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Copyright © 2016. Romanian Institute of Orthodox Theology and Spirituality. All rights reserved.
An Austro-Libertarian Critique of Public Choice, Romanian Institute of Orthodox Theology and Spirituality, 2016. ProQuest
AN AUSTRO-LIBERTARIAN
CRITIQUE OF PUBLIC CHOICE
We do not say that the Public Choice School has not made any positive
contribution to political economy. It has. The originators of it, James Buchanan and
Gordon Tullock, along with their many followers and collaborators, have done
important work on rational voter theory, setting up a meeting agenda, game theory,
etc. Nor can we object to the application of economic theory to political issues. Far
from it. However, the present book seeks to uncover its many failures. For
example, the fact that underneath the veneer of its supposed adherence to value-
free positive analysis lies a value-laden support for statism. To wit, its emphasis
and reliance on “theoretical unanimity” not the actual unanimity incorporated in
every commercial act under free enterprise. We also take issue with its nomen-
clature “rent seeking” albeit not the concept itself. Why pick on innocuous “rent” to
describe crony capitalism?
Thomas J. DiLorenzo,
Professor of Economics
Loyola University Maryland
Walter E. Block,
Loyola University New Orleans
EDITORIAL ADVISORY BOARD
Steven E. Abraham State University of New York, Oswego

Anis Bajrektarevic IMC University of Applied Sciences-Krems
Giorgio Baruchello University of Akureyri
Tina Besley University of Waikato
Walter E. Block Loyola University New Orleans
Gerard Casey University College Dublin
Mark Fox Indiana University South Bend
Murray Hunter University Malaysia Perlis
Richard Kearney Boston College
Tibor Machan Chapman University
Nicholas M. Odhiambo University of South Africa
Efstratia Oktapoda Université Paris-Sorbonne, Paris IV
Michael A. Peters University of Illinois at Urbana-Champaign/
University of Waikato
Jaya Prakash Pradhan Central University of Karnataka
Peter Roberts University of Canterbury
Klas Roth Stockholm University
Horst Ruthrof Murdoch University
Susanne Maria Weber Philipps Universität Marburg
AN AUSTRO-LIBERTARIAN
CRITIQUE OF PUBLIC CHOICE
Thomas J. DiLorenzo,
Loyola University Maryland
Walter E. Block,
Loyola University New Orleans
ADDLETON ACADEMIC PUBLISHERS • NEW YORK
Addleton Academic Publishers
www.addletonacademicpublishers.com,
[email protected]
30-18 50th Street, Woodside, New York, 11377
ISBN 978-1-935494-97-3
eISBN 978-1-935494-98-0
Library of Congress Control Number: 2016953702
This book has undergone rigorous peer review, based on initial editor screening
and anonymized refereeing by two international scholars.
© Addleton Academic Publishers 2016
Addleton Academic Publishers is an imprint of RIOTS, New York.

Economy and Society

Series Editor: Heather Ridley, Institute of Interdisciplinary Studies
in Humanities and Social Sciences, New York
Addleton Academic Publishers has no responsibility for the persistence or accuracy of urls
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Publishers, at the address above. You must not circulate this book in any other binding or
cover and you must impose this same condition on any acquirer.
Produced in the United States of America
CONTENTS
Acknowledgements
Introduction [1]
Part 1: What Is Austrian Economics? [3]

Chapter 1
The Subjectivist Roots of James Buchanan’s Economics [4]
Chapter 2
Cultural Dynamics [18]
Part 2: The Austrian Critique of Public Choice [44]

Chapter 3
Competition and Political Entrepreneurship: Austrian Insights
into Public-Choice Theory [45]
Chapter 4
Is Voluntary Government Possible? A Critique of Constitutional Economics [57]
Chapter 5
George Stigler and the Myth of Efficient Government [73]
Part 3: The Austrian Response to The Calculus of Consent [88]

Chapter 6
The Calculus of Consent Revisited [89]
Chapter 7
Buchanan and Tullock’s “The Calculus of Consent” [102]
Chapter 8
Constitutional Economics and the Calculus of Consent [106]
Part 4: Austrians and Public Choicers on Antitrust [122]

Chapter 9
The Truth about Sherman [123]
Chapter 10
The Myth of Natural Monopoly [132]
Chapter 11
Monopolistic Competition and Macroeconomic Theory by Robert Solow [146]
Chapter 12
The Origins of Antitrust: An Interest-Group Perspective [152]
Chapter 13
Total Repeal of Antitrust Legislation: A Critique of Bork, Brozen, and Posner [160]
Part 5: Rent Seeking [188]

Chapter 14
Property Rights, Information Costs, and the Economics of Rent Seeking [189]
Chapter 15
All Government is Excessive: A Rejoinder to
Dwight Lee’s “In Defense of Excessive Government” [204]
Chapter 16
Watch Your Language [241]
Part 6: Taxation [245]

Chapter 17
Utility Profits, Fiscal Illusion, and Local Public Expenditures [246]
Chapter 18
The Expenditure Effects of Restricting Competition in Local Public Service Industries:
The Case of Special Districts [256]
Chapter 19
The Justification for Taxation in the Public Finance Literature:
An Unorthodox View [265]
Part 7: Other Topics in Public Choice [282]

Chapter 20
A Constitutionalist Approach to Social Security Reform [283]
Chapter 21
The Futility of Bureaucracy [298]
Chapter 22
Government and Market: A Critique of Professor James Buchanan’s
“What Should Economists” Do? [301]
Chapter 23
Economic Competition and Political Competition: An Empirical Note [314]
Chapter 24
An Empirical Assessment of the Factor-Supplier Pressure Group Hypothesis [321]
Thomas J. DiLorenzo is Professor of Economics, Sellinger School of Business, Loyola
University Maryland. He earned a BA degree at Westminster College and a PhD at Virginia
Polytechnic Institute and State University. He is the author of numerous refereed journal
articles and his works are widely discussed on radio and television. His other books include:
The Problem with Socialism (2016); Hamilton’s Curse: How Jefferson’s Arch Enemy
Betrayed the American Revolution (2008); Lincoln Unmasked: What You’re Not Supposed to
Know About Dishonest Abe (2006); How Capitalism Saved America: The Untold History of
Our Country from the Pilgrims to the Present (2004); The Real Lincoln: A New Look a
Abraham Lincoln, His Agenda, and an Unnecessary War (2003); From Pathology to Politics:
Public Health in America (2000); The Food and Drink Police: America’s Nannies,
Busybodies, and Petty Tyrants (1998); CancerScam: The Diversion of Federal Cancer
Funds for Politics (1997).
Walter E. Block is Harold E. Wirth Endowed Chair and Professor of Economics, College of
Business, Loyola University New Orleans, and senior fellow at the Mises Institute. He earned
his PhD in economics at Columbia University in 1972. He has taught at Rutgers, SUNY
Stony Brook, Baruch CUNY, Holy Cross and the University of Central Arkansas. He is the
author of almost 500 refereed articles in professional journals, two dozen books, and
thousands of op eds. He lectures widely on college campuses, delivers seminars around the
world and appears regularly on television and radio shows. He is the Schlarbaum Laureate,
Mises Institute, 2011; and has won the Loyola University Research Award (2005, 2008) and
the Mises Institute’s Rothbard Medal of Freedom, 2005; and the Dux Academicus award,
Loyola University, 2007.
Acknowledgements
The authors of this book thank the journals in which these chapters were first published for
permission to reprint.
Part 1: What is Austrian Economics?

Chapter 1: DiLorenzo, Thomas J. (1990), “The Subjectivist Roots of James Buchanan’s
Economics,” Review of Austrian Economics 4 (Spring): 180–195.
Chapter 2: Block, Walter (1997), “Compromising the Uncompromisable: The Austrian Golden
Mean,” Cultural Dynamics 9(2): 211–238.
Part 2: The Austrian Critique of Public Choice

Chapter 3: DiLorenzo, Thomas J. (1987), “Competition and Political Entrepreneurship:
Austrian Insights into Public Choice Theory,” Review of Austrian Economics 2(Fall): 59–71.
Chapter 4: Block, Walter, and Tom DiLorenzo (2000), “Is Voluntary Government Possible? A
Critique of Constitutional Economics,” Journal of Institutional and Theoretical Economics
156(4): 567–582.
Chapter 5: DiLorenzo, Thomas J. (2002), “George Stigler and the Myth of Efficient
Government,” Journal of Libertarian Studies 16(4): 55–73.
Part 3: The Austrian Response to The Calculus of Consent

Chapter 6: Block, Walter and Thomas J. DiLorenzo (2001), “The Calculus of Consent
Revisited,” Public Finance and Management 1(3): 305–321.
Chapter 7: Rothbard, Murray (1997), “Buchanan and Tullock’s ‘The Calculus of Consent,’”
The Logic of Action II. Glos: Edward Elgar, 269–274.
Chapter 8: DiLorenzo, Tom, and Walter Block (2001), “Constitutional Economics and the
Calculus of Consent,” The Journal of Libertarian Studies 15(3): 37–56.
Part 4: Austrians and Public Choicers on Antitrust

Chapter 9: DiLorenzo, Thomas (1991), “The Truth About Sherman,” Austrian Economics
Newsletter. Auburn, AL: The Mises Institute, 1–6.
Chapter 10: DiLorenzo, Thomas J. (1996), “The Myth of Natural Monopoly,” Review of
Austrian Economics 9(2): 43–58.
Chapter 11: DiLorenzo, Thomas J. (1999), “Monopolistic Competition and Macroeconomic
Theory by Robert Solow,” Quarterly Journal of Austrian Economics 2(4): 83–88.
Chapter 12: DiLorenzo, Thomas J. (1985), “The Origins of Antitrust: An Interest-Group
Perspective,” International Review of Law and Economics 5(1): 73–90.
Chapter 13: Block, Walter (1994), "Total Repeal of Anti-trust Legislation: A Critique of Bork,
Brozen and Posner,” Review of Austrian Economics 8(1): 35–70.
Part 5: Rent seeking

Chapter 14: DiLorenzo, Thomas J. (1988), “Property Rights Information Costs, and the
Economics of Rent Seeking,” Journal of Institutional and Theoretical Economics 144(2):
318–332.
viii
Chapter 15: Block, Walter (2002), “All Government is Excessive: A Rejoinder to ‘In Defense
of Excessive Government’ by Dwight Lee,” Journal of Libertarian Studies 16(3): 35–82.
Chapter 16: Block, Walter (2000), “Watch Your Language,” Mises Daily, February 21.
Part 6: Taxation
Chapter 17: DiLorenzo, Thomas J. (1982), “Utility Profits, Fiscal Illusion, and Local Public
Expenditures,” Public Choice 38(3): 243–252.
Chapter 18: DiLorenzo, Thomas J. (1981), “The Expenditure Effects of Restricting
Competition in Local Public Service Industries: The Case of Special Districts,” Public Choice
37(3): 569– 578.
Chapter 19: Block, Walter (1989), “The Justification of Taxation in the Public Finance
Literature: An Unorthodox View,” Journal of Public Finance and Public Choice 3(Fall): 141–
158.
Part 7: Other Topics in Public Choice

Chapter 20: DiLorenzo, Thomas J. (1993), “A Constitutionalist Approach to Social Security
Reform,” Cato Journal 3(2): 443–459.
Chapter 21: DiLorenzo, Thomas J. (2002), “The Futility of Bureaucracy,” The Free Market
20(7).
Chapter 22: Block, Walter (2005), “Government and Market: A Critique of Professor James
Buchanan’s What Should Economists Do?” Corporate Ownership & Control 3(1): 81–87.
Chapter 23: DiLorenzo, Thomas J. (1983), “Economic Competition and Political Competition:
An Empirical Note,” Public Choice 40(2): 203–209.
Chapter 24: DiLorenzo, Thomas J. (1981), “An Empirical Assessment of the Factor Supplier-
Pressure Group Hypothesis,” Public Choice 37(3): 559–568.
The coauthors of this book thank William Maye for his tireless administrative and editorial
efforts in getting this book off the ground, and into the hands of the publisher.
ix
Introduction
The first reaction to the title of our book is likely to be “What? An Austro-libertarian critique of
Public Choice? Surely, there is a typographical error here!”
Many scholars would argue that Austrian economics, the libertarian political philosophy,
and public choice are all, well, if not identical, then at least in the same political economic
philosophical camp.
To be sure, there is evidence that might support such an interpretation: The Edward
Elgar publishing company issues a compendium of their new books. The title of this flyer?
“Public Choice and Austrian Economics.” It cannot be denied that at least they see an
intimate connection between the two. One of James Buchanan’s many books Cost and
Choice is not only entirely compatible with Austrian economics, but makes important
contributions to this school of thought. Needless to say, this author, along with Gordon
Tullock, is widely acknowledged to be the creator of the entire Public Choice movement.
George Mason University features both the Public Choice and the Austrian schools of
thought. There are numerous scholars in the economics department who are practitioners of
one or the other of these and more than just a few who consider themselves members of
both.
Nevertheless, it is the contention of the present book that while to be sure there are
some commonalities between libertarianism, Austrianism and Public Choice, there are also
deep dark and wide chasms between all three. We come, in the vernacular, mainly not to
praise the latter of this trio, but to underscore many of its flaws.
However, we must also acknowledge that the members of the Public Choice School
have also done excellent work in public policy analysis. They have analyzed and popularized
the view that men do not sprout angel’s wings when they enter government; they are just as
profit maximizing, they look after #1 just as much in the civil service as they do anywhere
else.
Further, before Public Choice came on the scene, a popular syllogism both within and
without the dismal science was as follows:
1. Markets are imperfect

2. We want perfection
3. Therefore, we must have government involvement in the economy to correct market
failures.
Thanks to the school of thought started by James Buchanan and Gordon Tullock, this
syllogism was turned around on its ear. Because of their skillful popularization, we now have,
instead, this greatly improved version of that old saw:
1. Government is imperfect
2. We want perfection.
3. Therefore, we should privatize government services as much as possible; replace
bureaucrats with entrepreneurs.
Libertarians can do naught but applaud such a turn-around. Public Choicers have done more
than most to de-mystify and de-romanticize the workings of the state apparatus. They have,
another welcome initiative, been foremost in applying the basic tools of economic analysis
not only to the market, but to government as well, something sorely needed and rarely
accomplished (apart from Austrians of course) before their advent.
The obvious difference between the libertarian political philosophy and Austrian
economics is that the former is a normative pursuit, while the latter a positive one. Never the
twain shall meet, although it must be conceded, they are often confused. How does Public
Choice register on the normative-positive scale? It hits both sides. Certainly, its work on
such matters as the median voter, the order in which decisions are made, rules, the
democratic process, etc., are positive. Its support for governments, the main focus of our
criticism, however, is normative.
The essays which follow, the entire remainder of the book, while do acknowledge the
contributions of Public Choice to liberty, to our understanding of economics and politics, are
also highly critical. But, these thoughts do not emanate from critics of the market. Very much
to the contrary, the present authors are strong adherents of the system of natural liberty. Our
main complaint is not that Public Choice, too, do not veer in this direction, but that it does not
go far enough along that path.
Do not expect much of a critique of the Public Choice School in Part 1. Here, we are but
laying the groundwork, mentioning Buchanan’s adherence to Austrian economics on
subjectivism mostly (but not always) in a very positive manner, and introducing Austro-
libertarianism. It is in Part 2 that we begin to fully explore how our Austro-libertarian
perspective diverges from that of Buchanan and Tullock and their followers. Part 3 is given
over to our negative reaction to what we regard as the single most important book
emanating from this school of thought, The Calculus of Consent. We then demonstrate how
and why we part company from our friends in Public Choice on a range of issues: part 4 on
monopoly theory and anti-trust law; part 5 with regard to so-called rent seeking and part 6
which is devoted to taxation. We conclude with part 7, wherein we pursue this school of
thought on several miscellaneous fronts.
All of the chapters in this book have been written by either of the two co-authors of the
present volume, Tom DiLorenzo or Walter E. Block, and several of them by the two of us,
together, as co-authors. The one exception is chapter 7 of part 3, written by our friend, guide
and mentor, Murray N. Rothbard. Without expressing any undue modesty, we regard this
single chapter as the highlight of the entire book.
Part 1:
What Is Austrian Economics?
Chapter 1
The Subjectivist Roots of
James Buchanan’s Economics
“I have often argued that the Austrians seem ... to be more successful
in conveying the central principle of economics to students
than alternative schools ... or approaches.”
--James M. Buchanan, 197
1. Introduction
When James Buchanan was awarded the 1986 Nobel Prize in economics the
Nobel committee cited The Calculus of Consent,1 coauthored in 1962 with Gordon
Tullock, as Buchanan’s most important work. But Buchanan himself has stated that
he considers his 1969 book, Cost and Choice: An Inquiry in Economic Theory,2 to
be his most important theoretical contribution.
Even though Cost and Choice was published seven years after The Calculus of
Consent, it embodies important elements of Buchanan’s thinking that are crucial to
his contributions to The Calculus of Consent and to much of his other work. Of
particular interest to Austrian economists is the fact that subjective cost theory lies
at the heart of many of Buchanan’s contributions to economic theory. Moreover,
other Austrian-school insights, such as methodological individualism and an

