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A vivid realization that we need to talk about politics as it actually is, I say, is the great merit of the so-called public choice, or Virginia, school in economics and politics and political theory, that of James Buchanan and Gordon Tullock and their many colleagues. The school asks what governments can in fact do, considering that the governors have their own agendas — for example, the acquisition of large and secret bank accounts in Switzerland, and the monopoly of violence at home to achieve them. Buchanan and friends are the reply to Nussbaum's hazy nostalgia for collectivism.

But remember the Nussbaum Lemma and the Virtue-Ethical Theorem. Is a full ethics missing? Does Nussbaum in the end get her own back relative to the Virginia School?

"The Madisonian vision, with its embodied ethic of constitutional citizenship," Buchanan noted in one of his elegiac pieces after the 1960s, "is difficult to recapture once it is lost from the public consciousness." Of course it is easier to have the ethic of a constitutional citizen if one is involved, as Madison and his founding brothers were, in making and defending an actual, new constitution. Still, Buchanan is rightly advocating an appreciation of constitutional issues, as against a game of maximizing within a given constitution, which he believes characterizes the Me Generation. He notes over and over again in his work that "if we [in Prudence-Only style] are considering games with effectively large numbers of players, there may exist little or no incentive for any single player to participate actively in any serious evaluation of the rules," that is, the constitution of the game. There is no point in voting in a large election if casting the vote costs even a tiny inconvenience, five minutes to go to the polls, a spot of rain, a longish line. He concludes that "participating in the discussion of constitutional rules must reflect the presence of some ethical precept that transcends rational interest for the individual."

Bingo. Suddenly we are back in an ethical world. "We remain," Buchanan wrote in 1992, "ethically as well as economically interdependent." The most obvious sort of ethical precept, other-regarding, may not do the trick, in the middle reaches of the virtue diagram: "The individual may be truthful, honest, mutually respectful, and tolerant in all dealings with others; yet, at the same time, the same individual may not bother at all with the maintenance and improvement of constitutional structures." He plays checkers with a good will, refraining from cheating, say, but does not enter into the question whether the 10 x 10 board is better than the (long-solved) 8 x 8 board. In other words, Buchanan's idea of "constitutional citizenship" is a transcendent ethic, at the top of the diagram of the virtues. We vote because we have faith in the traditions of American democracy or hope for its future or some less dignified yet still transcendent imagining, not because we irrationally expect to influence the outcome of a senatorial campaign in which 5 million other citizens of Illinois are going to the polls.

In 1989 Buchanan wrote that "Each one of us, as a citizen, has an ethical obligation to enter . . . into an ongoing . . . constitutional dialogue." But where does the inclination to fulfill our ethical obligations come from? Not, as Buchanan shows repeatedly, from Prudence Only. He wrote in 1978 that "Homo economicus has assumed . . . a dominant role in modern behavior patterns." He attributes the sad slip towards Prudence Only to larger polities, national politics (the K Street fishery again), and the "observed erosion of the family, the church, and the law" (remember: it's 1978). Is that right?

Buchanan is the greatest student of Frank Knight. Like Knight, he is a theologian who dismisses theologies. He has a tragic, Protestant vision, as Robert Nelson has described it. We are sinners in the hands of an angry God, which God has arranged all sorts of prisoners' dilemmas and free-riding problems to stand it the way of a second Eden that the naïve optimists like Nussbaum and McCloskey in their separate ways think are attainable. We may not in fact be among the elect. The more there are of us, the further we get from small communities, the more likely is damnation. As early as 1965 Buchanan was asserting that "the scope for an individualistic, voluntaristic ethics must, of necessity, be progressively narrowed." In 1978 he exclaims in anguish, "Is not man capable of surmounting the generalized public goods dilemma by moral-ethical principles that will serve to constrain his proclivities toward aggrandizement of his narrowly defined self-interest?" But immediately he answers, No, not under the large-polity conditions of modern governments.

