Kenneth Boulding and James Buchanan on the public function of economics

Abstract James Buchanan and Kenneth Boulding shared the (unique) definition of economics as the science of exchange, and they did so for moral reasons. This paper reconstructs their argument and shows that their understanding of economics (and political economy) as moral science was grounded in the idea that science contributes to the public image of the world. The concept of ‘the image’ was developed by Boulding, and referred to the semi-rational subjective picture on which individuals rely to interpret the world, formulate plans of action, and imagine alternatives. Buchanan and Boulding considered exchange a type of human relationship which was voluntary in nature and aimed at mutually beneficial transactions. Although exchange relationships are not as morally praiseworthy as integrative relationships such as friendships, to them, they are morally preferable to relationships based on (threats of) violence. Since integrative relationships cannot sustain an extended society, they believed that economics and politics should be studied as the science of exchange, to show how both markets and political institutions contribute to a good society, as well as to analyze which other institutions organized around exchange were possible in the commercial and political realm. This normative and public role of economics has been largely overlooked and is distinguished in this paper from the more established normative and public functions of economics: the technocratic role (to advise policymakers) and the democratic role (to advise citizens).