emphasis on market (and non-market) processes, as opposed to equilibrium
conditions or end states, also figure prominently in Buchanan’s work.
Buchanan’s Nobel Prize is widely regarded as a salute to public choice
economics. But the award also reflects well on the Austrian school, to the extent
that it has influenced Buchanan’s thinking.
2. Buchanan’s Principles of Cost and Choice
Buchanan has clearly stated that subjective cost theory is at the heart of much of
his work in public choice and public policy. This methodological distinction is what
separates much of his work from other economists who have written on public
policy issues. The notion of opportunity cost is usually defined acceptably by most
economists, according to Buchanan, but the problem is that “the logic of the
concept is not normally allowed to enter into and inform the subsequent analytical
applications.”3 Such applications are essential, for a consistent application of the
notion of opportunity cost, writes Buchanan,
clarifies important areas of disagreement on policy issues. In public
finance alone, debates over tax incidence, tax capitalization, public
debt burden, and the role of cost-benefit analysis can be partially
resolved when protagonists accept common concepts of cost. The
unsatisfactory state of welfare economics can at least be understood
and appreciated more adequately when the incorporated cost confusions
are exposed. The ... debate over the possibility of socialist calculation
emerges with perhaps a different glow. Something can be said about
such ... topics as the draft and crime.4
Buchanan’s cost theory “is properly labeled Austrian,”5 and also owes a debt to
developments of the “London School Tradition” during the period of the 1930s to
the 1950s.6
One of the essential points of Cost and Choice is that, to many economists,
cost is divorced from the act of choice. To neoclassical economists cost is objective
in that it can be estimated ex post by external observers, even though market
values are set by the subjective evaluations of market participants. Furthermore, in
“the predictive science of economics” cost is, according to Buchanan,
the objectively-identifiable magnitude that is minimized. It is the market
value of the alternate product that might be produced by rational
reallocation of resource inputs to uses other than that observed. This
market value is reflected in the market prices for resource units;
hence, cost is measured directly by prospective money outlays.7
One consequence of objective cost theory is that the theory “is not a theory of
choice at all. Individuals do not choose; they behave predictably in response to
objectively-measurable changes in the environment.”8 For according to the objective

cost theory:
Cost ... is faced in the strict sense only by the automaton, the pure
economic man, who inhabits the scientist’s model. It is the behavior
inhibiting element that is plugged into the purely mechanistic market
model. The conversion of objective data reflecting prospective money
outlays into the subjective evaluations made by real-world decision-
makers is of no concern to the predictive theorist.9
Buchanan acknowledges an intellectual debt to Philip Wicksteed, who was the first
to tie opportunity cost directly to choice. Wicksteed wrote, for instance, that the cost
of production, “in the sense of the historical and irrevocable fact that resources
have been directed to this or that special purpose, has no influence on the value of
the things produced.”10 In this respect cost of production does not affect supply;
What does affect supply is anticipated cost “in the sense of alternatives still open
which must now be relinquished in order to produce this specific article,” and which
“influences the craftsman in determining whether he shall produce it or not.”11
Wicksteed’s work was refined by Hayek, Mises, and other Austrians, and by
some members of the London School. Buchanan summarizes the resultant “choice-
bound conception of cost” as follows:
(1) Cost must be borne exclusively by the decision-maker; it is not
possible for cost to be shifted to or imposed on others.
(2) Cost is subjective; it exists in the mind of the decision-maker and
nowhere else.
(3) Cost is based on anticipations; it is necessarily a forward-looking or ex
ante concept.
(4) Cost can never be realized because of the fact of choice itself; that
which is given up cannot be enjoyed.
(5) Cost cannot be measured by someone other than the decision maker
because there is no way that subjective experience can be directly
observed.
(6) Cost can be dated at the moment of decision or choice.12
Buchanan makes an important distinction between choice-influencing and choice-
influenced cost. The former is the type of cost discussed by Wicksteed, whereas
the latter is the type of (subjective) cost that is the consequence of economic
choices. Such costs may be borne by the decision maker, or by others on whom
costs may sometimes be shifted. This distinction is critical to much of Buchanan's
work in public finance and public choice.
3. The Importance of Subjective Cost Theory

to Public Finance and Public Choice
Buchanan gained an international reputation as a public finance scholar long

before the phrase “public choice” was ever coined. Moreover, his subjective cost
theory is what distinguishes his work from other prominent public finance theorists
such as Paul Samuelson and Richard Musgrave.
Buchanan’s work on tax incidence theory is a clear example of how subjectivist
insights have shaped his thinking about public finance. Neoclassical public finance
theory has focused on the “cost” of taxation in terms of (1) who pays the amounts
of money actually sent into the Treasury, and, (2) the “excess burden” or welfare
costs of taxation. Both of these costs are assumed to be objective and measurable.
Buchanan takes a very different approach to the issue of tax incidence.
Specifically, he was the first modern scholar to examine the relationship between
taxes as costs of public goods and the importance of those taxes in democratic
decision making. Neoclassical tax incidence theory, according to Buchanan,
“examines the choice behavior of individuals and firms, but this is not the choice
behavior that involves either the financing of public goods or the selection among
taxing alternatives.”13 The individual or firm is assumed by the neoclassical theory
“to be subjected to an imposed change in the alternatives of private or market
choice” (emphasis in original).14
Neoclassical tax-incidence theory is concerned almost exclusively with the tax-
induced changes in the costs of undertaking private production, investment, and
consumption decisions, but lacks a theory of public choice. The analysis yields no
information about the subjective cost of public goods.
With the neoclassical approach to tax incidence theory the economist quite
naturally views his role as one of adviser to political decision makers. If the
economist can identify the effects of a tax on the economy, his role is to advise the
presumably benevolent political authorities as to which type of tax would raise the
“desired” amount of revenue and at the same time minimize the “excess burden” on
society. According to this viewpoint, the economist’s role is to construct a social
welfare function, even if the members of society, i.e., taxpayers, have no input into
the construction of the social welfare function or to the choice of tax instruments.
Buchanan has long recognized that this approach is inherently authoritarian, for
in the name of maximizing some idealized notion of “social welfare,” it ignores the
preferences of those who comprise the society. For example, neoclassical public
finance theory holds that individuals would prefer a “lump-sum” tax to an excise tax
that raise the same amount of revenue because the former causes no excess
burden. But to reach this conclusion, writes Buchanan,
the economist must assume that the taxpayer is exclusively interested
in the post-tax changes in his position and that he is indifferent among
tax instruments otherwise. But there are obviously many reasons why
the taxpayer may not evaluate alternative tax instruments in the same
way that ‘the applied welfare economist evaluates them. The taxpayer
might, in the first place, prefer to suffer the higher measurable cost
imposed by the excise tax because of the wider range of personal
options that this form of tax allows’ [i.e., to avoid an excise tax on
liquor by not purchasing it]. This option feature may well outweigh the
excess burden. In the second place, the taxpayer may prefer the
excise tax on liquor for consumptuary reasons even though he knows
that he, too, bears an excess burden. The tax-induced reduction in
liquor purchases by others may be more than enough to modify the
relative standing of this tax on his preference scale.15
Informed by subjective cost theory, Buchanan suggests an alternative approach by
asking the fundamental question: “What are the ‘costs’ of public goods in the
genuine opportunity cost, or choice-influencing sense?” (emphasis in original).16
This question ties costs directly to choice and requires one to identify the choosing
agent. The choosing agents are (at least in part) the voters in a democratic
decision making structure. Since there are many different types of decision-making
structures, democratic and non-democratic, the focus of Buchanan’s approach is
on how choice-influencing costs affect these decision makers in alternative
institutional settings. To Buchanan, it is impossible to evaluate alternative tax
systems without a theory of public choice, and that theory must be based on the
insights of subjective cost theory.
One of the most important distinctions between Buchanan’s and the neo-
classical approach to taxation theory was recently described by one of his students,
Richard E. Wagner. Wagner observed that much of the “optimal taxation” literature,
which has largely ignored Buchanan’s work, is labeled “individualistic,” but would
appear to be anything but. According to Wagner,
It is ... a curious piece of vocabulary that affixes the designation ‘in-
dividualistic’ to an analytic construction in which people are manipulated
as objects at the disposal of some type of despot, who is presumed to
be benevolent by virtue of being named ‘Social Welfare Function.’ ...
[In the optimal taxation literature] policy outcomes are assessed
against some transcendent criterion of goodness, independent of any
consideration of what the participants might or might not work out
among themselves ...17
As an aside, it is interesting that Buchanan’s suggested approach to the study of
tax incidence has been met with intense hostility by some neoclassical theorists. In
1980 he published The Power to Tax with Geoffrey Brennan),18 a book that is,
among other things, an exposition of Buchanan's brand of tax-incidence theory.
One reviewer for the Economic Journal was so offended by the book that he called
the authors “fascists” for merely recommending that citizens should be given a
greater voice in the choice of tax instruments.
In The Power to Tax Buchanan and Brennan disagreed with economic
orthodoxy that broad-based taxes are the most “efficient” tax structure. They
argued that a system of multiple excise taxes, rather than a few broad-based taxes,
would give taxpayers more control over government by permitting them to escape
taxation by reducing their purchases of heavily-taxed items. Altering one’s

consumption patterns in this way would be a way of “protesting” against excessive
government spending.
Buchanan’s subjectivist cost theory has colored his views of many economic
phenomena besides tax incidence. For example, in criticizing benefit/cost studies of
governmental programs, Buchanan reminds us that the costs that are discussed in
such studies are not choice-influencing costs. Thus, their usefulness is limited at
best, and misguided at worst.
In real-world political settings, the costs that influence the choice calculus of an
individual voter are his or her own personal share in the costs of government in
terms of the alternatives foregone. The distribution of taxes certainly makes a
difference in the evaluation of governmental programs, but this is ignored by
benefit/cost studies.
4. Subjective Cost, Public Choice, and Fiscal Institutions
Buchanan’s subjectivist roots have also led him to the conclusion that “institutions
matter.” This may sound simplistic, but to many economists the notion that the
means of making choices influence the choices themselves may imply irrational
behavior. Buchanan has ignored this criticism, however, and has demonstrated
throughout his career how the institutions of fiscal choice do matter because they
influence public choices.
As Buchanan and Wagner have written, “individual choice behavior is affected
by the costs and benefits of choice alternatives as these are perceived by the
chooser, and not as they may exist in some objective dimension necessarily
measurable by third parties.”19 Furthermore, “different tax institutions will exert
differing effects on the individual’s perception of his share in the costs of ‘public
service.’ From this; it follows that the form of tax institution, or the tax structure
generally, can affect budgetary choices.”20 And, according to Buchanan and
Wagner, it is perceptions of individuals concerning the differential effects of fiscal
institutions that are relevant to public choice.
This type of thinking is at the heart of much of “the new public finance,” which
Buchanan has had an important role in establishing. One example of this new
approach is the literature on “fiscal illusion.” According to the so-called fiscal illusion
hypothesis, complex and indirect payment structures create a fiscal illusion that will
systematically produce higher levels of government spending than those with
single-payment structures: In essence, complex and indirect tax structures weaken
the cost signals upon which public choices are based.
This notion is similar to the analytical basis of the psychological literature on
information processing.21 In that literature, to the degree to which any message is
understood varies directly with the strength of the particular signal to be received
and inversely with the noise present when the signal is transmitted. It is easier, for
instance, to hear what someone says in a room that is not crowded and filled with
background chatter. The fiscal illusion literature espouses a similar interpretation of
economic phenomena.
Thus, the size of governmental budgets will be directly related to the complexity
and indirectness of tax systems. The perceived or choice-influencing costs will be
lower under indirect than direct taxation, and will be lower under a multiplicity of tax
sources than under a system that relies heavily on a single source. Indirect tax-
ation, therefore, is likely to lead to greater budgetary expansion. Casual evidence
supports this hypothesis, as does a body of economic research.22
Nevertheless, “orthodox” public finance theorists have largely neglected the
theory of fiscal illusion. A reason for this neglect, according to Buchanan and
Wagner, is that the orthodox theory “defines rational behavior in terms of
objectifiable magnitudes and, furthermore, embodies the hypothesis that ... persons
do not systematically err. The subjectively determined perceptions of persons ...
have been neglected."23 Not all economists, however, have ignored objectively
determined perceptions, such as those embodied in the fiscal illusion literature.
“The ... Austrian School of economists, along with a more specialized tradition in
cost theory centering on the London School of Economics in the 1930s, provide
notable exceptions.”24
The theory of fiscal illusion has led to a greater understanding of the effects of
alternative tax systems. For example, one reason the inflation tax is so pernicious
is because it reduces the perceived cost of government. Debt-financed budget
deficits are also better understood once one incorporates a subjectivist view of
cost. Buchanan’s decades-long research on the public debt demonstrates as much
as anything the importance of Austrian-school insights to his contributions to
economic theory.
5. Buchanan and the Public Debt Controversy
Buchanan has been involved in the public debt controversy for over 30 years. He
never accepted the dreamy world of Keynesian interventionism, wherein a benev-
olent government, faithfully obeying the academic economic sages, could “stimulate”
the economy through deficit spending. Nor has he accepted the technocratic world
of Robert Barro and other believers in the Ricardian “equivalence theorem,” which
holds that there is no fundamental difference between debt and tax finance.
Buchanan has long maintained that federal deficit spending is destructive, for it
crowds out private spending and imposes burdens on future generations.
The reason why Buchanan has differed from these schools of thought, on the
issue of deficit finance, is his insistence that “institutions matter,” which is deduced
from his subjectivist cost theory. Deficit spending allows the governmental sector to
replace or crowd out private spending because,
the replacement of current tax financing by government borrowing has

the effect of reducing the ‘perceived price’ of governmental goods and
services. This ‘relative price’ change embodies an income effect of the
orthodox Hicksian sort, and this income effect will generate some
attempted increase in the rate of private spending. ... To the extent
that the costs of governmental goods and services are perceived to be
lowered by any degree through the substitution of debt for tax finance,
the ‘relative’ price change will be present.25
Furthermore, the reason why deficit spending leads to govern mental expansion is
that in response to a reduction in the perceived price of publicly-provided goods
and services, taxpayers “increase their demands for such goods and services.
Preferred budget level will be higher, and these preferences will be sensed by
politicians and translated into political outcomes.”26
6. Money Creation and Subjective Cost Theory
Buchanan’s views of the inflation tax are also colored by subjective insights. Much
has been written about how inflation effectively constitutes a “tax” on privately-held
wealth. But inflation is not really equivalent to a tax, because “no explicit political
10
discussion a decision takes place on either the source or the rate of tax to be
imposed.”27 Consequently, “individual citizens are likely to be less informed about
the probable costs of an inflation tax than they are about even the most indirect and
complex [tax] levy.”28
Once again, choice-influencing costs are altered by real-world fiscal institutions.
But in this instance, the consequences are perhaps even worse than with deficit
finance. The problem is that:
the tax signal under inflation is overwhelmed by the accompanying
noise which takes the form of rising prices . ... Psychologically,
individuals do not sense inflation to be a tax on their money balances;
they do not attribute the diminution of their real wealth to the legalized
‘counterfeiting’ activities of government. Rather, the sense data take
the form of rising prices for goods and services purchased in the
private sector. The decline in real wealth is attributed to failings in the
market economy, not to governmental money creation... Inflationary
finance, then, will generally produce an underestimation of the oppor-
tunity cost of public services, in addition to promoting a false attribution
in the minds of citizens as to the reason for the decline in their real
wealth, a false attribution that nonetheless influences the specific
character of public policies.29
The so-called inflation tax is pernicious not only because it is a hidden tax on
privately-held wealth, but also because it leads to false perceptions of the cause of
the inflation. Political demagoguery adds to the confusion, as politicians are
naturally inclined to lie to the public and blame the inflation on greedy capitalists,
farmers, mortgage bankers, and others in the private sector. The proposed solution
typically is to place even more power in the hands of the inflation-generating
governmental authorities.
7. Methodological Individualism and the Market Process
Rigorous application of methodological individualism is perhaps what most