The underlying dilemma that Buchanan has been worrying about for so long is that although private goods are best provided in anonymous markets, public goods are best provided in face-to-face communities, two people playing checkers or two people married, or a small town in Tennessee. It is the classic dilemma of modern public finance, noted by Wicksell and the Italians and James Buchanan. The only solution is ethical, and Buchanan is not optimistic about getting it.

But the paradox in economists like Buchanan or Tullock — this is my Nussbaumian criticism of the Virginia School — is that the ethical change Buchanan in particular advocates to solve the large-polity problem, or the big change in institutions necessarily supported by an ethical change, is undermined by the very Prudence-Only framework he brings to the task. That is, the rhetoric of Prudence Only corrupts the public discussion of getting beyond Prudence Only.

One of Buchanan's contributions to Prudence-Only theorizing, for example, was his 1975 paper, "The Samaritan's Dilemma," arguing that the Samaritan has every incentive to "pass by on the other side," especially if the road is thronged with passers by. But the Samaritan in the gospel of Luke (10:33-34) did not do so, for reasons that had precisely nothing to do with prisoner's dilemmas or Prudence Only. That of course is the point of the parable. Suppose everyone around the Samaritan, and especially his professor of economics or of law and economics, was saying, "Why be a sucker? Only a fool would bother, under Prudence-Only ethical rules. Come on, Samaritan, pass by on the other side." That is the effect, I say, of 200 years of Benthamism in economic discourse

Why do we talk about ethics or about getting lists of capabilities correlated with ethics or about forming constitutions on the basis of ethics assumed at the start? We do so because we are exchanging persuasions in the way we exchange goods. Adam Smith spoke of the "propensity to truck, barter, and exchange," which Buchanan wishes to place at the center of economics, as arising from the faculty of reason-so much for Prudence Only and the reason half of the Enlightenment project. But Smith added, and believed, "and the faculty of speech," which is the other, freedom half, the matter of persuasion's role in the economy, ignored after his death. We are, as Smith said, orators through our lives. We preach. And what we preach is the seven virtues.

Buchanan complains about "lawyers [turning to] economic theory for new normative instructions," by which in 1978 he probably meant the then Professor, soon to be Seventh Circuit Court of Appeals Judge, Richard Posner. But what has given Posner his influence (I mean aside from his crushing if often misled energy and brilliance) is his retailing of just those theories of Prudence Only to which James Buchanan and Gordon Tullock and numerous of their colleagues have so notably contributed. Don't be a sucker. Defect.

We need direct ethical change. Only that will protect the constitution, or result in wide capabilities, or give birth to a society of love. Buchanan dismisses direct ethical change with the anti-clerical's sneer: "Rather than hope for a 'new morality,' I shall focus on the potential for institutional reform that may indirectly modify man's behavior towards his fellows." Hard-nosed and practical. No preacherly talk of ethical conversion.

But institutional reform, in turn, is only possible if we stop speaking of people as I'm-All-Right-Jack maximizers and start insisting that they are complete ethical beings. Not saints or heroes, I mean, but anyway people trying to evince all seven of the virtues, often failing.

The change in professors' talk won't of course suffice. People outside the academy, too, need to adjust their rhetoric to the ethical world. But changing our ethical rhetoric inside the academy will help. "I am sure," wrote Keynes in 1936, "that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas," and so the subsequent career of Keynesianism showed, in its rise and in its decline.

John Adams doubted "whether there is public Virtue enough to support a Republic"; yet James Madison expected political competition, like economic competition, to make it "more difficult for unworthy candidates to practice with success the vicious arts by which elections are too often carried." Adams stands for a civic republicanism depending on individual virtue, Madison for a liberalism depending à la Buchanan and Tullock on constitutional structures. Either individual virtue is necessary for the polity to thrive, or else ingenious structures can offset the passions with the interests. I suggest that the only way we are going to get the ingenious structures of Madison is in a polity with the public virtues of Adams, and the only way we are going to get that in turn is to start talking about it. All right: "preaching." Since when has urging virtue on our friends been a bad idea?

