Jan. 9 (Bloomberg) -- James M. Buchanan, the U.S. economist who won the 1986 Nobel Prize for applying the principles of economic self-interest to understand why politicians do what they do, has died. He was 93.
He died today at LewisGale Hospital at Montgomery in Blacksburg, Virginia, according to the Center for Study of Public Choice at George Mason University in Fairfax, Virginia, where Buchanan was a distinguished professor emeritus of economics. No cause was given.
“Jim’s importance to our department, the university and our profession cannot be overstated,” read a message on the center’s website.
The Royal Swedish Academy of Sciences awarded Buchanan the Nobel in economics “for his development of the contractual and constitutional bases for the theory of economic and political decision-making.”
Buchanan was a pioneer in the field known as public-choice theory, which views government decisions through the personal interests of the bureaucrats and elected leaders who want to advance in their careers and win campaigns.
He summarized public choice as “politics without romance” and said it helps explain why established bureaucracies “tend to grow apparently without limit,” why pork-barrel politics endure and why the tax system is defined by “the increasing number of special credits, exemptions and loopholes.” At the time he received the award, his ideas were finding a receptive audience within the administration of President Ronald Reagan.
“Buchanan’s contribution is that he has transferred the concept of gain derived from mutual exchange between individuals to the realm of political decision-making,” the Nobel committee wrote. “According to Buchanan, it is often futile to advise politicians or influence the outcome of specific issues. In a given system of rules, the outcome is to a large extent determined by established political constellations.”
As Buchanan put it in “Liberty, Market and the State” (1986), politics is “a process within which individuals, with separate and potentially differing interests and values, interact for the purpose of securing individually valued benefits of cooperative effort.”
He drew on the work of Knut Wicksell, the Swedish economist who studied to what degree different forms of parliamentary government spend money in line with the wishes of taxpayers.
The choice of Buchanan for the Nobel drew some criticism, in part because his area of study was a step away from traditional economics in the direction of political science.
Buchanan himself, writing in 1989, said he was surprised to be honored, “because I held myself, my work, and my affiliation, to be too far outside the mainstream both of my own discipline and the American academia.”
James McGill Buchanan was born on Oct. 3, 1919, in Murfreesboro, Tennessee. His grandfather, John P. Buchanan, had been governor of Tennessee from 1891 to 1893.
He earned his undergraduate degree from Middle Tennessee State University in 1940 and his master’s from the University of Tennessee in 1941. During World War II he served in the U.S. Navy on the staff of Admiral Chester Nimitz, commander of the Pacific fleet. He earned his Ph.D. from the University of Chicago in 1948.
He taught at the University of Tennessee and Florida State University. At the University of Virginia, where he taught from 1956 to 1968, he led the economics department and helped found the Thomas Jefferson Center for Studies in Political Economy, the research institute through which he continued his work on public-choice theory.
His best-known book, “The Calculus of Consent,” was published in 1962. He collaborated on it with his research institute co-founder, Gordon Tullock.
Among his students at Virginia was John Snow, who would become chairman and chief executive officer of CSX Corp., an international freight transportation company based in Jacksonville, Florida, and President George W. Bush’s second Treasury secretary.
Buchanan moved to Virginia Polytechnic Institute in 1969 and became director of a new Center for Study of Public Choice. He moved with the research center to George Mason University in 1983.
Buchanan and his wife, the former Ann Bakke, married in 1945.
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