separates the Austrian and Public Choice schools from most others. The idea that
the individual should be the unit of analysis has spared public choice and Austrian
economists from many of the mistakes of what might be called collectivist
economics. The Austrians, for example, have exposed a great deal of macroeco-
nomic nonsense due to the fact that Keynesian theory largely ignored aggregation
problems. The Austrian conception of markets, based on the interaction among
individuals and on man’s inherent “propensity to truck, barter and exchange,” is
also more useful and informative, in my view, than the perfect competition model.
Buchanan and other public choice theorists have greatly improved our under-
standing of the political process by scrapping the “organic” view of collective action,
11
which describes government, more or less, as a benevolent despot, making
decisions that are assumed to be in “the public interest.”
Not so long ago, in 1968, Buchanan remarked:
Most ... economists take an approach different from my own, and one
that I regard as both confused and wrong. In my vision of social order,
individual persons are the basic component units, and ‘government’ is
simply that complex of institutions through which individuals make
collective decisions, and through which they carry out collective as
opposed to private activities. Politics is the activity of persons in the
context of such institutions.30
Of course, the economics profession has changed significantly since then, par-
ticularly in light of the public choice revolution. Methodological individualism has
replaced more collectivist views in academic circles.
Nevertheless, it is far from clear that there has been a decisive “victory.” Social
welfare functions still clutter the economics journals. Moreover, there is no shortage
of recommendations for government intervention in the name of the mythical “public
interest.” Proponents of methodological individualism have made great strides, but
the collectivist mindset dies a slow death.
Buchanan has also long been considered a proponent of the Austrian view of
the market process. In this regard he is more than just a “fellow traveler”; his work
has played an important role in helping to distinguish between the theory of the
market as a process and the alternative, neoclassical theory of competitive equi-
librium. Thus, in addition to his seminal work on subjective cost theory, Buchanan
has helped clarify the Austrian view of the market as a process.
In his 1963 presidential address to the Southern Economic Association,
Buchanan explained how the economics profession was apparently being led
astray by its focus on the “theory of resource allocation.” He forcefully argued that
the standard neoclassical definition of economics as the study of the allocation of
scarce mean among competing ends “has served to retard, rather than advance
scientific progress.”31 The reason for this, according to Buchanan, is that there is very
little economic content in much of modern economics. What neoclassical economics,
all too often involves is a computation problem, the computation of equilibrium
prices, for example which “to the subjectivist, [seems] an absurd exercise.”32
A good example is the work of Nobel Laureate Tjalling Koopmans, who began
his career by working out the optimal allocation of a set of tankers carrying oil
across the Atlantic during World War II. Buchanan properly labels such work as
engineering, not economics, and claims that he must have been “a confirmed
subjectivist long before I realized what I was because I recall thinking in 1946,
when Koopmans was lecturing… at the University of Chicago, that there seemed to
be absolutely no economic content in what he was doing….”33
Buchanan has attempted to persuade the economics profession to abandon its
fixation on allocation problems per se, for “if there is really nothing more to eco-
12
nomics than this, we had as well turned it all over to the applied mathematicians.”34
This does appear to be the direction the profession has been heading; for “develop-
ments of note... during the past two decades consist largely of improvements in ...
computing techniques, in the mathematics of social engineering.”35
Instead of becoming weakly-trained mathematicians (at least by the standards
of professional mathematicians), Buchanan suggested replacing the theory of
resource allocation with the theory of markets. This would require paying more
attention to
a particular form of human activity, and upon the various institutional
arrangements that arise as a result of this form of activity. [Namely,]
man's behavior in the market relationship, reflecting the propensity to
truck and to barter, and the manifold variations in structure that this
relationship can take.36
These, Buchanan has written, are the proper subjects of economics.
This approach helps us understand why, in perfect competition, there is no
competition (or any trade, for that matter). It also reveals how a market is not
competitive by definition, as in the neoclassical model, but that a market becomes
competitive. “It is this becoming process, brought about by the continuous pressure
of human behavior in exchange, that is the central part of our discipline, ... not the
dry rot of postulated perfection.”37
Thus, Buchanan’s view of the market system may properly be labeled Austrian.
Furthermore, he has urged us to apply this same notion of the economic process to
the study of political institutions. This is why public choice theory is largely a study
of political processes, with policy recommendations usually focusing on altering
institutional processes, rather than political outcomes or end states.
8. The Importance of Austrian Economics to Public Choice
Buchanan has done seminal work in many areas of economics, but his Nobel Prize
was awarded primarily for his role in establishing, with Gordon Tullock, the sub-
discipline of public choice. As this paper has shown, many of the essential
principles of public choice (and of “the new public finance”) have subjectivist or
Austrian roots. This fact doesn’t seem to have been sufficiently appreciated by the
economics profession, however, for a number of reasons.
One possible reason, Buchanan writes in Cost and Choice, is that “it is not
easy to question long-accepted precepts.” He further confessed that he has “found
it difficult to prevent the analysis [in Cost and Choice] from lapsing into the kind of
conventional [neoclassical] methodology that I have often used in other works.” 38
Moreover, many economists may balk at seriously considering the impact of
subjectivist insights, writes Buchanan, because “in effect, the incorporation of the
London [or Austrian] conception of opportunity cost amounts to transforming one of
13
the foundation stones of economic theory. [However,] only when this basic
modification is completed can real progress toward changing the superstructure [of
economics] be attempted on a large scale.”39
The public choice revolution provides supportive evidence for this conjecture,
since many insights in public choice have subjectivist or Austrian roots. However,
there are many instances where the public choice revolution has taken a step
backward, in my view, because of insufficient attention paid to these roots. One
should not be overly critical of public choice economists, however, for in a recent
article Buchanan himself seems to have forgotten his subjectivist roots, thereby
walking into a theoretical and public policy mine field.
In a paper entitled “Rent Seeking, Noncompensated Transfers, and Laws of
Succession,”40 Buchanan analyzes the supposed inefficiencies generated whenever
potential heirs “compete” for an inheritance. The basic hypothesis is that the
“investment of effort, time, and resources in this rent-seeking activity will be socially
wasteful.”41 The behavior of children, as potential heirs, is assumed to be ana-
lytically identical to the behavior of lobbyists for protectionism, price supports, and
all other sorts of government-generated monopoly rents. “To ... potential recipients
[of a bequest],” writes Buchanan, “any such value becomes precisely analogous to
a rental opportunity that has been artificially created. The frugal rich man whose
fortune must be transferred by gifts or bequests stands ... in precisely the same
relationship as Queen Elizabeth before her courtiers when she announced the
possible assignment of a playing-card monopoly.”42
This logic led Buchanan to recommend governmentally imposed restrictions on

the disposition of inheritances, for “once the probable emergence of wasteful rent
seeking is acknowledged ... the efficiency basis for the argument against any and
all [government] restrictions on the transfer power [of individuals] vanishes.”43
Ironically, this argument appears to have much in common with the type of
reasoning that Buchanan so effectively criticized in Cost and Choice. Specifically,
he assumes that benefits and costs are objective in order to conclude that “all
noncompensated transfers are payments to the recipients.”44
Gifts and bequests are labeled “noncompensated transfers” in Buchanan’s
analysis because there is no objectively measurable “payment” for these “transfers.”
But surely such gifts involve implicit, mutually-advantageous exchanges. In the
case at hand, there is an exchange of tangible wealth for psychic income. Altruistic
behavior toward the donor is “exchanged” for a more tangible form of wealth. Since
such exchanges have persisted for millennia, it is reasonable to assume that there
must be “gains from trade” to the participants. This latter interpretation is consistent
with the subjectivist principles Buchanan has advocated throughout his career. But
in a bizarre repudiation of those principles – at least in this particular paper –
Buchanan chooses to ignore them. “To the extent that gifts and bequests are
literally payments for equal values received in exchange ... there is no net transfer
of value among persons involved and there is no incentive for the emergence of
14
rent-seeking behavior. Hence, for purposes of the analysis in this paper, fully
compensated transfers of value can be neglected.”45
By ignoring this elementary subjectivist insight for the sake of argument,
Buchanan renders his case for governmental controls of inheritance untenable. His
case is based on neoclassical notions of efficiency, namely, that such “rent
seeking” is “socially wasteful.” But as he also stated in an earlier work, since
individuals base choices on data that are inherently subjective, the economist can
identify waste in the actions of other people only by imposing his own standard of
value.46 And this is what Buchanan appears to be doing in this essay. Such work
can only impede the public choice “revolution,” however, by lending credence to
public choice critics who claim that much of public choice is simply a political
crusade “masquerading as science.”47
A second example of how ignoring subjectivist or Austrian insight has impeded
research in public choice is a contradiction in the world of Robert Tollison, one of
Buchanan’s most prolific students. Following Buchanan’s advice on viewing the
market as a process, rather than as an equilibrium condition, Tollison has written that:
when competition is viewed as a dynamic, value-creating, evolutionary
process, the role of economic rents in stimulating entrepreneurial,
decisions and in prompting an efficient allocation of resources is
crucial. … [P]rofit seeking in a competitive market order is a normal
feature of economic life. The returns of resource owners will be driven
to normal levels ... by competitive profit seeking as some resource
owners earn positive rents which promote entry and others earn
negative rents which cause exit. Profit seeking and economic rents are
inherently related to the efficiency of the competitive market process.
Such activities drive the competitive price system and create value
(e.g., new products) in the economy.48
But a few pages along in the same article Tollison condemns as “wasteful rent
seeking'” all forms of non-price competition “in imperfectly competitive markets.”
The contradiction lies in the fact that if one views competition as a “dynamic, value-
creating, evolutionary process,” as Tollison initially suggested, then the forms of
non-price competition that he labeled wasteful – advertising, R&D spending,
product differentiation – are viewed as an essential ingredient of the competitive
process, not as wasteful rent-seeking or monopolizing devices.49
There is now an emerging literature in public choice that labels almost all forms
of private business behavior as “wasteful rent seeking.”50 Oddly, much of this
literature recommends government regulation as a means of reducing such waste.
But surely, granting even greater powers to government will lead to more, not less,
rent seeking. I have written elsewhere51 how such bizarre reasoning has come
about, at least partly, because of the failure of public choice economists to pay
sufficient attention to the fundamental Austrian concepts of subjectivism, method-
ological individualism, and the concept of the market as a dynamic process. This is
15
why students of public choice, above all, should more fully appreciate the sub-
jectivist roots of James Buchanan’s economics.
Finally, it is worth repeating that I have not attempted a comprehensive review
of the impact of Austrian economics on the work of James Buchanan. Such an
undertaking would require at least a book-length treatment. My only objective has
been to point out a relatively neglected aspect of at least some of Buchanan’s
work, namely, its subjectivist roots. Subjective cost theory is not at the heart of all
of Buchanan’s work; perhaps not even most of it. At times his writing seems strictly
positivist. But a case can be made that many of his most important contributions to
economics may be properly labeled “Austrian.” Moreover, an equally strong case
can be made that the work of Buchanan, and of other public choice scholars, is
weakest when it neglects fundamental Austrian-school insights.
NOTES AND REFERENCES

1. Buchanan, James, and Gordon Tullock (1962), The Calculus of Consent. Ann Arbor,
MI: University of Michigan Press.
2. Buchanan, James (1969), Cost and Choice: An Inquiry in Economic Theory. Chicago,
IL: University of Chicago Press.
3. Ibid., ix.
4. Ibid.
5. Ibid.
6. Buchanan, James, and G. F. Thirlby (eds.) (1981), LSE Essays on Cost. New York:
New York University Press.