The analogy in ethical theory is the difference between act utilitarianism and rule utilitarianism. Buchanan's example of playing a game within a given set of rules is act utilitarianism, and as he has been explaining to us for fifty years act utilitarianism has great problems. In a game of chess, for example, do you cheat when your opponent goes to the bathroom? The monster of Prudence Only assumed in most economic theorizing would. Therefore, says Buchanan, we have to rise to the level of rule utilitarianism. We formulate for ourselves and others by mutual agreement some extensive rules of the game. No cheating. A bishop moves on the diagonal. No taking out a .38 and threatening our opponent. It is Hobbes' and Locke's or Rawls' or Buchanan and Tullock's or Nussbaum's social contract. But why would anyone follow the social contract? The answer is not, as Hobbes supposed, Prudence Only. That doesn't work. The answer is Buchanan's "constitutional citizenship." But in order for this in turn to work it must be supported by a third level, above the rules and constitutions, namely, educated character. Ethos. Ethics.

You can think about it in a little table, where the two later levels solve the problem of the earlier one:

Buchanan sometimes rejects ethical reasoning in terms that echo the so-called "emotivism" of logical positivism and other hard-nosed theories, such as Hobbes' in 1651: "Good and evil are names that signify our appetites and aversions." In 1975 Buchanan disdained ethical discussion as "pure escapism; it represents empty arguments about personal values which spells the end of rational discourse." We must proceed "on the presumption that no man's values are better than any other man's."

I don't think Buchanan could really have meant this. Emotivism is also called the "hurrah-boo" theory. Many "realist" thinkers, which is not Buchanan's party, have really meant it. Ethical and aesthetic preferences, the American judge Oliver Wendell Holmes, Jr. wrote in 1902, are "more or less arbitrary. . . . Do you like sugar in your coffee or don't you?" Hurrah. In the same year: "Our tastes are finalities." Boo. In the fourth year of the Great War he wrote to Harold Laski, "When men differ in taste as to the kind of world they want the only thing to do is to go to work killing."

The problem is the word "taste," with its evocation of considerations more or less arbitrary, sugar in your coffee, hurrah-boo. Joseph Schumpeter of Vienna and Harvard expressed an ethical philosophy along similar lines: "We may, indeed, prefer the world of modern dictatorial socialism to the world of Adam Smith, or vice versa, but any such preference comes within the same category of subjective evaluation as does, to plagiarize Sombart, a man's preference for blondes over brunettes." Hurrah-boo. Thus also Lionel Robbins of the London School of Economics at about the same disturbed time: "If we disagree about ends it is a case of thy blood against mine--or live and let live, according to the importance of the difference, or the relative strength of our opponents. . . . If we disagree about the morality of the taking of interest . . , then there is no room for argument." And a fount of such an attitude, Bertrand Russell: "As to ultimate values, men may agree or disagree, they may fight with guns or with ballot papers, but they cannot reason logically." Russell certainly didn't.

Emotivism is "the doctrine that all evaluative judgments and more specifically all moral judgments are nothing but expressions of preference." Emotivism, observe, taken as a doctrine one should believe, is of course self-contradictory, since preaching against preaching is preaching. But logic is not a strong point among the emotivists, or the logical positivists.

I am saying that there is a tension in Buchanan's thought, this lack of comfort with ethical thinking in a man very given to . . . ethical thinking. Like Frank Knight, Buchanan is a highly ethical thinker, "admittedly and unabashedly" celebrating, for example, constitutional political economy precisely for its "rationalization purpose or objective." He is not by any means the laughing amoralist that Schumpeter pretended to be. The judgment about dictatorial socialism is decidedly not in Buchanan's ethical world a preference more or less arbitrary, hurrah-boo.

Let me put the point another way. A paper by Buchanan and Viktor Vanberg in 1991 declares that people's preferences have but two components, theories and interests. "A person may oppose the imposition of a highway speed limit because it is predicted to be unenforceable (a theory-component) or because he or she enjoys driving at high speeds (an interest-component)." This is mistaken. There is also an ethical component: "High speed is good for the human spirit," the ethicist may say, or "No government should interfere." It seems apparent that human preferences are affected by ethical reasonings. The ethical component often has nothing to do with the person's own pleasures — she may not know how to drive, for example, or herself be terrified by high speed, but nonetheless she advocates ethically speaking the right to high speed for others.

