The Rules of Reason: COVID-19, Buchanan, and Hayek

Abstract

This paper presents a reassessment of the policy measures taken to combat the effects of COVID-19. It addresses the following question: does the threat of pandemic justify the sacrifice of legal and political principles for the sake of expediency? We do so by filtering the unintended consequences of price controls through the lens of constitutional political economy as understood by James Buchanan and F.A. Hayek. We argue that constitutional rules provide rules for reason. The reason for constitutional rules is not only provide constraints on arbitrary discretion, but also to provide the epistemic preconditions that harness and guide the creative powers of individuals required for recovery from pandemic. We illustrate this point by reframing price controls as a violation of the U.S. Constitution, particularly the First Amendment. Thus, if prices are understood to be a form of communication across individuals, then upholding constitutional principles should not be abandoned but reinforced during times of crises.

Keywords: COVID-19; F.A. Hayek; James M. Buchanan; Constitutional Political Economy

JEL Classification: B31; B53; H11; H12