Buchanan, coordination failures and the emergence of law

Alain Marciano (Université de Montpellier)
Stefano Dughera (University of Piedmont Orientale)


The purpose of this paper is to show that the criticism of spontaneous order that pervades the law and economics contributions Buchanan wrote in the 70s, and that fuels the defense of a social contract he drew in these years, is logically consequential to his views on coordination failures that one finds elsewhere in his writings, in particular, in those dealing with the theory of public goods. Secondly, the paper shows that this criticism, as well as the need for political-government institutions it implies, does not apply to all societal situations, but only, as already recalled, to those where individuals interact in large groups. Thirdly, the paper argues that the same large number dilemma that makes it rational for individuals to contribute inefficiently to public goods – or more generally, to behave economically instead of ethically, as discussed in Section 2 and by Buchanan (1965) – also undermines the possibility of using property rights to solve the problem. Let us insist: this line of reasoning is not explicit in Buchanan’s work. And yet, to us, seems largely consistent with the message conveyed by many of the writings he produced in the 60s on cooperation and coordination. Indeed, it is not unreasonable to postulate that property rights atrophy more easily when the frequency with which they are violated is so high that makes it irrational for right holders to enforce their entitlements. Hence, a side contribution of this paper is to show that albeit Buchanan was aware that “the pure theory of public goods remains in its infancy [when it comes to] distinguish or classify those goods and services that exhibit “publicness”, his theory on the atrophy of property rights may provide implicit indications as to when market-exchange institutions should be substituted with government political institutions.

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