Chapter Ǵ: Why Subjectivism? ȂȂadvantages and hunches about fruitfulness and not let himself be badgered
into foretelling the unforetellable.
James Buchanan achieved one of the greatest triumphs of subjectivism
in demonstrating (ȀȈȄȇ/ȀȈȈȈ) that the burden of government spending
can indeed be largely shifted onto future generations by deficit financ-
ing through issue of bonds. Ļe conventional wisdom among economists
(shared even by Ludwig von Mises, though not by the general public)
had been unduly materialistic: the burden cannot be shifted through time,
since resources are used when they are used. Buchanan recognized that a
burden is something subjectively perceived. Persons who voluntarily give
up current command over resources in exchange for government bonds
that they find attractive suffer no burden in doing so. It is in the future
that people—in general, people other than the original bond-buyers—will
bear the burden of paying taxes to service the debt or of losing through
its inflationary or outright repudiation. Furthermore, bond-financed gov-
ernment deficits do affect allocation of resources in time by trenching
on private capital formation, thereby worsening future economic oppor-
tunities.Ȁ
ŒšŞŠŔőŞ ŜśŘŕŏť ŕřŜŘŕŏōŠŕśŚş
Ļe ultrasubjectivist view of cost put forward by James Buchanan (ȀȈȅȈ)
and writers in the London School tradition (some of whose articles are
reprinted in Buchanan and ĻirlbyȀȈȆȂ/ȀȈȇȀ) has been largely adopted by
Austrian economists (VaughnȀȈȇǿandȀȈȇȀ; SeldonȀȈȇȀ).
In examining this view, we must avoid false presuppositions about how
words relate to things. It is not true that each word has a single definite
and unequivocal meaning and that it labels a specific thing or action or
relation objectively existing in the world. On the contrary, many words
have wide ranges of meaning. One way to learn what writers mean by
a word is to see what implications they draw from propositions contain-
ing it.
Ļis is true of “cost” as interpreted by Buchanan and the London econ-
omists. Ļose writers associate particular policy positions with the fuzzi-
ness that they attribute to cost. Ļey heap scorn on cost-oriented rules for
managing enterprises.
ȀUnaccountably, I somehow forgot to mention this achievement of Buchanan’s until
it was too late to change this article while it was being originally published.