. 126 government, duty of 56, 57–60 Graaff, J. de V. 81, 86, 91 Greek philosophers 64–5 gun free zones 151–4, 159, 161 Hamilton, Alexander 1–2, 4–5, 7–8, 12–14, 25, 28–32, 34–6, 39, 46, 64–5, 82, 115, 145–6, 147–8, 160–61 Hampton, Jean 37, 39 happiness 26, 64, 65 ‘harmony of obedience’ 10, 11 Hart, H.L.A. 100 Hausman, D.M. 66, 69, 122 Hayek, Friedrich A. 55, 77, 102–3, 106, 116, 125, 139 Hebert, Robert F. 108 hedonic utilitarianism 69, 85, 87 Heiner, R.A. 115, 116 Henry, Patrick 17 heteronomy 24, 38 heuristics 23, 116, 159 Hobbes, Thomas 18, 19, 66 Hobbesian contractarianism 65–7, 71, 72 Homo economicus 85, 91, 113–17, 120, 129 human nature 53, 62, 65, 66, 130 humanity 19, 21 identity, sense of 115 impartial spectator 20, 21–2, 23, 24, 26, 38, 58, 96, 97 impartiality 37, 43, 46, 68, 96, 142 imperative 28, 56, 57, 60, 62, 69, 71, 75, 92, 106 justice as 11, 25–6, 28, 30, 35–6, 41, 66, 69–71, 85, 90, 104, 106, 131, 137–8, 144, 161, 163 principle 48–9, 139, 141, 143–4

190

Morality, political economy and American constitutionalism

impersonality 68, 83, 90, 92 informal restraints 6–13 information asymmetry 45, 55, 113, 120 inheritance 81, 104 institutional efficiency 113 institutional imperative 70, 78, 80 education 57–60 rule of law 60–63 instrumentalism 110 intergenerational discrimination 43 intergenerational equity 163 interpersonal utility comparisons (IUCs) 114, 122–3 ‘invisible hand’ 53, 55, 106 Jefferson, Thomas 2, 4–6, 10–11, 13, 16, 19–20, 23–5, 29, 31, 33–6, 39, 54, 65, 74, 81, 98, 104, 106, 145, 160–63 Jevons, Stanley 108 Johnson, Justice William 24 judicial review 30, 150, 161, 163 judiciary 29–36, 61, 100–101, 106–7, 162 jurisprudence 30, 44, 46, 144–62 justice 10–11, 24 distributive 39, 41, 47, 89 duty of 37–9, 46–8, 58, 67, 137, 142–3, 163 as fairness 37, 41, 43, 131, 137 as impartiality see impartiality as mutual advantage 66, 67, 90 procedural 89–90, 103, 104, 126 social 44, 89, 102–5 time-slice theory 41, 90 Kant, Immanuel 21–4, 26, 30, 37–8, 71–2, 96–8, 114, 129 Kantian autonomy 71–3, 99 Kelo case 159, 160, 161 Kennedy, John F. 39–40 Kennedy, Justice 150 Kent, James 10, 11 Koopmans, T. 110 Kurland, Philip B. 153, 154 Kymlicka, W. 37, 38–9, 66, 67, 79 Lancaster, K. 124, 125–6 Landreth, Harry 108, 109 large-number dilemma 58, 130

Lathrop, Joseph 10 law 107, 130, 163 fundamental see fundamental law moral see moral law morality and 2, 9–10, 17–18, 79, 143–4, 152 rule of 60–63, 140, 142 Law, Thomas 23 Lawson, Gary 153 Lectures on Jurisprudence (Smith) 62 Lee, Richard Henry 17 legislative grants (of monopoly) 34–5 Leontief, Wassily 110, 111 Lerner, Ralph 153, 154 Levy, Leonard 13, 15, 17 ‘liberal lawmaker’ 80–81, 104 liberalism classical 72–3, 78, 103 modern see modern liberalism utilitarianism and 87–91 liberty 2, 11–13, 17–19, 61, 76, 88, 101, 139, 142 equal 140, 141 natural 53–4, 56 liking system 117, 120 limited constitution 32 limited government 35 Lipsey, R. 124, 125–6 Locke, John 11, 19, 66, 99 logical positivism 107–11, 112, 115, 118, 121, 123, 125–6 Lopez case 151–4, 159, 161 lump-sum taxes 81–2, 86 Lyons, David 70, 87, 88–9, 122 MacDonald, Margaret 99, 100, 101 macroeconomic policy 126–8 Madison, James 1, 3, 6–8, 10–11, 13–17, 24–9, 31–6, 39, 43–4, 54, 59, 62, 65, 74, 76, 105–7, 129–30, 142, 145, 147–8, 154–5, 160–62 Magna Carta 100, 101 majoritarian cycling 36, 42–3, 48, 139, 141, 143 majoritarian democracy see democracy majoritarian exploitation 42, 113 majority rule 140, 141 manufacturing 4–5, 53, 54, 56–7, 145 marijuana case 45–6, 146–54, 159, 161 market failure 86, 156



