Liberty Fund Books

Description

Public Finance in Democratic Process is James M. Buchanan’s monumental work that outlines the dynamics of individual choice as it is displayed in the process of public finance.

Buchanan is perhaps nowhere more clearly a disciple of the great Swedish economist Knut Wicksell than he is in the underlying principles of this seminal work. Specifically, he elaborates on these three central Wicksellian themes:
1.Analysis of market failure in the provision of public goods.
2.The insistence on conceiving policy decisions as the outcome of political processes.
3.The necessity of treating the tax and expense sides of the budget as interconnected.

Echoing Wicksell’s antipathy to the “benevolent despot” model of government, Buchanan lays out in this book a starting point for modern public-choice analysis. Recognizing the pathbreaking work he is about to begin, Buchanan opens his preface by stating, “Fiscal theory is normally discussed in a frame of reference wholly different from that adopted in this book. This dramatic shift of emphasis . . . . requires that I consider the processes through which individual choices are transmitted, combined, and transformed into collective outcomes. Careful research in this area is in its infancy, and the necessary reliance on crude, unsophisticated models underscores the exploratory nature of the work.”

According to Geoffrey Brennan in the foreword, “Public Finance in Democratic Process is a work more hospitable to public finance orthodoxy and could be treated as an extension (albeit an important one) of the conventional approach.”

James M. Buchanan is an eminent economist who won the Alfred Nobel Memorial Prize in Economic Sciences in 1986 and is considered one of the greatest scholars of liberty in the twentieth century.

The entire series includes:

Volume 1: The Logical Foundations of Constitutional Liberty
Volume 2: Public Principles of Public Debt
Volume 3: The Calculus of Consent
Volume 4: Public Finance in Democratic Process
Volume 5: The Demand and Supply of Public Goods
Volume 6: Cost and Choice
Volume 7: The Limits of Liberty
Volume 8: Democracy in Deficit
Volume 9: The Power to Tax
Volume 10: The Reason of Rules
Volume 11: Politics by Principle, Not Interest
Volume 12: Economic Inquiry and Its Logic
Volume 13: Politics as Public Choice
Volume 14: Debt and Taxes
Volume 15: Externalities and Public Expenditure Theory
Volume 16: Choice, Contract, and Constitutions
Volume 17: Moral Science and Moral Order
Volume 18: Federalism, Liberty, and the Law
Volume 19: Ideas, Persons, and Events
Volume 20: Indexes

Table of Contents

Foreword ix

Preface xiii

I. The Effects of Institutions on Fiscal Choice
1. Introduction 3
2. Individual Demand for Public Goods 11
3. Tax Institutions and Individual Fiscal Choice: Direct Taxation 22
4. Tax Institutions and Individual Fiscal Choice: Indirect Taxation 44
5. Existing Institutions and Change: The Effects of Time in Fiscal Decisions 57
6. Earmarking Versus General-Fund Financing: Analysis and Effects 71
7. The Bridge Between Tax and Expenditure in the Fiscal Decision Process 87
8. ”Fiscal Policy'' and Fiscal Choice: The Effects of Unbalanced Budgets 97
9. Individual Choice and the Indivisibility of Public Goods 112
10. The Fiscal Illusion 125
11. Simple Collective Decision Models 143
12. From Theory to the Real World 169
13. Some Preliminary Research Results 181

II. The Choice Among Fiscal Institutions
14. The Levels of Fiscal Choice 215
15. Income-Tax Progression 227
16. Specific Excise Taxation 243
17. The Institution of Public Debt 258
18. Fiscal Policy Constitutionally Considered 269
19. Fiscal Nihilism and Beyond 282

Index of Authors 303
Index of Subjects 305