7. Buchanan, James, Cost and Choice, 112.
8. Ibid.
9. Ibid.
10. Wicksteed, Philip (1910), The Common Sense of Political Economy. London: MacMillan.
11. Ibid.
12. Buchanan, Cost and Choice, 43.
13. Ibid., 53.
14. Ibid.
15. Ibid., 54.
16. Ibid., 55.
17. Wagner, Richard E. (1985), “Normative and Positive Foundations of Tax Reform,”
Cato Journal Fall: 386 and 388.
18. Buchanan, James, and Geoffrey Brennan (1980), The Power to Tax. New York:
Cambridge University Press.
19. Buchanan, James, and Richard E. Wagner (1976), Democracy in Deficit: The·
Political Legacy of Lord Keynes. New York: Academic Press, 126.
20. Ibid.
21. See Wagner, Richard E. (1978), “Revenue Structure, Fiscal Illusion, and Budgetary
Choice,” Public Choice Spring; and DiLorenzo, Thomas J. (1981), “Utility Profits, Fiscal
Illusion and Local Public Expenditures,” Public Choice Fall.
22. Ibid.
16
23. Buchanan and Wagner, Democracy in Deficit, 130.
24. Ibid.
25. Buchanan and Wagner, Democracy in Deficit, 138.
26. Ibid., 139.
27. Ibid., 142.
28. Ibid.
29. Ibid., 143.
30. Buchanan, James (1968), “An Economist’s Approach to Scientific Politics,” in M.
Parsons (ed.), Perspectives in the Study of Politics. Chicago, IL: Rand McNally, 78.
31. Buchanan, James (1964), “What Should Economists Do?,” Southern Economic
Journal January: 213–222.
32. Buchanan, James (1979), “General Implications of Subjectivism in Economics,” in
Geoffrey Brennan and Robert D. Tollison (eds.), What Should Economists Do? Indianapolis,
IN: Liberty Press, 85.
33. Ibid.
34. Buchanan, James, “What Should Economists Do?,” 217.
35. Ibid.
36. Ibid.
37. Buchanan, Cost and Choice, 83.
38. Ibid.
39. Ibid.
40. Buchanan, James (1983), “Rent Seeking, Noncompensated Transfers, and Laws of
Succession,” Journal of Law and Economics April: 71–85. For another critical look at
Buchanan’s work from an Austrian perspective see Boettke, Peter J. (1987), “Virginia
Political Economy: A View From Vienna,” Market Process Fall: 7–15, published by the
Center for the Study of Market Processes, George Mason University, Fairfax, VA.
41. Ibid., 74.
42. Ibid., 83.
43. Ibid., 76.
44. Ibid., 71.
45. Ibid., 72.
46. James Buchanan, “Is Economics the Science of Choice?,” in Brennan and Tollison
(eds.), What Should Economists Do?, 61.
47. For an elaboration of this point see DiLorenzo, Thomas J. (1988), “Property Rights,
Information Costs, and the Economics of Rent Seeking,” Journal of Institutional and
Theoretical Economics Spring.
48. Tollison, Robert D. (1982), “Rent Seeking: A Survey,” Kyklos 35: 577.
49. See Littlechild, Stephen C. (1981), “Misleading Calculations of the Social Costs of
Monopoly Power,” Economic Journal June: 348–63; and DiLorenzo, Thomas J. (1984), “The
Domain of Rent-Seeking Behavior: Private or Public Choice?,” International Review of Law
and Economics December: 185–97.
50. Boudreaux, Don, and Thomas J. DiLorenzo, “A Critique of the Economics of Raising
Rivals’ Costs,” unpubl. ms., Department of Economics, George Mason University.
51. DiLorenzo, Thomas J. (1987), “Competition and Political ·Entrepreneurship: Austrian
Insights into Public Choice Theory,” Review of Austrian Economics 2: 59–72.
17
s
Chapter 2
Cultural Dynamics
1. Introduction
One major purpose of this article is to apply the insights of Murray Rothbard’s
(1977) unjustly neglected “Toward a Reconstruction of Utility and Welfare Eco-
nomics” to several issues in economics. Another is to demonstrate the truth of
Garrison’s (1982) contention that Austrian economics is a moderate philosophy,
occupying a mid-point between more extreme views popular within the profession.
A third is to show that moderation in the sense of compromise can sometimes
constitute a more sensible world view than that occupied by the extremes.
What is the main contribution of Rothbard’s “Reconstruction”? It is that
demonstrated preference is the linchpin of a proper welfare economics. His point is
that people can reveal what enhances their utility only through their free choices. 1
Since I am now writing this article, it proves – as nothing else can do – that I value
doing this more than any other alternative, such as sleeping, swimming, or
studying. In order to do so, I had to first purchase the means with which to
accomplish this task, in this case, a word processor. That being the case, an
economist is entitled to deduce from this fact that I valued the computer more than
the price I was charged, and, also, that the vendor placed greater value on my
money than on his own machine. As it happens, I am employed by the College of
the Holy Cross; this means that I prefer the salary they pay me more than the
foregone leisure, and that they rank my services higher than their monetary outlay.
As a general rule, it logically follows from the fact that people engage in
commercial interaction of this sort that they benefit, at least in the ex ante sense.
That is, it cannot be denied that voluntary trade of whatever sort enhances the
welfare of all parties to it – otherwise, they would scarcely agree to participate.
States Rothbard (1977: 2): “... actual choice reveals, or demonstrates, a man’s
preferences; i.e., ... his preferences are deducible from what he has chosen in
action.”
What is the implication of the foregoing for welfare economics? In Rothbard’s
(1977: 29) view, it is that “... no government interference with exchanges can ever
increase social utility.” And why, in turn, is this? It is because the unanimity rule,
and the impermissibility of interpersonal comparisons of utility, stand as twin
barriers against any such conclusion. Yes, forbidding a trade can benefit some
people; at the very least, the utility of the prohibitor will have been enhanced,
otherwise he would not have taken this step. But if some have been made better
off, the utility of others (the would-be trading partners) has been decreased. Unless
we may interpersonally compare utility between the winners and losers, or
18
somehow conclude that all “stakeholders” have unanimously agreed to cancel the
commercial agreement, we cannot unambiguously conclude that social welfare has
been enlarged.2
But we can do neither. Given ordinal not cardinal utility, no comparisons across
people can ever be made. And it is illogical to think that the would-be traders have
agreed not to interact with each other in this manner. Were this true, there would
be no need to forbid the trade in the first place.
Trade, in contrast, does pass muster even in the teeth of these twin challenges.
States Rothbard (1977):
... the very fact that an exchange takes place demonstrates that both
parties benefit (or more strictly, expect to benefit) from the exchange.
The fact that both parties chose the exchange demonstrates that they
both benefit. The free market is the name for the array of all the
voluntary exchanges that take place in the world. Since every exchange
demonstrates a unanimity of benefit for both parties concerned, we
must conclude that the free market benefits all its participants. In other
words, welfare economics can make the statement that the free
market increases social utility, while still keeping to the framework of
the Unanimity Rule. (p. 27)
Notwithstanding the foregoing, there are those who cleave to the notion that statist
prohibitions on trade can improve human welfare. These, for obvious reasons, are
called “interventionists.” But there are others who take the very opposite tack. They
claim that trades made compulsory by government can enhance the human
situation. Such people, for reasons that are far less apparent, are not usually seen
as interventionists.3 It is the purpose of this paper to show that neither view has
incorporated the Rothbardian reconstruction of welfare economics; that both are
therefore fallacious.
2. Preventing Commercial Interactions
We shall now attempt a rather unusual critique of trade prohibitions such as rent
control, minimum wages, tariffs and drug laws. But before we do so, let it be clearly
established that enactments of this sort do indeed constitute prevention of trade.
Consider first rent controls. It might be objected at the outset that this is a price
control, not a trade prohibition. In actual point of fact, however, it is both. Namely, it
prevents trades at any price incompatible with the law. For example, if the law
requires that a given apartment rent for $500 or less, then it ipso facto prevents
trades at $501 or more. Similarly, the minimum wage law is on the face of it an
unemployment law, not an employment law. Specifically, it prevents jobs from
coming into existence where the pay is below the level stipulated by legislation.
Interferences with foreign commerce, further, prevent trades from occurring where
the benefits to the contracting parties are less than the tariff which must be paid.
19
And drug laws prevent all purchases and sales of addictive substances at any
price.
The usual criticism of these laws is that they have harmful economic effects.
Typically, this is seen as a result of a concatenation of empirical events which
renders them deleterious. Our point here, in contrast, is that even if we make the
most positive assumptions about these laws possible, the Rothbardian analysis can
nevertheless be utilized to show that they cannot improve social welfare. In a
sense, this is a more thoroughgoing critique of interventionism than the con-
ventional one. It claims that even if we adopt the best case scenarios for these
enactments, they still cannot satisfy the Rothbard criteria.
2.1. Rent control
The case against rent control is simple and straightforward.4 The law retards
investment in residential rental units. Property owners, faced with lower profit
opportunities, find other, better options for their financial resources. With a lowered
supply of housing, prices are inevitably forced upwards, directly contravening the
presumed intent of the law. Sometimes this is hidden, as when the monetary rent
stays constant, or even decreases, but the actual housing services provided fall
more quickly than the declining price. Sometimes it is only slightly hidden, as when
rents in new dwellings are higher than otherwise they would have been.
The price ceilings bring in their wake a shortage of rental housing, where
demand exceeds supply. The shortfall must be rationed in some manner, and if it is
forbidden for prices to do so, then other mechanisms come into play: favoritism,
racial discrimination, black markets (“key money”), “first come first served,” etc. As
well, shortages reduce the vacancy rate below optimal levels, and wasteful queuing
for apartments ensues.
The landlord has less of an incentive to maintain and upgrade his property.
This leads to an exacerbation of relations with tenants, and to a slide of entire
neighborhoods into slum conditions. Often times, lower class housing is “protected”
from rent rises even more strongly than are luxury dwellings. As a result, the little
money earmarked for investment in this field is shifted from the former to the latter.
The perceived “market failure” to provide housing for the poor then leads to
other government programs such as public housing; this further worsens an already
bad situation because, typically, tenants who have lost their apartments due to fire
are placed at the head of the public housing queue. But landlords who are insured
at the higher pre-rent-control housing prices already have little incentive to guard
against arson. Given similar motivations on the part of the tenants, it is little wonder
that vast areas subject to rent control (e.g. the South Bronx) begin to resemble
cities which have been subjected to bombing. Toss in lenient judges who will not
evict tenants for non-payment of rent in any month within 90 days of Christmas-
20
coupled with banks which for good reason insist upon mortgage payments
throughout the entire year-and the recipe for urban disaster is complete.
This is the conventional critique of rent control. For our present purposes,
however, we wish to paint this law in the most attractive colors possible,5 and show
that a defense cannot be sustained even under these conditions. Accordingly, let
us assume a very moderate rent control, which hardly entices resources into other
areas; one which allows for generous rent “pass alongs,” which barely reduce the
incentives which would otherwise obtain to encourage owners to maintain their
buildings. We further posit that the overwhelming majority of tenants are poorer
than landlords, and that those who receive the greatest rent reductions are the
poorest, neither of which is always the case.
In addition, our “ideal” rent control is very much more punitive with regard to
luxury than substandard housing. This draws resources away not from the poor, but
from the rich. Such a stipulation might hurt the well-to-do, somewhat, but at least
insult will not be added to injury for the destitute.
Nor need we apologize for the unreality of our present assumptions. After all,
not all cities subject to rent controls come to resemble the South Bronx. All five
boroughs of New York City were subject to the same law, and yet their experiences
were not at all identical.
The point is, even under a more “rational” rent control regime, we are still not in
a position to overcome the objections laid in our path by Rothbard. Without
recourse to interpersonal comparisons of utility, the Pareto conditions will not
obtain. It is simply not true that at least one person will benefit, and that no one will
be harmed. It may well be that less damage will occur under this set of suppositions
than others, but it seems farfetched to suppose that no one at all will come to grief.
There are, for example, the rich, who will have less housing at their disposal.
We may assume that all of the poor gain more from the lower rents they pay
than from the increases they must suffer due to a smaller supply of housing, but
this cannot apply to the well off. Further, what about the landlords? They are
people too. Their well-being must also be factored into our social welfare equation.
Yet it would be the rare interventionist who would be courageous enough to assert
that no harm would come to them. If so, there would have been no need for
compulsory rent control in the first place. The landlords themselves would have
instituted a plan of this sort on a voluntary basis.
2.2. Minimum wage legislation
The case against wage minima is equally straightforward. By prohibiting employ-

ment contracts which stipulate wages below a given point, any point, there are
bound to be some would-be workers with productivity lower than that level who will
be rendered unemployable. For example, if there are unskilled laborers with
marginal revenue products, of, say, $2 per hour, and the minimum wage level
21
stipulated by law is $5 per hour, then any employer foolish enough to hire such a
person would lose $3 per hour. People of this sort, then, are in effect rendered
unemployable by this legislation.6
Some might object that $2 per hour is an “unconscionable” salary, and laborers
would be better off with nothing than with that amount. For with no wage at all, they
could avail themselves of unemployment insurance payments, and/or welfare
subsidies. Such a package might well amount to more than $80 per week (40 hours
X $2 per hour), minus taxes, especially when the disutility of work is taken into
account.
The only problem with this objection is that it violates the usual ceteris paribus
assumptions. Other things are not being held equal when we compare the welfare
of our worker with and without and without me minimum wage law in operation.
Specifically, payments from government are being allowed to vary, and this need-
lessly complicates the issue. In order to see more clearly the exact effects of this
legislation, we must hold everything else constant, particularly side payments of the
sort we have been discussing. This can be done in two ways: by assuming either
that these “benefits”7 do not exist at all, or that if they exist, they apply, somehow,
whether or not the person is employed.
This is a difficult point to articulate, since the law specifies that unemployment
and welfare payments shall not be made when the worker has a job. Legislatures
may indeed make such stipulations, and often they do. But we cannot allow them to
“repeal” the ceteris paribus requirement. That is, even though it is illegal for
employed workers to avail themselves of these government “benefits,” we have to

act as if it is possible, even if only for the sake of argument, in order to hold other
things equal. Otherwise, it is impossible to accurately assess the true effects of
minimum wage legislation (see Table 1).
The unsophisticated advocates of wage minima compare the northwest and the
southeast quadrants; since $100 is preferable to $80, they conclude that the
minimum wage law is beneficial, at least to poor unskilled workers. But this, as we
have seen, is to make a comparison where other things are not equal; thus, it does
not follow that the law benefits the poor. A more rational comparison is between the
northwest and the northeast quadrants, and/or the southwest and southeast.
There, no matter how one twists and turns, $180 is an improvement over $100 (in
the presence of side payments) just as is $80 over $0 (in their absence).
22
However, there is a more sophisticated objection to the minimum wage law. It is
that some empirical studies have shown no unemployment effects of this legis-
lation.8 It is as if employers have a vertical demand curve for workers: no matter
how high the wage, at least within the limits occupied by the typical minima, firms
are willing to hire the same number of laborers.9
Let us follow the same procedure as before and concede to the critics such as
Card and Krueger that the minimum wage law does not have any serious
unemployment effects, or even, in the extreme case, none at all. Namely, we
stipulate that employers are operating on the basis of a demand curve for this sort
of labor of zero elasticity. One could hardly go further in the direction of accom-
modating the Card-Krueger thesis. Yet, even under these very constrained and
unlikely assumptions, the Rothbardian reconstruction of utility and welfare
economics cannot be denied. That is, it precludes us from concluding that the
minimum wage can enhance social welfare. For even if not a single solitary worker
loses his job due to the minimum wage, nor do any laborers who would have been
hired in its absence fail to achieve employment status, there will still be at least one
person who will lose out as a result of this enactment: the employer who is forced
to pay more than he otherwise need have done. We simply cannot say him “nay.’’
The welfare of the owner of the firm (to say nothing of that of his customers) is
clearly decreased by this law. Without interpersonal comparisons of utility, it is
impossible to conclude that society has benefitted.
2.3. Tariffs
If the economic cases against rent control and the minimum wage law are
compelling, the same holds true for international10 trade restrictions.11
At the most unsophisticated level, free trade is opposed out of fear that
foreigners will take away domestic jobs, either because of sheer efficiency (e.g.
23
Japan) or willingness to work for very low wages (e.g. Mexico, Bangladesh, etc.).
But this argument is easily overcome-at least on an intellectual plane-by resort to
the basic proofs concerning comparative advantage, as opposed to absolute
advantage.
With very few exceptions indeed, no one, even the most ardent protectionist,
really opposes trade of, say, maple syrup for tropical fruit. Even the mercantilists
realize it would be foolish for us to grow bananas in hot houses and for the Costa
Ricans to house maple trees in gigantic refrigerators. Let us produce enough maple
syrup for both countries; let the Costa Ricans produce a likewise amount of
bananas; we can each specialize in what we do best, trade with each other, to
mutual benefit.12
But when it comes to Japan, for instance, a country which is presumed able to
outcompete us not just in one or a few industries, but in virtually every one of them,
then all bets are off. The free traders may win the debates, but the hearts and
minds of the public tend to support protectionism. There are, however, any number
of simple numerical examples which show that even though one country may be
more efficient at producing all goods than another, it will still be beneficial for them
to trade. For while Japan, say, may have an absolute advantage in all goods
compared to the US,13 it will almost of necessity be better in some than in others.
Suppose, for example, that Japan can produce 200 stereo sets and 100 bushels of
wheat in a given time (a “day”), while America can produce 5 of the former and 75
of the latter. Then, surely, it would enrich both countries if Japan specialized in
stereos and America in wheat. We could both have more of each of these
commodities in this way (see Table 2).
Japan has an absolute advantage in both commodities and a comparative
advantage in stereos. The US has an absolute advantage in neither, but a com-
parative advantage in wheat. With no trade, the part of the world consisting of
these two countries has 175 units of wheat and 205 stereos, for a total of 380;
Japanese GDP is 300 and American is 80, also for a total of 380. With free trade,
however, total product rises from 380 to 550. The presumption is that this will be
shared in such a way so as to improve the welfare of each, otherwise cooperation
will not occur.14
24
So much for the arguments against the unsophisticated opposition to free trade. 15
In sharp contrast, there is a view that is popular with certain elements of the
economics profession, based on the so-called “rational tariff models.” Here, the
contention is that if our import taxes are set carefully enough, they can in effect
garner monopoly power for US industry, since with the correct external “pricing
mechanism” we are a large enough part of world trade to accomplish this task.
The problems with this view are serious. First is the practical one that our past
experience with governmental central planning, in the US and elsewhere (Boettke,
1994), does not encourage the belief that the “optimal tariffs” will be able to be
achieved. The Public Choice School (Tullock, 1980a, 1980b) has done yeoman
work in showing that tariff or tax rates are not set so as to conform with the theory
of economists as to what constitutes the “public good.” Rather, they are a result of
a political tug of war labeled “rent seeking.”16
Second is the difficulty that this initiative is incompatible with other elements of
the mainstream economist’s political program. Central to this is their contention that
the only desideratum is the enhancement of economic welfare, or wealth, and that
monopoly is anathema to this project. But in the “optimal tariff” movement, they are
violating not one but both strictures: here they seek to utilize monopoly “power,” in
the full realization that while US wealth will be increased, it will come at the cost of
a diminution elsewhere. Further, and perhaps even more contrary to their theory,
the US gains will be more than matched by the loss to foreigners. This is hardly a
perspective one could have expected would garner much support within the
profession.
Notwithstanding the foregoing, we shall put the best face on trade prohibitions
as possible, as is our wont, lest we be accused of trafficking in straw men. In this
case, there are two separate scenarios. First, we assume that the unsophisticated
opponents of free trade are correct: foreigners, Japanese, Mexicans, whoever, will
“steal” our jobs-by out-producing us, and outcompeting17 us. Does it follow that
tariffs and quotas will improve social welfare? Not a bit of it. For if we interfere with
international trade, we make at least two people-those who would otherwise have
conducted the trade-worse off. Without recourse to interpersonal comparisons of
utility, there is no way to scientifically determine that the gains (to the prohibitors)
exceed these losses.
Second, we assume that the welfare of foreigners for some reason does not
enter into our calculations, and that the theory of monopoly which underlies optimal
tariffs is thus unobjectionable.18 Under these conditions, it would appear that the
proposal will indeed enhance social welfare.
But any such conclusion again reckons in the absence of Rothbard’s
contribution. Again, his reconstruction of utility and welfare economics stands like a
sentry, ready to repel invasions. For, as before, there will be at least two erstwhile
traders who will be balked in their goal by interventionism. They will be rendered
worse off. And there is nothing in the annals of value free scientific economics
25
which can prove that their misfortune is of lesser moment than the gains the
optimal external monopolists can garner.
2.4. Drugs
The debate over the legalization of addictive drugs is largely, but not totally, a
dispute over the shape of the demand curve. It is uncontroversial (at least in
economic quarters) that at present the high price of these materials is due to their
very prohibition. Supplies are limited, and hence prices high, because of the
danger-from the police and other competing gangs-of bringing to market a con-
trolled substance. Marijuana, for example, is nothing more than a rather hardy
weed; ordinarily, cigarettes made out of it would undoubtedly be cheaper than
those fashioned from tobacco. Under legalization, supplies would as a result be
vastly enhanced.
What then of the demand side? Here, the controversy rages fiercely. Some –
mostly those who favor legalization – assert that the lowered prices would scarcely
change the amount demanded. For them, decriminalization would be an unrelieved
blessing. At the lower legal prices, addicts would not have to rob, kill and prostitute
themselves to buy a fix. They could do so for a song. There would be no more
violence attendant upon this industry than now prevails with regard to alcohol.
Indeed, the parallels between drugs and booze are very strong. Under prohibition,
alcohol production was also a very violent undertaking. At present, it is not.
Similarly, as with impure “bathtub gin,” the impurities, and lack of quality control,
would also end as bona fide businesses replaced the fly by nights. 19
Others-mostly those who oppose legalization-claim that all this might come
about, if it does, only at the cost of addicting an exceedingly large percentage of
the American public. Their view is that this latter scenario is far too likely, and far
too deleterious if it comes about, to risk on behalf of the nebulous benefits, if any,
of legalization.
Again, we assume the worst case scenario for economic freedom. We posit,
that is, that were these drugs allowed on the market, nothing less than chaos would
ensue. And we ask, can value free economics justify prohibition? We answer, it
can, but only if the benefits to prohibited buyers and sellers can be ignored. And
since they cannot be discounted, given the illegitimacy of interpersonal com-
parisons of utility, we persist in concluding, with Rothbard, that whatever its merits,
our present policy on drugs cannot be defended on the basis of the dismal science.
Let us summarize this section of the paper. We have posited the best case
scenario for intervention; maximum rents do not lead to a diminution of housing;
increases in the mandated wage do not lead to additional unemployment; tariffs do
not disrupt the international division of labor; drug legalization does lead to a vast
increase in addiction rates. We have shown that despite this, Rothbard’s recon-
26
struction of utility and welfare economics stands as a barrier against the conclusion
that social welfare can be increased by enacting such legislation.
Have we demonstrated too much? Have we proven it irrational to support laws
such as rent control, minimum wage, tariffs and drug prohibition? Not at all. It is still
possible to favor these interventionistic laws, given these heroic assumptions, or
even in their absence, for that matter. But this is possible only on normative
grounds. As value free economists attempting to sketch out the conditions for
welfare maximization, we cannot logically arrive at any such conclusion.
Let us consider one more objection. Can our own logic be turned around
against us in our defense of laissez faire? That is, we have defended markets on
the ground that no interference with them can be shown in a value free manner to
benefit societal welfare. But suppose we start with interventionism as the basis of
our analysis. We could then show, utilizing our same Rothbardian methodology,
that no forced change from that status quo could unambiguously benefit everyone.
This is so because any change is bound to hurt someone. For example, if rent
control is rescinded, there will presumably be at least one tenant who can object on
the ground that he will be made worse off. Thus, without interpersonal comparisons
of utility, we cannot claim an unambiguous increase in the general welfare.
Where, then, is the proper starting point? Strictly speaking, that is not a matter
of positive but rather of normative economics. Hence, it must remain outside of our
present concerns.
However, the following can still be said, and said once again: “the free market
benefits all its participants” (Rothbard, 1977: 27). Consider the tenant who benefits
from rent control, and would lose out from its repeal. Whatever he is, he is not a
participant in the free market, for rent control is simply incompatible with this
system.
3. Forcing Commercial Interactions
We have seen that even under the most positive assumptions possible, the cases
for rent control, minimum wage, international trade restrictions and drug prohi-
bitions cannot pass muster under the conditions adumbrated by Rothbard.
But these are not the most serious challenges that can be offered up against
his reconstruction of welfare economics. For the overwhelming majority of
economists reject these four public policies.20 There is another set of cases, much
more popular within the profession, which also cut against the grain of Rothbard’s
analysis.
Here, the contention concerns not commercial arrangements which are
deemed improper by legislative bodies, but rather interactions which fail to take
place in the market. That is, instead of maintaining that trades should not take
place in order to enhance economic welfare, it is now argued that trades should be
forced upon unwilling participants, to this end.
27
Most economists will readily see the error of supposing that the prohibition of
trade will improve social welfare. Interestingly enough, the obverse does not hold.
That is, there are very few practitioners of the dismal science who acknowledge
that if prohibiting trade cannot enhance the welfare of society, neither will forced
trade achieve this end. It is to this point that we now turn. Under this rubric we con-
sider three different proposals: monopoly, public goods and externalities, and welfare.
3.1. Monopoly
There are two sorts of entities that are conventionally called “monopoly.” Somewhat
surprisingly, they have nothing at all in common. They are alike as fish and
bicycles. The conflation between them, resulting from a sort of definitional laziness,
has caused no end of trouble both in public policy analysis and theoretical
economics. It has long kept us from thinking clearly about the issues involved.
The first kind of monopoly is an exclusive state grant of privilege to a favored
business. Anyone who tries to compete with this type of monopolist goes to jail. In
olden times, the king would give a boon of this sort to a preferred duke, or earl, or
other nobleman, or warrior. This person would have the monopoly over the sale of
salt, or candles, or wine, or sugar, or textiles, in a certain geographical area. It was
illegal to compete with this monopolist. Anyone doing so was subject to the full
penalties of the law. In the modern era, recipients of such legal protection include
the post office, “utilities” such as electric and gas, and, for a time, telephone
service, as well as taxicabs, buses, and insurance in certain jurisdictions.

