It was with great sadness that I heard, on the morning of the 9th of January, that James McGill Buchanan, winner of the Nobel Prize in Economics, had passed away at the age of 93. I owe Buchanan a great debt of gratitude. Though he was not a full-fledged member of the Austrian school of economics, from the time of my first international lectures (always from the Austrian perspective) nearly thirty years ago, until now, Buchanan never ceased to respect my talks (often imbued with the excessive passion characteristic of young academics and to which I am so prone) and what is more, to support them in public with all the prestige of his great wisdom and personality. For example, it particularly surprised and moved me when, at the 1994 general meeting of the Mont Pelerin Society in Rio de Janeiro, Buchanan patiently waited his turn in line for the floor with the sole purpose of objecting because the chair, the Argentine Benegas Lynch, had taken the floor from me when, as Buchanan pointed out:
Professor Huerta de Soto was presenting perhaps one of the most important arguments of the entire conference, the institutional link between the credit expansion made possible by fractional-reserve banking against general legal principles (which require a 100-percent reserve on demand deposits) and economic crises and recessions.
Nor can I forget his kind words of correction on occasion, such as when I launched a comprehensive, supported attack on Maurice Allais and his 1947 article in which he conveys a belief in the possibility of socialist economic calculation. Buchanan clarified that during those years, Allais shared the general opinion of those in our profession and that he had not yet been able to completely digest Mises’s and Hayek’s contributions on the matter.
In any case, Buchanan’s sympathy with the Austrians was well-known, and his popular collection of essays, LSE Essays on Costs, echoes the essentially Austrian argument that the mistaken neoclassical belief in the possibility of socialist economic calculation had its origin in neoclassical economists’ inability to grasp the true, subjective, entrepreneurial, and creative nature of costs.
At any rate, I have always felt that, despite his sympathy with the Austrians, Buchanan was too heavily influenced by the neoclassical, maximizing spirit of the Chicago school, both in his very remarkable contributions which demonstrate the flaws in the “public choice” of voters, interest groups, bureaucrats, and politicians, and especially in the development of his theory of constitutional contractualism (which I view as one of his most debatable contributions, apart from the principle of unanimity, which he adopted from Wicksell, and which has always seemed quite healthy to me).
It is interesting to note that from a young age, Buchanan valued the Mediterranean academic mentality, particularly the realist, sociological approach of the Italian theory of public finance. Perhaps for that reason, I think he always liked me and was amused by a young Spanish economist who, in every forum, continually and determinedly stressed the Hispanic origin of the school of Mises and Hayek, and the importance of the scholastics of the Spanish Golden Age. At least that is what he told me on various occasions – at Madrid’s Jockey restaurant, now no longer in existence – over his favorite Spanish dish, baby eels, amply washed down with Rioja, a meal he never failed to taste on his numerous visits to Spain.
Fortunately, barely four months ago, I had the opportunity to pay my last public tribute to Buchanan, at the opening session of the general meeting of the Mont Pelerin Society, which took place September 3, 2012 in Prague. There, before the President of the Czech Republic, Vaclav Klaus, and over 500 people who attended the meeting, I expressly mentioned the intellectual victory Buchanan had finally won when various European countries, led by Spain, had at last been obliged to modify their constitutions, compelled by the discipline of the euro, to include the anti-Keynesian principle of budget stability and equilibrium …
May this great libertarian economist rest in peace.
A great man. Particularly in his fight against the myth that the national debt does not matter – i.e. the fallacy that we “owe it to ourselves”.