Index

Marshall, Alfred 108–9 Marshall, Chief Justice 153–4 Mason, George 4 McClellan, James 3, 7, 8–10, 14, 25–32, 44–5, 59, 71, 129–30, 145 McClintock, Samuel 9 McDonald, Forrest vi McPherson, M.S. 66, 69, 122 Melitz, J. 110, 111 Menger, Carl 108 mercantilism 54 methodological individualism 48, 114 Mill, John Stuart 77 ‘minimax relative concession’ 66 modern liberalism 75, 106, 135–6, 139, 163 conception of self 96–9, 114 failed public philosophy 94–105 morality and 68–9, 78–83, 84 political morality of 78–83, 84, 89, 95 preferences and 68, 71, 77–82, 89, 91 rights problem 99–102 social justice and 102–5 utilitarian SWT and 69, 72, 84, 87–92, 94–5, 114, 117, 122, 144 monitoring costs 45 monopoly 34–5 Montesquieu, Charles de 5, 8–9, 19, 23, 99, 102, 139 Moore, Zephaniah Swift 58 moral anarchy 75–6, 77, 136 moral code 66, 67 moral community 75–6, 77, 98, 102, 105, 115, 136 moral equivalence 21, 24–7, 36, 39, 45–8, 60, 64, 67, 69–71, 80, 83, 91, 103, 107, 128, 137, 141, 144, 161, 163 moral law categorical imperative 21, 22–3, 24, 26, 78, 96, 140 of Founders 21–7, 36–9, 46, 64 respect for 21–7, 67, 73, 79, 92, 99, 104, 130, 136, 139 moral sense 2, 19–20, 23–4, 114–15, 136 moral space 1, 6 morality 1, 23, 98, 151 external 140, 143 law and 2, 9–10, 17–18, 79, 143–4, 152

191

modern liberalism and 68–9, 78–83, 84 political 78–83, 84, 89 Morgenstern, Oskar 112 Morrison case 151–4, 159, 161 Muller, Jerry Z. 20, 54, 55, 59, 60, 62–3, 107 mutual advantage 66, 67, 90 Nagel, E. 110 national character 8, 115 natural justice 103–4 natural liberty 53–4, 56 natural rights 15, 74, 78, 99–102, 135 Necessary and Proper Clause 152–3, 162 needs 26, 27, 47, 69, 163 New Deal 103 New Institutional Economics 87 New Political Economy 87 Nicholas, Wilson Cary 29 nirvana approach 112–13 Nondelegation Clause 156, 158 Notes on the State of Virginia (Jefferson) 5 Nozick, Robert 41, 90 O’Connor, Justice Sandra Day 45–6, 100–101, 147–9, 151, 159–61 omniscient being 91, 124, 125, 126, 143, 156 ontological objection 88, 99 opportunism 45, 55, 67, 113, 128 opportunity costs 116 Oregon case 150–55, 159, 161 ‘original position’ 38, 66–7, 138 originalism 29, 61, 149–50, 160 Pareto, Vilfredo 108 Pareto optimality 42, 81, 85–7, 89–91, 113, 121–2, 124, 156 partial equilibrium 108 participation, principle of 70, 140–42 path dependence 16, 72, 97, 100–101, 113–14, 117, 120, 121, 122 patriotism 3, 8 Pejovich, Svetozar 121 perfect adaptability 117, 118 Perkins, John 2 Pettit, P. 25, 68

