My graduate school professor and one-time George Mason University colleague, the Nobel laureate economist James M. Buchanan, has passed away at the age of 93. In a 1990 article in the Review of Austrian Economics I argued that many (or most) of Jim Buchanan’s most important contributions to public finance and public sector economics are rooted in his Austrian School, subjectivist roots. Jim’s books, Cost and Choice, and What Should an Economist Do? should be considered classics in the modern Austrian School literature on subjective cost theory. The methodological foundations of Professor Buchanan’s approach to economics is laid out in these two books.
It was Professor Buchanan who, along with his faculty colleague (and former UVA student) Richard Wagner, among others, who controlled the graduate program at Virginia Polytechnic Institute and State University when I entered the program in 1976. They adopted Human Action and Friedman’s Price Theory as the two texts for the first semester of the Microeconomic Theory course. It drove the game theorists nuts but provided students like me with an extraordinary, once-in-a-lifetime learning opportunity. Professor Wagner was in charge of at least some of the visiting lectures that year, and one of his speakers was none other than Murray Rothbard.
Professor Buchanan never described himself as an Austrian, but he was familar with the literature and made very significant contributions to it. His longtime collaborator, Gordon Tullock, always said that it was Human Action that “made me an economist” (Professor Tullock never earned and economics degree; he holds a law degree from the University of Chicago).
The quotation of Professor Buchanan that I placed at the top of my 1990 RAE article reads: “I have often argued that the Austrians seem . . . to be more successful in conveying the central principle of economics to students than alternative schools . . . or approaches.” Indeed he did, and he was right.