The reason the third, ethical component matters is that the veil-move in contractarian philosophy is supposed to leave only the theory component, what Buchanan and Vanberg call "the knowledge problem," since one does not know where ones interests will be located in the rule-guided world thus enacted. But the deduction is mistaken. The veil does take away interest, yes. But it leaves theories and ethics, a knowledge problem and an ethical problem. The point applies equally to Hobbes and Gauthier and Rawls and Nussbaum and Buchanan and Vanberg. The veil-move takes away particular, local, historical interest. From behind your veil you don't advocate slavery because for all you know you may end up as a slave. But as human beings actually are, and must be if the constitution is to endure, the veil-move leaves the ethical component. People after bourgeois English Quakerism detested slavery, and not merely because of an unsupported expression of taste, but for new reasons more or less good, elaborated in the past two centuries: "Slavery is inefficient"; "Slavery corrupts even the master"; "Slavery violates the categorical imperative"; "Slavery would not be chosen from behind a veil of ignorance."

Buchanan had earlier written that it would be "empty to evaluate imagined social states without consideration of the structure of rights, or rules, that may be expected to generate them." It is what he and I would agree is wrong in Martha Nussbaum's brave book. We can call his assertion the Buchanan Lemma. I've used it here to say why I don't agree with Nussbaum's statist /NGO-ist system of foreign aid.

But as in Nussbaum's case, our new Lemma applies to the very writer who formulated it. Nussbaum herself returns thereby the critical favor. It would be empty to evaluate imagined constitutions, say Nussbaum and I, without consideration of the structures of ethics that may be expected to generate them.

I am advocating what can be conceived of as the next step in Nussbaumian capabilities or the next step in Buchananesque constitutional reform. The next step is to take all the human virtues seriously. You could call it a humanistic economics, gradually emerging from the slow, dignified, and long-awaited collapse of the Samuelsonian program in economic science. It might be called the "second-stage classical economics" that Vivian Walsh recently advocated, because after all it was in fact the program of the blessed Adam Smith. Or it might simply be called "Smithian."

Buchanan has long argued that we don't need Max U to do economics. Smith didn't need it, for example. Keynes didn't need it. Hayek didn't need it. The Samuelsonian program was initiated by an amazing paper by Samuelson in 1938 on revealed preference and fully launched in his modestly entitled Ph.D. dissertation of 1947, The Foundations of Economic Analysis. Samuelson founds economics on maximizing individuals and, in the political sphere (articulated first by A. C. Pigou in the 1910s and 1920s at Cambridge and then mathematized in the 1930s by Samuelson's friend at Harvard, Abraham Bergson) maximizing societies consisting of maximizing individuals. They are not just "individuals." I am not here complaining about methodological individualism. They are maximizing individuals. The mathematics of maximization, a mathematics already a century and a half old in the 1930s, became the dominant tool of economists. By the 1970s some economists, who themselves rose to dominate this part of the profession, demanded that everybody "found" even the study of inflation, unemployment, and growth, namely, macroeconomics, on "micro-foundations," that is, the Samuelsonian method of Max U. It didn't work, but it is still taught with the utmost rigor in graduate programs in economics. In the same decade another group of economists, who later came like their teachers to dominate the rest of the profession, demanded that everybody, simply everybody, found the study of face-to-face interactions, namely, bargaining situations and the faculty of speech, on game theory, that is, Max U in another guise.

Buchanan and a small group of other economists, including now me, a latecomer, say that Max U is a curse, not a blessing. We are not, I emphasize, attacking mathematics or methodological individualism. These have their faults, but have their virtues, too. We anti-Samuelsonians say merely that economics should not be about a dubious individual psychology, proven mistaken over and over again in the laboratories, or about a desperately partial ethics. It should be about exchange. Buchanan said so a long time ago in his presidential address to the Southern Economics Association.