192

Morality, political economy and American constitutionalism

physician-assisted suicide case 150–55, 159, 161 Pigou, A.C. 108–9 Plato 64, 65 political economy 80, 163 constitutional see constitutional political economy decline of 106–31 of Founders see Founders New 87 of Smith 56, 106, 107–8, 111 political efficiency 42, 85, 92, 113 political morality 78–83, 84, 89 political position constitutive 79–80, 84 derivative 79–80, 82, 84 political space 1, 6 politics as constitutional anarchy 138–9, 143, 144, 162 public philosophy (failed) 94–105 public philosophy (of modern America) 74–83 Possibility Result (Arrow) 88, 122–3 preaching 48 preference utilitarianism 68–9, 71, 85, 87–8, 95 preferences 80, 89, 115 external 6, 68–9, 72, 77–9, 81–2, 84, 91, 95–9, 122–3 non-external 79, 95 social 88, 123 structures 1, 8, 48, 67, 85–6, 113–14, 120 prisoner’s dilemma 67 private goods 156 private virtue 23, 25, 48, 76 procedural justice 89–90, 103, 104, 126 procedural rights 1, 36 production function 113, 117, 118, 119 production possibility frontier 119 property 24–5, 60 rights 78, 86, 87, 90, 113, 121, 157–61 public choice theory 48, 128, 129, 156 public good 3, 40, 56, 63, 71, 85, 122, 129, 136 public goods 124, 156 public interest 45 public opinion 16, 18, 58, 59, 125

public philosophy 135 failed 94–105 modern America 74–83 public rights 7 Public Use Clause 159, 160, 161 public virtue 9, 13, 23, 25, 27, 36, 47–8, 76 public welfare 5, 35, 145 radical simplifications 112 Raich case 45–6, 146–9, 150–52, 153, 154, 159, 161 Rakove, Jack N. 8, 14–15, 16, 17, 25 Ramsay, David 9 Randolph, Edmund 15 Rapanos case 156, 157, 158, 159, 161 rational choice 66, 67, 119, 138 rational expectations 150 rationality bounded see bounded rationality classical 113, 114, 115–18 ecological 116 Rawls, John 21, 26, 37–8, 41, 47, 68–71, 79, 83, 90, 104, 137, 140–42, 163 reality (decline of political economy) 112–19 Rehnquist, Justice 159 relational contracting 86, 113 religious inheritance 21 rent seeking 36, 42, 48, 85, 113, 128, 139, 141, 163 Report on the Subject of Manufactures (Hamilton) 4, 5, 145 representative democracy 80, 103 republican self-government 77 autonomy and 67, 69–72 commercial republic 3–5, 53–63 Founders’ 1–49, 92, 102, 130, 144 restraints (formal/informal) 6–13 Ricardo, David 108 Richter, Rudolf 87, 113, 114, 116, 121, 124 right 28 theory of the 25–6, 38, 68, 79, 83, 94–6 rights 88–9, 91, 96, 97, 122 civil 17, 82, 84, 152 exchange 86, 87, 90, 121 natural 15, 74, 78, 99–102, 135 problem 67, 99–102



Index

property 78, 86, 87, 90, 113, 121, 157–61 see also Bill of Rights Rima, Ingrid Hahne 109 Rives, William Cabell 28 Robbins, Lionel 109 Roberts, Chief Justice 157, 158 Robinson, Joan 113 Roth, T.P. 118, 121, 123, 128 Rousseau, Jean-Jacques 139 Rowe, Christopher 64, 65 rule-governed behavior 116 rule of law 60–63, 140, 142 rule utilitarianism 70, 88 rules 67, 135, 136–7, 138–9 of conduct 55, 77 of the game 41, 44, 69 Rush, Benjamin 6, 7, 8, 11 Rutledge, John 15 Saint-Paul, Gilles 87, 127 Sandel, Michael 1, 6, 14, 15, 39–40, 74–5, 94, 98, 101, 102 Scalia, Justice 149–50, 151, 155–6, 157–9 ‘scientific’ economics 123–31 Scruton, Roger 6, 14, 16, 24, 37, 84, 96–7, 98, 101–2, 103–5 second best theory 124, 125, 126 self first-person 78, 96, 97, 98, 104, 136 Founders’ view 18–27, 79, 95–9, 101–2, 106–7, 129, 130, 136, 144 modern liberalism’s conception of 96–9, 101, 104–5 Smith/Kantian view 24–7, 36, 77, 96, 103, 105, 129, 162–3 third-person 96, 97, 98 two-person 72, 96, 97, 100, 105, 106, 129 see also transcendental autonomous self self-government see republican self-government self-interest 1, 4, 7, 23, 43, 46, 49, 53–4, 63, 65–7, 115 bifurcated man 92, 136, 143 factional 56–7, 60, 73, 77, 106 rent seeking 48, 85 self-love 23