The second kind of “monopoly” really does not deserve that denigration. A
“monopolist” of this sort receives no privileged status from the government. Instead,
he competes for a market, and succeeds, to a degree greater than allowed for by
the theory of perfect competition of neoclassical economics. This view, sometimes
called the structuralist view of competition, claims that if a company’s sales, or
employment, or shipments, or inputs, is too great a proportion of the industry of
which it is assigned,21 then it is guilty of anticompetitive behavior. Kellogg, IBM,
Alcoa Aluminum, Microsoft are all very successful companies which hav e
excessively high “concentration ratios,” defined on the basis of this theory. Thus,
they have all run afoul of our antitrust laws,22 which are predicated upon these
neoclassical notions of competitive behavior.
There is no doubt whatsoever that monopoly of the first sort is incompatible
with the Rothbardian insight into the maximization of social welfare. A would-be
candle manufacturer in olden times, or a “gypsy” cab driver who wants to compete
with the “yellow” or “licensed” taxis, is precluded by law from doing so. Trades
between this person and all potential customers are therefore ruled out of court-
with a resultant loss in utility. If all market participation enhances welfare, and if
antitrust laws ban such commercial interaction, then they lower the level of utility
that society would otherwise have obtained.
28
“Monopoly” of the second sort is a very different matter. So different that we
shall cease to speak of it as “monopoly” at all, and instead call it “Large Firms,”23
shorthand for “firms which have a larger proportion of markets than is compatible
with neoclassical competition theory.” Why is this very different? For one thing, it is
crucial how the Enormity was achieved. If this was done through prohibiting
competition, well and good, that is real monopoly. But if accomplished by offering a
better product at a lower price, with more service, reliability, quality, superior
foresight, ability to attract customers and a work force, then at each point in its rise
from a small firm to a gigantic one, it conferred satisfaction on all the people with
whom it dealt.
For another, neoclassicists notwithstanding, mere Large Size is irrelevant to
market satisfaction. What are their arguments to the contrary? They maintain that
when there are numerous firms in an industry, each with a very small market share,
then all of them will interpret the market demand (D) they face as absolutely elastic,
or flat. This being the case, resources will be allocated at point C (for “competitive”)
on Figure 1.
However, when a few firms become large enough, or, in the extreme, there is
only one remaining, then the dreaded “Monopoly” will occur. Now each of the few
firms, or the One Big One, will not interpret the demand curve as infinitely elastic.
Rather, it will be seen as it actually is (Figure 2), which will give rise to a marginal
revenue curve below it. When marginal revenue and marginal costs are equated, at
point Qm, we arrive at the familiar neoclassical conclusion that with “Monopoly”
prices will be higher (Pm), quantity less (Qm), and excess profits (APmMB) and
dead weight loss (DMC) will arise so as to misallocate resources.
This is neither the time nor the place to go into a full scale critique of this
model.24 We shall content ourselves by mentioning only those fallacies which
pertain to Rothbard’s “Reconstruction.”
First, Figure 2, and the analysis which accompanies it, is no more than an
exercise in interpersonal comparisons of utility. Consider the quantity Qc – Qm.
According to the mainstream viewpoint, consumers value this quantity of the good
to the extent depicted by the area under their demand curve, bounded by Qc and
Om.25 Producers, for their part, can manufacture this amount Qc – Qm of the good
at a cost of only the area under the marginal cost curve, between these two points.
The difference between the two areas is the Dead Weight Loss (DMC). But cost
means opportunities foregone, and only the economic actor himself can ever know
what this is. Similarly for demand, which includes, at least potentially, consumers’
surplus. Both are notions of subjective utility. To compare them is thus to engage in
the forbidden comparison of utility on an interpersonal basis.26 What the neo-
classicals are saying, in effect, is that the amount of good Qc – Qm is worth more
to buyers than to sellers. How can they know that, unless they have information
about the utility that each places on this amount of good, and the ability to compare
them?
29
Second, there is the little matter of forced exchange. In this regard, the logical
positivists who occupy the mainstream of the economics profession go far past the
Austrian assertion. In the latter view, there are (ex ante) mutual gains from trade.
And that is all. But the former far surpass this affirmation with the claim that forced
trades can also benefit both parties. They in effect maintain that if the buyers and
the sellers who are now trading for the amount Qm, can somehow be forced to
trade for an additional amount, Qc – Qm, further gains to both sides will accrue.27
Here, they leave the realm of reality and enter one of magic, a world that one would
have thought logical positivists would eschew with all their might. How can they
know any such thing? If it were true, why wouldn’t the two trading partners engage
in further trades on their own?
30
In their reply to this challenge they contrast the flat demand curves facing the
perfect competitor with the market demand curve of intermediate elasticity which
confronts the Big Firm (e.g. “monopolist”). But this argument must be rejected if
only because of its reliance on interpersonal comparisons of utility.
Even apart from this is the fact that their analysis relies on a level of ignorance
which is totally incompatible with their assumptions about perfect competition. In
the perfectly competitive model, information is supposedly costless. That implies, if
it implies anything, that transaction costs are zero. Well, with this state of affairs,
why don’t the numerous perfect competitors band together and act like a Giant?
And if not that, why don’t they at least realize that all put together, they face a
downward, not an infinitely elastic demand curve?
3.2. Public goods
Externalities are another fertile neoclassical ground for the support of forced trades.
The argument is that there are some goods which, by their very nature, are not
amenable to production through markets. Due to this “market failure,” if we want to
make these items available, only the government can bring about such a satis-
factory state of affairs.
Why has the market “failed”? For two reasons: non-excludability and non-
rivalrousness. The former problem is that there are certain products which, when
once produced, are impossible (or very expensive) to confine to those who have
purchased them. But if the buyers of this service as well as the non-buyers may
avail themselves of it, why should anyone make the purchase? Rather, everyone
will attempt to “free ride” on the efforts and payments of the others. If each person
adopts such a “wait and see” policy, no one will undertake production in the first
place. Friedman (1962) gives an illustration of this mindset when he discusses the
“neighborhood effect” or “externality” of the poor:
It can be argued that private charity is insufficient because the benefits
from it accrue to people other than those who make the gifts-again, a
neighborhood effect. I am distressed by the sight of poverty; I am
benefitted by its alleviation; but I am benefitted equally whether I or
someone else pays for its alleviation; the benefits of other people’s
charity therefore partly accrue to me. To put it differently, we might all
of us be willing to contribute to the relief of poverty, provided everyone
else did. We might not be willing to contribute to the same amount
without such assurance. In small communities, public pressures can
suffice to realize the proviso even with private charity. In the large
impersonal communities that are increasingly coming to dominate our
society, it is much more difficult for it to do so (p. 191).
Other examples include defense, parks and lighthouses.28 In all of these cases,
everyone benefits, because of the intrinsically public nature of the good or service;
non-payers as well as payers.
31
The second is non-rivalrousness. Here, the point is that even if we could
somehow exclude non-purchasers from enjoying the product, we still should not do
so if we want to maximize wealth, or welfare, or utility, or whatever flavor of the
month is occupying the thoughts of the neoclassicals. Why not? Because it is
costless to allow everyone to utilize items with this characteristic. A typical example
of this “market failure” is the radio or television broadcast. If you tune in, this
discomforts me not at all; if I tune in, not only does your utility not decrease, you
are extremely unlikely to even know that I am also enjoying the program. So why
stop anyone from availing himself of an essentially costless service? If you value
the broadcast even at the rate of only $.05 per hour, and are charged $.50 per hour
for the privilege, then you do without. And society fails to create $.45 worth of
wealth per hour, which it could have done at zero marginal cost.
Since there are two criteria used here, excludability and rivalrousness, each of
which admits of two states of affairs (presence or absence), this yields a two by two
matrix (see Table 3). Let us give examples of each, the better to explicate the
doctrines now under consideration. Combination 1 is the most straightforward.
Here, neither source of “market failure” is present. It is possible (very cheap,
costless) to exclude non-payers from use, and rivalrousness is present. Consider a
hot dog. You can be excluded from eating it if you don’t pay for it: it is against the
law to do so, and you will be thrown in jail if you eat a hot dog you have not
purchased.29 Further, the hot dog is rivalrous: if you eat it, I can’t have it, and if I eat
it, you are necessarily precluded from doing so. For any entrant into this first
category, even the neoclassicals concede that the market can handle production.
However, each of the other three raise problems of “market failure.” Take
section 2. Here, rivalrousness is not a problem, but excludability is. An instance of
this would be parks. It is conceded by the neoclassical advocates of the “market
failure” doctrine that a fee can sometimes be charged for admission, as in the case
of Disneyland. However, the real estate prices in the surrounding areas typically
rise, and the developer has no way of capturing these benefits all for himself.
Hence, according to the argument, a lower than optimal number of parks will be
built under laissez faire capitalism.
Now consider compartment 3. Here, excludability is not a problem, but rival-
rousness is. The broadcast fits this description, because while it is easy to exclude-
with jamming devices which can be overridden for a fee-it would be economically
inefficient to do so, since the marginal viewer or listener costs no one anything.
Group 4 is very clear cut. Both excludability and rivalrousness present
difficulties. No one can be excluded from national defense. If an antiballistic missile
or a submarine protects you and your home, it also does so for your neighbor. The
incidence of free riding would be so serious, it is maintained, that no firm could
collect money to protect people from a foreign invader. Nor is any rivalrousness
involved. If your neighbor is already protected under the defense umbrella, it costs
not a penny more to include you as well. You can enjoy being defended without
32
reducing his defense, and vice versa. Therefore, even if you could somehow be
excluded (which is impossible) this should not be done to you. Doing it would be
inefficient, in that you would now not be obtaining a benefit the provision of which
harms no one else; it would be in direct contravention of the rule of the Pareto
Optimum: it is always efficient to undertake an act if at least one person gains
thereby, and no one else loses.
Another way to articulate this philosophical vision is through highways and streets.
In order to do this we must make two assumptions.
First, an empty highway or street is a non-rival good. You are driving along, and
another rider appears about a quarter mile away. You do not impede him; he does
not impede you. Neither of you rivals the other for use of the thoroughfare. You can
each use it without dis-accommodating the other even in the slightest. In contrast,
busy highways and streets are rival goods. Each motorist gets in the way of every
other. They all slow each other down, to say nothing of increasing the overall
accident rate.
Second, it is possible to exclude people from highway use by setting up toll

