Economic Theorist of ‘Public Choice’ School : James M. Buchanan Wins Nobel Prize

James M. Buchanan, who pioneered a theory supporting the view that the ability of government to solve social problems is drastically limited, won the 1986 Nobel Prize in Economics on Thursday.

Buchanan, 67, is a key figure in the development of the generally conservative “public choice” school of economic thought. In this camp are several key members of the Reagan Administration, including White House Budget Director James C. Miller III and Federal Reserve Vice Chairman Manuel Johnson, a former top Treasury Department official.

But Buchanan, who describes himself as “closer to being a libertarian,” has avoided involvement in government affairs and remained an unconventional academic economist at relatively obscure Virginia universities for nearly his entire career.

At a news conference, Buchanan expressed his disdain for the “Eastern academic elite.” He criticized its members for thinking of themselves as enlightened advisers to “a benevolent government for the rest of us. . . . I’m proud to be a member of the great unwashed.”

The economics award went to Buchanan for his seminal work in applying economic analysis to political institutions, an approach that first examined how lawmakers and bureaucrats often make decisions to advance their own self-interest rather than that of the public.

Buchanan, who advocates a constitutional amendment to require a balanced budget, has long been critical of government budget deficits. He argued that politicians rely on a “fiscal illusion” that encourages them to spend excessively on programs to enhance their reelection prospects without having to worry as much about raising the revenue to pay for them.

‘Fault of the Structure’

Lawmakers are “willing to spend more than they’re willing to tax,” Buchanan said. “Now, that is not the fault of any particular congressman, it’s the fault of the structure.”

Buchanan founded the Center for Study of Public Choice at Virginia Polytechnic University and moved it in 1983 to George Mason University, a fast-rising college in a suburb near Washington that has been fashioning itself into a new center of conservative economic thought. Earlier, Buchanan had taught at the University of Virginia.

The Royal Swedish Academy of Sciences, in awarding the economics prize to an American for the 13th time in the 17 years since the prize was created, cited Buchanan for developing “explanations for political behavior that resemble those used to analyze behavior on markets.”

Unlike most academic economists, Buchanan rarely relies on complex mathematical models to develop his ideas. Arjo Klammer, an economist at Wellesley College who has written a leading book on the profession, described Buchanan as an “intellectual giant” who follows a “much more European way of reasoning” and is “not as arrogant as many other economists.”

But Klammer also criticized Buchanan’s work as “a celebration of economic imperialism--the notion that economic reasoning can be applied to everything.”

Although Buchanan’s “Virginia school” of economics shares a deep skepticism about the motives behind most actions of public officials, several key government officials have been strongly influenced by proponents of the “public choice” school.

“He had a commanding presence,” said Budget Director Miller, who briefly studied under Buchanan when he was at the University of Virginia in the late 1960s. Miller said the Gramm-Rudman budget-balancing law “is exactly the kind of thing public choice would call for in changing the rules” to prevent endless deficit spending. He praised Buchanan for giving him a “way of looking at the world that helps me do my job better, or at least less bad.”

Buchanan, dressed casually in a blue blazer, Hush Puppies and white socks, displayed a relaxed attitude toward the prize, which carries a $290,000 award. “It won’t make much difference in my life,” he said, explaining that he and his wife, Ann, raise nearly all their food on a 400-acre farm in rural Virginia. “I don’t think I’ve eaten anything frozen or canned, except what I’ve done myself, in the last 12 years.”

Buchanan went to college at Middle Tennessee State Teachers’ College in his home town of Murfreesboro after the Great Depression ended his family’s hopes of sending him to the more prestigious Vanderbilt University. He earned “enough for fees and books by milking dairy cows morning and night for four years,” as he described it in a paper modestly titled “Better Than Plowing.”

Thomas Borcherding, an economics professor at Claremont Graduate School in Claremont, said he was asked two years ago by the Nobel committee to write an analysis of Buchanan’s contribution to the field.

“It’s hard to believe today, but there was a time when people were thought to be different in their political lives, more altruistic,” Borcherding said. “Buchanan questioned that deeply.”

The public recognition for Buchanan--whose key work on public-choice theory, “The Calculus of Consent,” was written with his longtime colleague, Gordon Tullock--should help add to the stature of George Mason University, which has grown dramatically in recent years and risen from obscurity by aggressive recruitment of such academic stars as Buchanan and Walter Williams, a leading black free-market economist.

“We all bask in his reflected glory today,” said George Johnson, president of the university.