The Max U idea came into its own in David Hume — not in his person, which approached as Smith remarked of his friend "as nearly the idea of a wise and virtuous man as perhaps the nature of human frailty will permit" (***original date? Correspondence, p. 221) but in his utilitarianism. "The sole trouble which virtue demands," declared Hume, "is that of just calculation, and a steady preference for the greater happiness" (****cite? Search Lib Fund). The idea was ancient, of course. Epicurus recommended it, as much later did Machiavelli and Hobbes. Hume was merely another alarming figure in a long line saying as we say in Chicago, "Take it easy: but take it." In Hume among sophisticates, though, it started to sound respectable, and when Bentham elaborated on it ***NN years later it started to sound scientific, and when Mill brought it in ***NNNN to perfection it started to sound right. By the time Samuelson dressed it in Lagrange's mathematics a utilitarian ethic sounded to many people like the only reasonable way to approach a question of what to do.

But Max U kills ethics. That was indeed Hume's purpose, and Hobbes', and Machiavelli's. The moment you insist that the only way to know what to do is to ask what particular doings will maximize "utility" you have reduced ethics to the one virtue of Prudence. Banishing ethics was not Samuelson's purpose. But in the philosophical atmosphere of the 1930s and 1940s, dominated by emotivism, it is hardly surprising that banishing ethics from economics is in fact what he accomplished. A very different economist, Milton Friedman, agreed with Samuelson on the banishment.

In other words, the very formulation of economics as a constrained maximization problem or as a game or as micro-foundations, that is, as Max U, makes it impossible to take other virtues seriously. You therefore find economists and evolutionary psychologists and the like saying, for example, that "love" — they commonly used the scare-quotes — is merely getting the most for yourself, even if by the intermediate step of getting something for the beloved. Or you find them claiming that justice will spring from a group of Max Uers.

Buchanan and company reject Max U. My point is that in doing so the Buchananites create a space for a full ethics, which they sometimes admit. Indeed, only a non-Max U economics has such a space. The kiss of Hume is the kiss of death to a humanistic economics.

Buchanan in particular, following Knight and Hayek, has himself made a related point about the society as a whole. He criticizes the Pigou-Bergson-Samuelson program of social engineering that I mentioned. Briefly put, Buchanan argues that taking Max Social U as your goal is a formula for tyranny. If the maximizers are the better Swedish bureaucrats maybe it will not be so bad, at any rate until they retire and another and less already-ethical group takes over. But in most countries as I said the bureaucrats, being like the rest of us fallen humans, are not so ethical as the Swedes, and as Buchanan has pointed out they have good or bad purposes of their own distinct from the "welfare" of their charges. "Their charges." The phrase captures the underlying problem with a system of Max U generalized to social engineering. Who wishes to be held in charge by Vladimir Putin, or for that matter George Bus? Who wishes to be child to a governmental adult?

My own argument, that we need to re-ethicize the social sciences, I am very willing to admit, has its own unresolved tensions, chiefly: by what mechanisms do I imagine that the next ethical step will take place? If our hope must rest partly in ethical change, what is the basis for the hope?

One small contribution we ex-Samuelsonian economists and political scientists and political philosophers can make is to stop talking of Prudence Only as the ideal constitution of liberty. It is not, and economists and calculators have done damage by obsessing on it all these years since Paul Samuelson first mathematized it, or since Jeremy Bentham first formalized it, or since Bernard Mandeville first put it into verse, or since Hobbes first declared it the natural law of humans, or since Machiavelli first suggested it to the prince. In our times Amartya Sen was among the first Samuelsonian economists to de-convert; I am a late follower of Sen; Buchanan was already suspicious of Prudence Only, but he had never been a Samuelsonian.

A contribution the non-economist clerisy can make to an ethical change is to cease talking of voluntary exchange as exploitative, or as easily second-guessed by those better Swedish bureaucrats. Prudence Only at the level of an ideal bureaucracy is just as partial and unethical as Prudence Only at the level of individual motivation. We need to inquire into how to make good people, including our governors, in the world as it is.

The choice of an ethical character is so to speak a within-person constitutional choice. We should be investigating how to produce good people, because good people make good political and economic choices.

And anyway flourishing lives for human beings is what we seek.