stations. If they do not pay, they cannot enter. If they try to do so anyway, a severe
fine will be imposed upon them with practically a 100 percent chance of being
caught. However, it is not possible to exclude people from city streets. Tollways
would be impossibly numerous. This would slow traffic down to a standstill. Given
these assumptions, it is again possible to illustrate the neoclassical case against
the market (see Table 4). Let us consider each of the alternatives in turn. First,
according to this schema, the busy highway, somewhat paradoxically, is actually a
candidate for privatization,30 at least insofar as excludability and rivalrousness are
concerned. For a road full of vehicles is certainly a rivalrous one. And, by
stipulation, it is not only possible but actually feasible to exclude non-payers from
access. “Market failure” does not exist in this case, but it does in the other three.
Second, the busy city street. This must inevitably be a public good, but only
because of excludability; if non-paying vehicles cannot be precluded, no private
enterprise could ever make a go of it. But “market failure” arises due to this factor
alone. As far as rivalrousness is concerned, there is no problem. For under
crowded conditions, there is no rivalry for the service provided by the streets.
Third, the empty highway. Here we have the reverse of the previous case.
Again there is “market failure” and thus the need for public management and
33
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[103] Dig. 1. 16. 195. 2: “Pater familias appellatur qui in domo
dominium habet.” In like manner patronus is protector of clients,
pater patriae protector of his country; Pott, ibid. 227.
[104] Ulpian, in Dig., ibid.: “Pater autem familias recte hoc
nomine appellatur, quamvis filium non habeat; non enim solam
personam eius, sed et ius demonstramus: denique et pupillum
patrem familias appellamus.”
[105] Livy i. 32. 10 (from a fetial formula).
[106] Rubino, Röm. Verfassung und Geschichte, 186;
Mommsen, Röm. Forsch. i. 228, n. 16.
[107] In the same way reges is made to include the whole
family of the rex; Livy i. 39. 2. For other illustrations of the same
principle, see Rubino, ibid. 188, n. 1.
[108] The Twelve Tables seem to apply it to all patricians, not to
senators alone: Cicero, Rep. ii. 37. 63: “Conubia ... ut ne plebei
cum patribus essent;” Livy iv. 4. 5: “Ne conubium patribus cum
plebe esset.” These passages, however, do not afford absolute
proof; for Gaius, bk. vi ad legem Duodecim Tabularum (Dig. 1. 16.
238: “Plebs est ceteri cives sine senatoribus”), probably
commenting on the very law quoted by Cicero and Livy, seems to
understand patres as senators; cf. the prohibition of intermarriage
between senators and their agnatic descendants on the one hand
and freed persons on the other; Dig. xxii. 2. 44; Roby, Rom. Priv.
Law, i. 130; Vassis, in Athena, xii. 57 f. In some instances,
however, as in the expression “a patribus transire ad plebem”
(Vell. ii. 45. 1) patres is certainly equivalent to patricii.
[109] Cf. gentilicius from gentilis; tribunicius from tribunus, Pott,
ibid. 227. Patricius is an adjective signifying paternal, ancestral,
belonging to parents or progenitors; Corssen, ibid. i. 53.
[110] In his work on the Comitia, quoted by Fest. 241. 21:
“Patricios eos appellari solitos qui nunc ingenui vocentur.”
[111] X. 8. 10: “En umquam fando audistis patricios primo esse
factos non de caelo demissos, sed qui patrem ciere possent, id
est nihil ultra quam ingenuos...?”
[112] VI. 40. 6. The speaker contrasts ingenui with patricii.
[113] Plut. Q. R. 58: Those who were first constituted senators
by Romulus were called patres and patricii as being men of good
birth, who could show their pedigree. In its adjectival and
adverbial uses ingenuus connotes not the quality of free birth, but
respectability, nobility. The original meaning is “born within,”
hence indigenous, native; cf. Forcellini, Totius Latinitatis Lexicon,
s. v. In this sense it could not apply to the patricians, who
generally claimed a foreign origin. But native is superior to alien;
doubtless in this secondary meaning of excellence it attached to
the nobility, the close relation of the word to gens (family, lineage)
attracting it in that direction. Afterward it was so democratized as
to include all the freeborn. With this meaning we find it as early as
Plautus, Mil. 784, 961. According to Dionysius, ii. 8. 3, the
identification of patricii with ingenui in its sense of freeborn was
accepted not by the most trustworthy historians, but by certain
malicious slanderers: “Some say they were called patricians
because they alone could cite their fathers, the rest being
fugitives and unable to cite free fathers.”
[114] P. 30.
[115] The word is probably derived from the same root as
populus; Corssen, Ausspr. i. 368; cf. p. 1, n. 3 above.
[116] Rep. ii. 9. 16.
[117] ii. 9. 2.
[118] Notably among the Sabines, Livy ii. 16. 4; Dion. Hal. ii. 46.
3.
[119] Cicero, Rep. ii. 9. 16; Dion. Hal. ii. 9. 2.
[120] Cf. the citations in Mommsen, Röm. Staatsr. iii. 71, n. 1.
Dionysius, ii. 63. 3, distinguished the two classes as early as the
interregnum which followed Romulus.
[121] Dion. Hal. v. 40. 3; vi. 47. 1; vii. 19. 2; x. 43. As late as
134 Scipio called his clients to follow him to the Numantine war;
Appian, Iber. 84.
[122] Livy iii. 58. 1.
[123] Dion. Hal. ii. 10. 3.
[124] Livy ii. 56. 3; 64. 2; Dion. Hal. ii. 10. 3; iv. 23. 6; ix. 41. 5.
[125] Dion. Hal. ii. 10. 3 (it was not lawful for either patron or
client to vote against the other). Marius, a client of Herennius,
was elected to the praetorship; Plut. Mar. 5. A law declared that
election to a curule office (according to Plutarch, or as Marius
asserted to any office) freed a man and his family from clientage.
Evidently this law was passed in or after 367 b.c. Mucius, a client
of Ti. Gracchus, was elected to the plebeian tribunate; Plut. Ti.
Gracch. 13. Cn. Flavius, who was the son of a freedman and
probably therefore a client, was elected curule aedile for 304; Livy
ix. 46. 1; Val. Max. ii. 5. 2.
[126] Gaius 1. 3: “Plebs autem a populo eo distat, quod populi
appellatione universi cives significantur connumeratis etiam
patriciis; plebis autem appellatione sine patriciis ceteri cives
significantur.” Evidently Pomponius held the same view; Dig. i. 2.
2. 1-6; cf. Capito, in Gell. x. 20. 5; Fest. 233. 29; 330. 19; Isid.
Etym. ix. 6. 5 f.; Mommsen, Röm. Staatsr. iii. 4, n. 2.
[127] Cicero, Rep. ii. 12. 23; Livy i. 8. 7; Zon. vii. 9; Isid. Etym.
ix. 6. 6.
[128] Illustrations of this common use are Cicero, Rep. ii. 8. 14;
12. 23; Livy ii. 54. 3; iv. 51. 3; x. 13. 9; xxv. 2. 9; 3. 13; 3. 16; xxx.
27. 3; xxxiv. 54. 4; xxxvii. 58. 1; xliii. 8. 9. The Greeks always
regard populus as the equivalent of δῆμος; cf. Plut. Rom. 13. Not
only does the tribune in addressing the plebs call them populus
Romanus (Sall. Iug. 31), but the consuls also apply the term to
the same class (Livy xxv. 4. 4); and a statement of Cicero (Leg.
Agr. ii. 7. 17), which has the appearance of a legal definition,
makes the people of the thirty-five tribes under a tribune the
universus populus Romanus.
[129] Röm. Forsch. i. 172.
[130] Cic. Fam. x. 35; Verr. v. 14. 36; Mur. 1. 1; Livy xxix. 27. 2:
Tac. Ann. 1. 8; Macrob. Sat. 1. 17. 28; cf. Mommsen, Röm.
Forsch. i. 169, n. 4.
[131] E.g. senatui populo plebique Romanae; Cicero, Fam. x.
35 (address).
[132] Mommsen, Röm. Staatsr. iii. 6, n. 4; Soltau, Altröm.
Volksversamml. 84.
[133] For the division of the populus into tribes and curiae, see
Cic. Rep. ii. 8. 14; Livy i. 13. 6; Dion. Hal. ii. 7. 2; App. B. C. iii. 94.
The author of Vir. Ill. 2. 12, in supposing that the plebs alone were
assigned to the tribes is certainly wrong; but his mistake is
pardonable in view of the general agreement among our sources
that the populus, πλῆθος, contained in the curiae were mainly
plebeian.
[134] Cic. Rep. ii. 7. 13; 8. 14; 18. 33; Livy i. 13. 4; 13. 6; 28. 7;
30. 1; 33. 1-5; Dion. Hal. ii. 46. 2 f.; 47. 1; 50. 4 f.; 55. 6; iii. 29. 7;
30. 3; 31. 3; 37. 4; 48. 2; iv. 22. 3.
[135] Cf. Dion. Hal. ii. 8. 4.
[136] Livy i. 17. 11; 35. 2; 43. 10; 46. 1; Dion. Hal. ii. 10. 3; 14.
3; 60. 3; 62. 3; iv. 12. 3; 20. 2.
[137] Cf. Lectures on the History of Rome, i. 80, 83: “I beg you
to mark this well ... that even ingenious and learned men like Livy
and Dionysius did not comprehend the ancient institutions and yet
have preserved a number of expressions from their predecessors
from which we, with much labor and difficulty, may elicit the truth.”
[138] The school of Mommsen, which still clings to Niebuhr’s
theory of an exclusively patrician populus, has abandoned the
attempt to support it by a reconstruction of lost sources.
[139] The late regal period may have left a few documents
which, if used by the annalists, might have thrown light on the
condition of that time. It has not yet been determined whether the
inscription recently found in the Roman Forum belongs to the late
regal or to the early republican period.
[140] Mommsen, Röm. Staatsr. iii. 69, grants to the ancients far
more knowledge of their own history, but claims a “wider horizon.”
[141] Niebuhr treats Dionysius with great respect; cf. Lectures,
i. liv: “The longer and more carefully the work is examined, the
more must true criticism acknowledge that it is deserving of all
respect, and the more it will be found a storehouse of most solid
information.” Schwegler, Röm. Gesch. i. 621 f., and 626 f.,
assumes that Dionysius is alone responsible for the view that the
plebeians were in the primitive tribes and the curiae. A glance at
the citations given above, p. 24 f., will show, however, that Cicero
and Livy shared this view.
[142] Cf. Pais, Storia di Roma, I. 1. 82. The usual opinion (cf.
Bernhöft, Röm. Königsz. 8 f.) is that the sources of Dionysius are
later and less trustworthy than those of Livy, but Pais asserts that
on the whole the two authors drew from the same sources.
[143] Röm. Gesch. i. 339, Eng. 165.
[144] Lectures on Roman History, i. 81, 100 f.
[145] Röm. Gesch. i. 332, Eng. 158.
[146] In ibid. i. 330, Eng. 162, he excludes the “freed clients”
from the gens; in 339, Eng. 165, he states that the nobles alone
had the gens, the clients belonged to it in a dependent capacity.
[147] Cf. the edition of Sandys, 252; Rose, Aristotelis Frag.
385.
[148] Röm. Gesch. i. 326, Eng. 160. Genz, Patricisches Rom,
6, has the same idea.
[149] Il. ii. 362 f.; ix. 63 f.
[150] CIA. i. 61; cf. Dem. xliii. 57.
[151] This is illustrated, for instance, by a law quoted by
Philochorus, in Müller, Frag. Hist. Graec. i. 399. 94: Τοὺς δὲ
φράτορας ἐπάναγκες δέχεσθαι καὶ τοὺς ὀργεῶνας καὶ τοὺς
ὁμογάλακτας, οὺς γεννῆτας καλοῦμεν (“The members of the
phratry must receive the orgeones as well as the homogalaktes,
whom we call gennetae”). This fact is now too well known to need
further proof; cf. Gilbert, Constitutional Antiquities of Sparta and
Athens, 148 f.; Thumser, Griechische Staatsaltertümer, 324 f.
[152] P. 11.
[153] Top. 6. 29: “Gentiles sunt inter se, qui eodem nomine
sunt. Non est satis. Qui ab ingenuis oriundi sunt. Ne id quidem
satis est. Quorum maiorum nemo servitutem servivit. Abest etiam
nunc. Qui capite non sunt deminuti. Hoc fortasse satis est. Nihil
enim video Scaevolam pontificem ad hanc definitionem
addidisse;” cf. Cincius, in Fest. ep. 94.
As the word itself indicates, gentiles are members of a gens,
and no other members are known to the sources. If it were true,
as Mommsen, Röm. Staatsr. iii. 66, supposes, that there were
dependent members not termed gentiles, a name would have
been given this dependent relation, or the jurists would have
defined it, or some ancient writer would at least have mentioned
it. The attempt of Kübler, Wochenschr. f. kl. Philol. xxv (1908).
541 f., to prove, on the authority of Cicero, Tim. 11. 41, that clients
were termed quasi gentiles is simply absurd. The passage does
not even hint at clientage; and the quasi gentiles of the immortal
gods, according to this passage, were related to the gods by birth,
as the word gignatis proves. From this point of view men might be
called the children of the gods; but because the divine element in
both men and gods comes alike from the Creator, it is possible to
place them more nearly on a level with one another—in a relation
like that of gentiles. Kübler’s other remarks on the gens, 539-43,
are equally unconvincing.
[154] Cic. Brut. 16. 32; Livy iv. 16. 3; Suet. Aug. 2. Whether
these two gentes had ever been patrician does not affect the
question at issue.
[155] Val. Max. ix. 2. 1.
[156] Cic. Har. Resp. 15. 32, mentions sacrificia gentilicia of the
Calpurnia.
[157] Suet. Ner. 1.
[158] Cic. Dom. 13. 35.
[159] Fest. ep. 23.
[160] Varro, R. R. i. 2. 10.
[161] Unless Sp. Cassius, consul 502, 493, 486 b.c. and author
of the first agrarian rogation, is a myth; cf. Drumann-Gröbe,
Gesch. Roms, ii. 94.
[162] Cf. Cic. Orat. i. 39. 176. The patrician and plebeian
branches are sometimes spoken of as distinct gentes; Suet. Tib.
1.
[163] Mommsen, Röm. Forsch. i. 113 f.; Drumann-Gröbe, ibid.
359.
[164] Cic. Phil. i. 13. 32; Gell. ix. 2. 11; Fest. ep. 125.
[165] Mommsen, ibid. 116.
[166] L. Poplilius Volscus, patrician; Livy v. 12. 10. Q. Publilius
Philo, plebeian; Livy viii. 15. 9.
[167] This patrician gens included an Aebutius who was tribune
of the plebs (Cic. Leg. Agr. ii. 8. 21) and several other plebeians;
Klebs, in Pauly-Wissowa, Real-Encycl. i. 442 f.
[168] Mommsen, ibid. 117 ff.
[169] V. 14. 4: “Comitiis auspicato quae fierent indignum dis
visum honores volgari discriminaque gentium confundi.”
[170] Dom. 13. 35: “Ita perturbatis sacris, contaminatis
gentibus, et quam deseruisti et quam poluisti.”
[171] Sall. Iug. 95. 3; Livy iii. 27. 1; 33. 9; vi. 11. 2; Gell. x. 20. 5;
cf. ix. 2. 11.
[172] L. L. viii. 4: “Ut in hominibus quaedam sunt agnationes ac
gentilitates, sic in verbis.”
[173] In Lib. Praen. 3.
[174] It will suffice to quote Gaius iii. 17: “Si nullus agnatus sit,
eadem lex XII Tabularum gentiles ad hereditatem vocat”; cf. Cic.
Verr. i. 45. 115: “Lege hereditas ad gentem Minuciam veniebat.”
The Minucian gens was plebeian. Its right to the inheritance in
question rested on this law of the Twelve Tables. For the gentile
right of tutelage, see the so-called Laudatio Turiae, 15, 22 (CIL.
vi. 1527; Girard, Textes, 778).
[175] Cf. p. 20; see also Auct. Inc. De Diff. 527 (Keil): “Gens
seriem maiorum explicat.”
[176] E.g. “Family will take a person everywhere”; C. D. Warner,
quoted by the Standard Dictionary, s. v.
[177] Mommsen’s theory of the gens—a development from
Niebuhr’s—is criticized in Pol. Sci. Quart. xxii (1907). 668 f. The
distinction between patrician gentes and plebeian stirpes, on
which he especially relies, is there shown to be groundless.
[178] Gell. xv. 27. 2.
[179] II. 8. 4.
[180] Sén. Rom. ii. 34 f.
[181] Röm. Forsch. i. 233 f.; 247 f.; cf. Genz, Patr. Rom, 70. On
the patrum auctoritas, see p. 235 below.
[182] E.g. Röm. Gesch. ii. 359; iii. 168; Eng. ii. 147; iii. 73: “the
common council of the patres—the curies.”
[183] Cic. Frag. A. vii. 48; Livy ii. 56, especially § 3; Dion. Hal.
vi. 89. 1; ix. 41.
[184] Livy xxvii. 8. 3.
[185] Mommsen, Röm. Forsch. i. 148.
[186] Cic. Leg. Agr. ii. 12. 31.
[187] Cic. Dom. 14. 38; Livy vi. 41. 10.
[188] P. 185 below; cf. Mommsen, Röm. Forsch. i. 147 f.
[189] In the face of all evidence to the contrary two or three
scholars persist in maintaining essentially the opinion of Niebuhr
that through the republic the curiae continued patrician. Herzog,
Röm. Staatsverf. i. 98 f., 108, 1014, n. 2, imagines that from the
beginning the clients belonged to the curia in its administrative
capacity, shared in its sacra, attended its meetings, but did not
vote. The plebs, however, were not even passive members. His
reasons do not deserve mention. Vassis, Ῥωμαών Πολιτεία ἡ
βασιλευομένη κα ἡ ἐλευθέρα (Athens, 1903), also excludes the
commons from the curiate assembly throughout its history. The
fancies of Hoffmann, Patr. und pleb. Curien, need not detain us.
[190] Röm. Gesch. i. 623 f.
[191] Cf. p. 152, 172.
[192] Cf. p. 170, 172.
[193] P. 173 ff., 345.
[194] P. 75, 96, 209.
[195] Röm. Gesch. i. 625, n. 3.
[196] Röm. Forsch. i. 140 f.
[197] Röm. Forsch. i. 269; Röm. Staatsr. iii. 92. Clason, Krit.
Erört. über den röm. Staat, 12, supposes they were admitted by
the Ogulnian law, in 300. Genz, Patr. Rom, 41, 62, places their
admission not earlier than the institution of the Servian tribes and
not later than the decemvirate, greatly preferring the latter date.
[198] Röm. Staatsr. iii. 13; Abriss, 5.
[199] Röm. Staatsr. iii. 54 f.
[200] Ibid. iii. 91.
[201] Ibid. iii. 63.
[202] Ibid. iii. 67 f.
[203] Ibid. i. 91, n. 1; cf. Lange, Röm. Alt. i. 261 f. Reference
here is only to the auspicia publica of the magistrates. It is
established below (p. 101 ff.) that from the beginning the
plebeians had a right to private auspices.
[204] Röm. Staatsr. iii. 77.
[205] Cf. Töpffer, Attische Genealogie, 177.
[206] Altröm. Volksversamml. 93.
[208] P. 69.
[209] Röm. Forsch. i. 106 f. and n. 80.
[211] Rep. ii. 20. 35: “Duplicavit illum pristinum patrum
numerum et antiquos patres maiorum gentium appellavit, quos
priores sententiam rogabat, a se adscitos minorum.” The
connection shows that Cicero is speaking of two classes of
senators distinguished by the rank of the gentes from which they
respectively came.
[212] P. 28 f.
[213] P. 11 f.
[215] P. 17 f. and notes.
[216] P. 20 f.
[217] For the sources, see Schwegler, Röm. Gesch. i. 459 f.;
Stengel, in Pauly-Wissowa, Real-Encycl. ii. 1885.
[218] Andeutungen über den urspr. Religionsunterschied der
röm. Patr. und Pleb. 1 f.
[219] Cf. Livy xxxv. 51. 2; Serv. in Aen. ii. 761. Schwegler, ibid.
464-8, who insists on this fact, shows clearly that no historical
value attaches to the myth; see also Pais, Storia di Roma, I. i.
218, n. 1.
[220] Pais, ibid. 217 ff. Dionysius, i. 4. 2 f., expressly states that
this story is a Greek falsification.
[221] See the examples collected by Pais, ibid.
[222] Cf. Livy i. 8. 5.
[223] Cf. ibid. ii. 1. 4.
[224] Dionysius, i. 85. 3, states that the colonists from Alba
were mostly plebeians, but that a considerable number of the
highest nobility accompanied them. It is a significant fact,
however, that no patrician family is known to have derived its
origin from this earliest colony. Those who claimed Alban and
Trojan descent preferred to connect their admission to citizenship
with the Roman annexation of Alba Longa, e.g. the Tullii, Servilii,
Quinctii, Geganii, Curiatii, and Cloelii; Livy i. 30. 2. On the Alban
and Sabine origin of most of the nobility, Livy iv. 4. 7. In so far as
the local cognomina are indicative of origin (cf. Willems, Sén.
Rom. i. 11 ff.), they point to a diversity of foreign connections. The
Tarquinian gens, which in later time was thought of as patrician,
came from Etruria, ultimately from Greece. The Aemilii were
Greek (Plut. Aem. 1; Fest. ep. 23) or Sabine (Plut. Num. 8) or
Oscan (Fest. 130. 1).
[225] Cf. p. 31 above. For details, see Pol. Sci. Quart. xxii. 679
ff.
[226] That Caere was the first community to receive the civitas
sine suffragio may justly be inferred from the expression “Caerite
franchise,” which designates this kind of limited citizenship (cf. p.
62). The general fact stated in (6) is further confirmed by the law
which granted the right of extending the pomerium to those
magistrates only who had acquired new territory for Rome; Gell.
xiii. 14. 3; Tacitus, Ann. xii. 23.
[227] Since the publication of the Staatsrecht, writers have
made slight modifications or extensions of the conventional
theory. Greenidge, in Poste, Gaii Institutiones, xix, suggests that
the dual forms in Roman law may have as their basis a racial
distinction between the patricians and the plebeians. A serious
objection to this kind of reasoning is that if we are on the lookout
for dualities, trinities, and the like, we shall find them in
abundance everywhere. All sorts of theories as to the racial
connections of the two social classes have been proposed. Zöller,
Latium und Rom, 23 ff., supposes that the patricians were Sabine
and the plebeians Latin. Ridgeway, Early Age of Greece, i. 257,
holds that the plebeians were Ligurians, whereas Conway, in Riv.
di Stor. ant. vii (1903). 422-4, prefers to consider them Volscians.
These notions are equally worthless. Undoubtedly race is a
potent factor in history; but Gumplowicz, Rassenkampf (1883),
has killed the theory by overwork.
Among the writers who have rejected the conventional view are
Soltau, Altröm. Volksversamml. (1880); Bernhöft, Röm. Königsz.
(1882); Pelham, Outlines of Roman History (1893; reprint of his
article on “Roman History,” in the Encycl. Brit.); Meyer, Gesch. d.
Alt. ii (1893); Holzapfel, in Beitr. z. alt. Gesch. i (1902). 254.
[228] Meyer, Gesch. d. Alt. ii. 80; Featherman, Social History of
the Races of Mankind, ii. 408; Hellwald, Culturgeschichte, i. 175;
Barth, Philosophie der Geschichte, i. 382. It would be practicable
by the citation of authorities to prove the existence of such
distinctions in nearly every community, present or past, whose
social condition is sufficiently known.
[229] Giddings, Principles of Sociology, 124; Tarde, Laws of
Imitation, 233 f.; Fairbanks, Introduction to Sociology, 158; Grave,
L’individu et la société, 23; Funck-Brentano, Civilisation et ses