193

Sen, Amartya 87–8, 115, 123 Senior, Nassau 108, 109 separation of powers 1, 7, 8, 12, 27, 60–61, 92, 130, 141, 154–6, 158, 162–3 Simon, Herbert 115 Smith, Adam 30, 98, 114, 129 impartial spectator 20–22, 23–4, 26, 38, 58, 96, 97 influence of 53–7 invisible hand 53, 55, 106 political economy 56, 106, 107–8, 111 Theory of Moral Sentiments 19–20, 21–2, 53, 57, 58, 62 Wealth of Nations 4, 22, 53–4, 55–8, 59, 60–62 Smith, Melancton 8, 17, 98 Smith, Vernon 55, 116, 125 social contract 39, 66, 138 social good 44, 105 social justice 44, 89, 102–5 social knowledge 78 social norms 113 social order 44, 102, 135, 136–7 social preference 88, 123 social welfare theory 45, 135–6, 143, 156 consequentialist 41, 85, 95, 108, 121, 127 political economy and 106, 108–15, 117, 119, 121–31 role 84–92 social justice and 89, 104 utilitarian 40–41, 62, 67, 69, 72, 81–4, 87–92, 94–5, 104, 106, 108–9, 114, 114, 117, 122, 138, 144 Socrates 64, 65 sovereign, duty of 56, 57–60 sovereignty 28, 31–3, 35–6, 44–5, 145, 146, 148, 152 staggered elections 7, 27, 130 stare decisis doctrine 149–51, 160 state 56, 142–3 economist’s theory see utilitarian social welfare theory scientific economics and 123–31 Stevens, Justice 146–7, 159 Stiglitz, Joseph 40–41, 118 Stone, Timothy 11 Supremacy Clause 152–3, 162

194

Morality, political economy and American constitutionalism

Supreme Court 30–36, 74, 144–6, 149–62 surplus value 45 SWANCC case 158 Takings Clause 159 taxation 25, 81–2, 86, 145–6 Thaler, R.H. 114 Theory of Moral Sentiments, The (Smith) 19–20, 21–2, 53, 57, 58, 62 third-person self 96, 97, 98 Thomas, Justice 148–9, 151, 157, 159–61 time-slice theory 41, 90 transaction costs 67, 86, 113, 118, 122 transcendental autonomous self 18, 20–21, 64, 71–2, 74–5, 77–8, 96–9, 101, 103–4, 114, 129, 136, 163 Tribe, Laurence 106, 149 trust 47, 48 Tullock, Gordon 41, 43, 49, 131, 143 Tversky, A. 114 two-person self see self ‘tyranny of the majority’ 6, 7, 36, 79 Uhlmann, Michael 158, 159 uncertainty 43, 116, 139, 143 utilitarian social welfare theory see social welfare theory utilitarianism 26, 39, 74 autonomy and 68–71, 72 hedonic 69, 85, 87 liberalism and 87–91 modern liberalism and 82–4, 87–91, 94, 95, 99, 108, 135 preference 68–9, 71, 85, 87–8, 95 rule 70, 88 welfare 69–71, 85, 87 utility comparisons, interpersonal 114, 122–3 functions 48, 113, 114, 115, 117, 118, 120–21

maximization 26, 38, 66, 85, 136 value structures 1, 8, 48, 67, 85, 99, 113–14, 120 veil of ignorance 30, 38–9, 43, 49, 69, 96–7, 138, 139, 143 Vienna Circle 109 violence against women 151–4, 159, 161 Virginia Declaration of Rights 3–4, 14 Virginia Ratifying Convention 3, 76 virtue 8, 20, 57–8, 62, 96, 104 civic 1, 3–4, 5, 7, 9, 102, 107, 128–9 liberty and 2, 17–19, 76 political economy and 107, 128–31, 163 private 23, 25, 48, 76 promotion of 7, 10, 13, 18–19, 22, 27, 136, 152, 161 public see public virtue Waldron, Jeremy 95, 99 Walras, Leon 108 wants 26, 27, 47, 48, 69, 117, 120, 163 Washington, George 4, 5, 8, 12, 13, 27, 28, 42–3, 75, 98, 115, 143, 163 Wealth of Nations (Smith) 4, 22, 53–4, 55–8, 59, 60–62 Webster, Noah 6, 9, 12, 13, 82, 98 welfare economics 41, 90–92, 108–9, 117, 124–6 frontier 81, 85 fundamental theorems 40–41, 81, 85–7, 95, 104, 106, 111, 117, 123, 125, 131, 138, 156 public 5, 35, 145 utilitarianism 69, 70–71, 85, 87 see also public good; social welfare theory Will, George 7, 8, 16–17, 39, 65 Wong, Stanley 111, 112