Where Chicago Meets London: James Buchanan, Virginia Political Economy, and Cost Theory

28 Pages Posted: 17 Oct 2019 Last revised: 18 Oct 2019

See all articles by Peter J. Boettke

Peter J. Boettke

George Mason University - Department of Economics

Rosolino Candela

Mercatus Center at George Mason University

Date Written: October 7, 2019

Abstract

James Buchanan has argued that not only the study of public choice, but also property-rights economics as well as law and economics can be directly traced to the work of scholars associated with the Thomas Jefferson Center for Studies in Political Economy and Social Philosophy (TJC) at the University of Virginia (UVA). We draw attention to this point to raise the following question: what was the common knowledge at UVA that made it uniquely suited for the development of each these related, yet distinct subdisciplines of political economy? Fundamentally, this can be explained by the unique combination of Chicago price theory and LSE cost theory developed at UVA, where opportunity costs were regarded not as constraints to which individuals passively respond. Rather, they are the reciprocal of the act of choice itself. This subtle distinction has significant implications not only for public policy, but more importantly the scope and scale of government with respect to addressing market failures. This unique combination between the Chicago School and London School was central to the development of a neglected branch of price theory at the University of Virginia.

Keywords: James Buchanan; Ronald Coase; Cost Theory; Political Economy; Public Policy

JEL Classification: B31; D46; H11

Suggested Citation

Boettke, Peter J. and Candela, Rosolino, Where Chicago Meets London: James Buchanan, Virginia Political Economy, and Cost Theory (October 7, 2019). GMU Working Paper in Economics No. 19-34. Available at SSRN: https://ssrn.com/abstract=3465915 or http://dx.doi.org/10.2139/ssrn.3465915

Peter J. Boettke

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

Rosolino Candela (Contact Author)

Mercatus Center at George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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