lois, 71 f.; Caspari, Urgeschichte der Menschheit, i. 125 f.;
Hellwald, ibid. i. 175, 177; Ross, Social Control, 80.
[230] Giddings, ibid. 262; Ammon, Gesellschaftsordnung, 133
f.; Cherbuliez, Simples notions de l’ordre social à l’usage de tout
le monde, 38 f.; Dechesne, Conception du droit, 36; Grave, ibid.
23 f.; Caspari, ibid. i. 133 f.; Harris, Civilization considered as a
Science, 211; Lepelletier de la Sarthe, Système sociale, i. 329;
Mismer, Principes sociologiques, 63 f.; Rossbach, Geschichte der
Gesellschaft, i. 13 f.; Schurtz, Urgeschichte der Kultur, 385;
Hittell, Mankind in Ancient Times, i. 228 f.; Maine, Early History of
Institutions, 130; Seebohm, Tribal System in Wales, 139; Post, A.
H., Anfänge des Staats- und Rechtslebens, 150 f.
[231] Giddings, ibid. 262; cf. Arnd, Die materiellen Grundlagen
... der europäischen Kultur, 444 f.; Frohschammer, Organisation
und Kultur der mensch. Gesellschaft, 84 f.; Bastian,
Rechtsverhältnisse bei verschiedenen Völkern der Erde, 20 f.;
Spencer, Principles of Sociology, ii. 333, 335.
[232] Frazer, Early Hist. of the Kingship; Spencer, ibid. ii. 338 f.;
cf. for the Malays, Skeat and Blagden, Pagan Races of the Malay
Peninsula, 499.
[233] Cf. Rubino, Röm. Verf. 183; Spencer, ibid. ii. 334 f.;
Seebohm, Tribal System in Wales, 72.
[234] Aristotle, Politics, 1294, a 21; Giddings, Principles of
Sociology, 293 f.; Jenks, History of Politics, 30 f.; Grave,
L’individu et la société, 25; Combes de Lestrade, Éléments de
sociologie, 185; Schurtz, Urgeschichte der Kultur, 148, 385;
Featherman, Social History of the Races of Mankind, see index,
s. Classes; Hittell, Mankind in Ancient Times, i. 228; Maine, Early
History of Institutions, 134; Ginnell, Brehon Laws, 60 f.; Farrand,
Basis of American History, 114, 201; Bluntschli, Theory of the
State, 149.
[235] Grave, ibid. 30 f.; Combes de Lestrade, ibid. 184 f.;
Funck-Brentano, Civilisation et ses lois, 68 f.; Spencer, ibid. ii.
348 f.; Schurtz, ibid. 150 f.; Featherman, ibid. ii. 128, 197 f., 311;
Letourneau, Sociology, 480 f.; Bastian, Rechtsverhältnisse, 8 f.
[236] Cf. Schurtz, ibid. 148; Farrand, ibid. 114, 129, 141. For
the Malays, see Skeat and Blagden, ibid. 494 ff.
[237] Maine, ibid. 132.
[238] Maine, ibid.; Ginnell, Brehon Laws, 63 f., 93 f.
[239] Seebohm, Tribal System in Wales, 134 f.
[240] As in Wales; Seebohm, ibid. 139; cf. the Inca grandees,
who all claimed descent from the founder of the monarchy;
Letourneau, Sociology, 479.
[241] Tac. Germ. 13. 3: “Insignis nobilitas aut magna patrum
merita principis dignationem etiam adulescentulis adsignant.” It is
clear that the family of a youth who receives an office or dignity
because of the merits of his ancestors is coming near to nobility.
[242] A certain man of illegitimate birth, hence of inferior social
standing, through martial skill and daring becomes a leader of
warriors, acquires wealth, marries the daughter of a notable,
“waxes dread and honorable” among his countrymen, who elect
him to a high military command by the side of their hereditary
chief; the taint of his birth is forgotten; Od., xiv. 199; cf. Bernhöft,
Röm. Königsz. 123.
[243] Livy viii. 39. 12; x. 38. 7: “Nobilissimum quemque genere
factisque,” with reference to the Samnites; some were nobles by
birth, others by prowess; cf. 46. 4: “Nobiles aliquot captivi clari
suis patrumque factis ducti;” some of these captives were noble
through their own prowess, others through that of their ancestors.
The Samnite nobility was in the formative stage like that of the
German nobility in the time of Tacitus. The Yakonan of California
are in this condition; Farrand, Basis of American History, 129.
[244] Maine, Early Hist. of Inst. 135 f.; Giddings, Principles of
Sociology, 294 f.
[245] Cf. Giddings, ibid.
[246] Maine, ibid. 136.
[247] Laws of Athelstan.
[248] Giddings, Principles of Sociology, 296; cf. Maine, Early
Hist. of Inst. 141. Thus in the time of Tacitus the German youth of
common blood who entered the comitatus of a chief had a fair
opportunity to become noble; Germ. 13. 3-5; 14. 1 f. Among the
Danes, too, some noble families were once peasant; Maine, ibid.
135.
[249] Brunner, Deutsche Rechtsgeschichte, i. 235 f., 252;
Maine, ibid. 138; Ammon, Gesellschaftsordnung, 135; Schurtz,
Urgeschichte der Kultur, 148 f.; Bluntschli, Theory of the State,
131, 155; Tarde, Laws of Imitation, 237.
[250] Giddings, Principles of Sociology, 315; cf. Combes de
Lestrade, Éléments de sociologie, 185; Rossbach, Gesch. der
Gesellsch. i. 14. A nobility formed purely by conquest, if such
indeed exists, must be rare, and can hardly be lasting; Schurtz,
Urgesch. der Kul. 149.
[251] Giddings, ibid. 315; cf. Grave, L’individu et la société, 32.
[252] Strabo viii. 4. 4, p. 364; Aristotle, Politics, 1270, a 34.
[253] Schurtz, Urgesch. der Kult. 165.
[254] Ginnell, Brehon Laws, 145.
[255] Bluntschli, Theory of the State, 142; Freeman, Norman
Conquest, iv. 11. There were nobles both in England and in
Normandy before the conquest. After the battle of Senlac most of
the English nobles submitted to William, and were allowed to
redeem their lands; Freeman, ibid. iv. 13 f., 36 f. It was only in
punishment for later rebellion that they lost their holdings, and
some English thanes were never displaced; cf. Powell, in Traill,
Social England, i. 240.
[256] The most violent and oppressive Germanic invaders are
supposed to have been the Vandals, and yet they doubtless
retained for the administration of the government the trained
Roman officials; Hodgkin, Italy and her Invaders, ii. 263. The
Ostrogoths were more liberal in their treatment of the Romans
(ibid. iv. 250, 271, 282), and the Franks still more liberal; Brunner,
Deutsche Rechtsgesch. ii. 202.
[257] Featherman, Social History of the Races of Mankind, ii.
354; Tarde, Laws of Imitation, 238, n. 1, 239; Hellwald,
Kulturgesch. i. 175 f.; Schurtz, Urgesch. der Kult. 149; cf.
Demolins, Comment la route crée le type social.
[258] P. 16.
[259] P. 37, n. 4.
[260] P. 31; Pol. Sci. Quart. xxii (1907). 679 ff.
[261] The idea that the primitive community is essentially
illiberal with its membership is erroneous. For the mingling of
conquerors and conquered, see p. 42 f. and notes. On the ethnic
heterogeneity of states in general, see Gumplowicz,
Rassenkampf, 181. The laws of Solon granted citizenship to alien
residents who were in perpetual exile from their own country, or
who had settled with their families in Attica with a view to plying
their trade; Plut. Sol. 24. Under his laws, too, a valid marriage
could be contracted between an Athenian and an alien; Hdt. vi.
130. The Athenians, like the Romans, believed that many of their
noble families were of foreign origin. In Ireland “strangers settling
in the district, conducting themselves well, and intermarrying with
the clan, were after a few generations indistinguishable from it;”
Ginnell, Brehon Laws, 103. Nearly the same rule holds for South
Wales; Seebohm, Tribal System in Wales, 131. To the Germans
before their settlement within the empire the idea of an exclusive
community must have been foreign; for as yet the individual was
but loosely attached to his tribe. Persons of many tribes were
united in the comitatus of a chief; the two halves of a tribe often
fought on opposite sides in war; a tribe often chose its chief from
another tribe. Intermarriage among the tribes was common, even
between Germans and Sarmatians. A single tribe often split into
several independent tribes, and conversely new tribes were
formed of the most diverse elements; Seeck, Geschichte des
Untergangs der antiken Welt, i. 209 with notes; Kaufmann, Die
Germanen der Urzeit, 136 f. Under these circumstances the
primitive German community cannot be described as exclusive. In
like manner our sources unanimously testify to the liberality of
early Rome in granting the citizenship to strangers. It is no longer
possible to oppose to this authority the objection that such
generosity does not accord with primitive conditions.
[262] Gaius i. 120 f.
[263] Mommsen’s theory of gentile ownership, adopted by
Kubitschek, in Pauly-Wissowa, Real-Encycl. i. 790, depends upon
his view that the gens was as old as the state; in his opinion it
was originally stronger but gradually weakened, whereas the
state went through the opposite process; Röm Staatsr. iii. 25. But
if, as I have elsewhere pointed out (Pol. Sci. Quart. xxii. 685 ff.),
the gens developed from the family during the decline of the
kingship and the rise of aristocracy, the theory of a primitive
gentile ownership falls to the ground.
[264] We are not to think of the state as granting a certain
district to the tribe, which then parcelled it among the component
curiae, etc., for this reason that the tribes and the curiae did not
themselves possess common lands. Rather the state divided a
given district among the families which were already included, or
which it wished to include, in a given curia or tribe. In this way the
later tribes were formed in historical time, and in this way the
Claudian tribe was originally constituted; Livy ii. 16. 4 f.; cf. Plut.
Popl. 21. When therefore Dionysius, ii. 7. 4, states that Romulus
divided the land into thirty lots and assigned a lot to each of the
thirty curiae, he means, if he correctly understands the matter,
that land was assigned not to the curia as a whole but to the
families which composed the curia, unless indeed the curiae once
had a right of landholding not possessed in historical time.
[265] Christ, W., in Sitzb. d. Berl. Akad. d. Wiss. 1906. 207.
[266] In the Twelve Tables heredium has the meaning of hortus,
“garden;” Pliny, N. H. xix. 4. 50. It was a praedium parvulum
consisting of two iugera; Fest. ep. 99.
[267] In the earliest colonies this was the amount assigned to
each man; cf. Livy iv. 47. 6 (Labici); vi. 16. 6 (Satricum); viii. 21.
11 (Tarracina, founded 329). The first two are not so distinctly
historical as the third; Mommsen, Röm. Staatsr. iii. 24, n. 1.
Supposing Rome to have been a colony, the historians infer that
Romulus made a similar distribution among its earliest settlers; cf.
Varro, R. R. i. 10. 2; Pliny, N. H. xviii. 2. 7; Fest. ep. 53; Juvenal
xiv. 163 f.; Siculus Flaccus 153; Livy vi. 36. 11; Plut. Popl. 21;
Columella v. 1. 9; Nissen, Ital. Landesk. ii. 507.
[268] Cf. Mommsen, Röm. Staatsr. iii. 23 f.
[269] Dion. Hal. iv. 13. 1; Varro, De vit. pop. rom. i, in Non.
Marc. 43; Livy i. 46. 1.
[270] Dion. Hal. v. 57. 3; Plut. Popl. 21. Moreover the division
into the five classes was based on unequal holdings.
[271] Cf. Meyer, Gesch. d. Alt. ii. 518, n.
[273] Dion. Hal. iv. 14. 2 might refer to a condition in which land
was still inalienable and the right of changing residence restricted.
[274] The text followed is that of Jacoby. The reading
represented by Jordan, Cato, p. 8, is not satisfactory. We have no
ground for impugning the statement of Dionysius that Fabius
actually called the country districts phylae, tribes. He may have
termed them at once μοῖραι, “regions,” and phylae with perfect
consistency; cf. Kubitschek, Rom. trib. or. 7, n. 34.
[275] Röm. Gesch. i. 434-7; English, 205 f.
[276] Verf. d. Serv. 95 f.
[277] Cf. Huschke, Verf. d. Serv. 72 ff., who supposed that the
twenty-six rural regiones were in most respects like tribes, but
contained only plebeians, who were politically inferior to the city
people; see also Schwegler, Röm. Gesch. i. 736 f.
[278] Röm. Tribus, followed by Grotefend, Imp. rom. trib. descr.
[279] The supposition that there were originally but four rests
upon those passages which mention only that number in
connection with Servius, as Livy 1. 43. 13; Fest. ep. 368; (Aurel.
Vict.) Vir. Ill. 7. 7; the discussion of the four city tribes as though
they were the only Servian tribes by Dionysius (iv. 14. 1), whereas
in the next chapter he describes those also of the country; and
the designation of the rural districts as regiones rather than tribes
by Varro, De vit. pop. rom. i, in Non. Marc. 43: “Et extra urbem in
regiones xxvi agros viritim liberis attribuit.” In L. L. v. 56, however,
he calls the country districts tribes.
[280] Grotefend, ibid. 27.
[281] Inferred from an obscure passage in Fest. 213. 13, and
from inscriptions cited by Mommsen, Röm. Trib. 215; Grotefend,
ibid. 67.
[282] Lange, Röm. Alt. i. 504; Herzog, Röm. Staatsverf. i. 39
and n. 2; Pelham, Rom. Hist. 39; Soltau, Altröm. Volksversamml.
457 ff.; Greenidge, Rom. Pub. Life, 67.
[283] Röm. Staatsr. iii. 163 ff. Mommsen calls attention to
epigraphic evidence, cited more fully by Kubitschek, Imp. rom.
trib. discr. 26 f., which assigns Ostia unmistakably to the Voturia
tribus. He notices further that the same sort of evidence which
places Ostia in the Palatina would give Puteoli, Sutrium,
Canusium, and Fundi to the same city tribe, which is impossible.
The error of including Alba and Ostia in the Palatina is due to
neglect of the fact that men excluded from the country tribes were
assigned to those of the city irrespective of domicile; cf. Röm.
Staatsr. iii. 442 f., with notes.
[284] Stor. di Rom. I. i. 320, n. 1, relying on Livy ix. 46. 14.
[285] Fest. 246. 30: “‘Pro censu classis iuniorum’ Ser. Tullius
cum dixerit in descriptione centuriarum;” cf. 249. 1; Livy 1. 60. 4;
iv. 4. 2. Cicero, Rep. ii. 22. 39, writes discriptio, which Lange,
Röm. Alt. i. 464, following Bücheler, in Rhein. Mus. xiii (1858).
598, accepts as the correct form.
[286] P. 67.
[287] Fabius Pictor, in Livy 1. 44. 2. Altogether unnecessary
therefore is Soltau’s supposition (Altröm. Volksversamml. 458, n.
2), in itself improbable, that Fabius, who wrote his annals in
Greek, applied the word φυλαί incorrectly to the rural districts.
However that may be, Cato, as good an authority, spoke of these
same districts as tribes. If the number thirty was suggested to
Fabius by the curiate organization (cf. Ullrich, Centuriatcomitien,
9), this circumstance would be no argument against the existence
of country tribes. On the strength of the army in the early republic,
see p. 83.
[288] P. 57.
[289] Ibid.; cf. Pais, Leg. of Rom. Hist. 140.
[290] Just as he supposed the Suburana to have been evolved,
name and all, from the pagus Succusanus; L. L. v. 48; cf. Fest.
302. 15; ep. 115.
[291] Varro, De vit. pop. rom. i, in Non. Marc. 43: “Et extra
urbem in regiones xxvi agros viritim liberis attribuit.” As this
statement does not rest upon an independent source, but is
merely an interpretation of Fabius and Cato, it has not the value
which Huschke (Verf. d. Serv. 72 f., 85 f.), Mommsen (Röm.
Staatsr. iii. 168 f.), and Meyer (in Hermes, xxx. 11) attach to it.
[292] Cf. Livy i. 43. 13; Fest. ep. 368.
[293] IV. 14.
[294] Dion. Hal. iv. 15.
[295] Dion. Hal. iv. 15. 4-6. His idea of a census of the country
people he derived from Lucius Piso (§ 5 f.) and from the censors’
office through Fabius (22. 2)—a fact which militates against
Mommsen’s theory that under Servius the country was not yet
ager privatus.
[296] Livy vi. 5. 8.
[297] P. 56.
[298] Röm. Staatsr. iii. 162 ff.
[299] Gesch. d. Alt. v. 135, 142; Hermes, xxx. 11; accepted by
Neumann, Grundherrsch. d. röm. Rep. 14 f.; Kornemann, in Klio,
v. 90.
[301] P. 50
[302] Röm. Staatsr. iii. 164 f.
[303] Ibid. 163 and n. 3, in opposition to his former view and
that of Grotefend; cf. p. 52.
[304] There might remain the conjecture that the regiones, or
pagi, had the same constitution as the tribes, but in that case the
difference between pagus and tribus would be one of name only,
and would therefore be without historical significance. Meyer’s
view (Gesch. d. Alt. v. 135, 142) that the sixteen earliest country
tribes were not formed till after the institution of the plebeian
tribunate depends partly on his notion that the tribunes were
originally the heads of the four urban tribes and partly on the
difference in the naming, the city tribes being named after
localities and the country tribes after gentes; cf. Hermes, xxx. 11.
The latter circumstance, he asserts, establishes a later origin for
the rural tribes. This argument is by no means convincing; the
difference may have arisen from different conditions in country
and city; probably no urban ward had one patrician gens so
predominant as to give its name. If one kind of name is earlier
than another, we should naturally suppose the gentile name to be
the earlier, and in that case we should prefer the view of Pais,
Stor. di Rom. I. i. 320, n. 1; Leg. of Rom. Hist. 140; cf. above, p.
52, n. 2.
The patrician gentile name does not imply patrician domination
any more than the eupatrid name of an Attic deme implies
eupatrid domination of that deme.
[305] Hermes, xxx. 12; followed by Neumann, Grundherrsch. d.
röm. Rep. 13 f.; Kornemann, in Klio, v. 90 f.
[306] P. 6.
[307] Among the scholars who insist that originally country as
well as city was divided into tribes are Müller, J. J., in Philol. xxxiv
(1876). 112 ff., and more recently Kubitschek, De trib. or. (1882);
Imp. rom. trib. discr. (1889), 2. Beloch, Ital. Bund (1880), 28,
begins with twenty-one tribes in 495, considering it impossible to
penetrate earlier conditions. Niese, Röm. Gesch. (1906). 38 and
n. 3, more positively assigns the creation of twenty-one tribes to
that date.
[308] Livy ii. 16. 5; cf. Dion. Hal. v. 40. 5.
[309] In Pauly-Wissowa, Real-Encycl. iii. 2650.
[310] Some place the immigration in the time of Titus Tatius;
Verg. Aen. vii. 706 ff.; Suet. Tib. 1; Appian, Reg. 12; Mommsen,
Röm. Forsch. i. 293; Röm. Staatsr. iii. 26, n. 1. That the earlier
tradition assigned the event to the date mentioned in the text is
asserted by Münzer, in Pauly-Wissowa, ibid. iii. 2663.
[311] Livy ii. 21. 7 (495): “Romae tribus una et xxx factae.” This
statement is not that thirty-one tribes were instituted in that year,
but that the number thirty-one was reached, “factae” being
copulative. If “una et xxx” is not a copyist’s error, it probably
depends on the Fabian view that there were originally thirty tribes.
At all events it is inconsistent with the later statement (vi. 5. 8)
that the number twenty-five was not reached till 387. The
epitomator of Livy accordingly corrected the number to twenty-
one, which most editors now write in the text itself. That there
were twenty-one tribes in 491, when Coriolanus was tried, is
assumed too by Dion. Hal. vii. 64. 6: Μιᾶς γὰρ καὶ εἴκοσι τότε
φυλῶν οὐσῶν, οἶς ἡ ψῆφος ἀνεδόθη, τὰς ἀπολυούσας φυλὰς
ἔσχεν ὁ Μάρκιος ἐννέα· ὤστ’ εἰ δύο προσῆλθον αὐτῷ φυλαί, διὰ
τὴν ἰσοψηφίαν ἀπελέλυτ’ ἄν, ὥσπερ ὁ νόμος ἠξίου (“There being
at the time twenty-one tribes, to whom the vote was given,
Marcius received the votes of nine tribes for acquittal; so that, had
two more tribes been favorable, he would have been acquitted by
an equality of votes, as the law required”). This is not a mistake,
as many assume, but an understatement; cf. Müller, J. J., in
Philol. xxxiv (1876). 110 f. Meyer’s explanation (Hermes, xxx. 10,
n. 2), which makes διὰ τὴν ἰσοψηφλίαν signify “owing to the equal
value of the votes,” is improbable and unnecessary.
[312] For the form of the word, see Mommsen, Röm. Staatsr. iii.
171; Kubitschek, in Pauly-Wissowa, Real-Encycl. iv. 117.
Crustumeria had been taken four years earlier (Livy ii. 19. 2, 499);
so that a tribe of the same name could have been admitted in
495.
[313] Livy vi, 5. 8.
[314] Ibid. viii, 15. 12.
[315] Ibid. 17. 11.
[316] Ibid. ix, 20. 6.
[317] Ibid. x, 9. 14.
[318] Ibid. ep. xix.
[319] B.C. i. 49. 214: Ῥωμαῖοι μὲν δὴ τούσδε τοὺς νεοπολίτας
οὐκ ἐς τὰς πέντε καὶ τριάκοντα φυλὰς, αἳ τότε ἦσαν αὐτοῖς,
κατέλεξαν, ἵνα μὴ τῶν ἀρχαίων πλέονες ὄντες ἐν ταῖς χειροτονίαις
ἐπικρατοῖεν, ἀλλὰ δεκατεύοντες ἀπέφηναν ἑτέρας, ἐν αἷς
ἐχειροτόνουν ἔσχατοι. For δεκατεύοντες scholars have attempted
to substitute δέκα, δέκα πέντε, δέκα ἐνεδρεύοντες (Mendelssohn,
App. ii. p. 53, n.). The meaning given in the rendering offered
above, though not found elsewhere, is possible. The passage has
reference to the Latins and faithful Italians admitted by the Julian
law of 90.
[320] III. 17 (Peter, Reliquiae, i. 280): “L. Calpurnius Piso ex
senati consulto duas novas tribus.”
[321] II. 20. 2.
[322] Kubitschek, Imp. rom. trib. discr. 2-6, tries to prove that
the lex Iulia, 90, provided for the enrolment of the Latins and
faithful allies in fifteen old rural tribes, and that the lex Plautia
Papiria, 89, assigned the more obstinate rebels to eight other
existing rural tribes.
[323] Cf. Madvig, Röm. Staat. i. 26 f.
[324] B. C. i. 53. 231.
[325] That there was an increase is held by Mommsen, Röm.
Staatsr. iii. 179, n. 1; Drumann-Gröbe, Röm. Gesch. ii. 370. This
view is favored by Long, Rom. Rep. ii. 199 f. Lange, Röm. Alt. iii.
111 f., compromises.
[326] Livy, ep. lxxvii; App. B. C. i. 55. 242; p. 404.
[327] App. B. C. i. 59. 268; Cic. Phil. viii. 2. 7.
[328] Vell. ii. 20. 2; Livy, ep. lxxxiv; App. B. C. i. 64. 287; Cic.
ibid.; Exup. 4; Mommsen, Röm. Staatsr. iii. 180, 439.
[329] Livy, ep. lxxxvi.
[330] Mommsen, ibid. 180.
[331] P. 71. Their military purpose is recognized by Dion. Hal.
iv. 14. 2, whereas Livy, i. 43. 13, connects with them nothing but
the collection of taxes.
[332] Livy i. 43. 13; Pliny, N. H. xviii. 3. 13; Varro, L. L. v. 45;
Mommsen, Röm. Staatsr. iii. 166, n. 1.
[333] Dion. Hal. iv. 14. 2; Laelius Felix, in Gell. xv. 27. 5;
Flaccus, in Gell. xvii. 7. 5. In referring to the year 204 Livy, xxix.
37. 3 f., represents the tribes as districts. The Pupinian tribe is
often spoken of as a district, as by Varro, R. R. i. 9. 5. On the local

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An Austro Libertarian Critique of Public

Choice 1st Edition Thomas J. Dilorenzo

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Steven E. Abraham State University of New York, Oswego

ADDLETON ACADEMIC PUBLISHERS • NEW YORK

© Addleton Academic Publishers 2016

Addleton Academic Publishers is an imprint of RIOTS, New York.

Economy and Society

Produced in the United States of America

Part 1: What Is Austrian Economics? [3]

Part 2: The Austrian Critique of Public Choice [44]

Part 3: The Austrian Response to The Calculus of Consent [88]

Part 4: Austrians and Public Choicers on Antitrust [122]

Part 5: Rent Seeking [188]

Part 6: Taxation [245]

Part 7: Other Topics in Public Choice [282]

Part 1: What is Austrian Economics?

Part 2: The Austrian Critique of Public Choice

Part 3: The Austrian Response to The Calculus of Consent

Part 4: Austrians and Public Choicers on Antitrust

Part 5: Rent seeking

Part 7: Other Topics in Public Choice

1. Markets are imperfect

other Austrian-school insights, such as methodological individualism and an

2. Buchanan’s Principles of Cost and Choice

objectively-measurable changes in the environment.”8 For according to the objective

3. The Importance of Subjective Cost Theory

Buchanan gained an international reputation as a public finance scholar long

taxation by reducing their purchases of heavily-taxed items. Altering one’s

4. Subjective Cost, Public Choice, and Fiscal Institutions

5. Buchanan and the Public Debt Controversy

the replacement of current tax financing by government borrowing has

6. Money Creation and Subjective Cost Theory

7. Methodological Individualism and the Market Process

Rigorous application of methodological individualism is perhaps what most

8. The Importance of Austrian Economics to Public Choice

This logic led Buchanan to recommend governmentally imposed restrictions on

NOTES AND REFERENCES

New York University Press.

2. Preventing Commercial Interactions

2.1. Rent control

2.2. Minimum wage legislation

The case against wage minima is equally straightforward. By prohibiting employ-

employed workers to avail themselves of these government “benefits,” we have to

3. Forcing Commercial Interactions

service, as well as taxicabs, buses, and insurance in certain jurisdictions.

3.2. Public goods

Second, it is possible to exclude people from highway use by setting up toll

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