What Should Economists Do? (Buchanan, 1964)

In this essay, James Buchanan argues that the economist should focus in "the theory of markets", instead of the "theory of resource allocation" or "theory of choice".  He criticizes the vision of Lord Robbins, who considered that the economic problem involves the allocation of scarce means among alternative or competing ends.  Buchanan considers that following Robin's path is to acknowledge the study of economics as one of applied maximization, where the utility function of the choosing agent is defined in advance and choice becomes purely mechanical.  According to Buchanan, the central idea of the discipline should be the cooperative association of individuals (behaviour of exchange, trade or agreement).

Buchanan considers the model of perfect competition to have limited explanatory value except when changes in variables exogenous to the system are introduced.  There is no place within this model for the internal change driven by the Smithean propensity of men. Furthermore, he considers the market as "the institutional embodiment of the voluntary exchange process that is entered into by  individuals in their several capacities" and defines economics as the study of the whole system of exchange relationships.  Finally, Buchanan emphasises that economists should be "market economists".

Several questions arise from revising this essay:

(1) What is the main criticism of Buchanan to the definition of economics stated by Milton Friedman?

(2) According to Buchanan, what is the paradox within the theory of choice?

(3) Why Buchanan considers that the use of the term "catallactics" or "symbiotics" is preferable to the use of the word "economics"?

(4) Why the model of perfectly competitive general equilibrium excludes the social content of the individual behaviour in market organization?

(5) Why is there no explicit meaning of the term "efficiency" when applied to aggregative or composite results?

(6) What is the basic distinction between economics and politics regarding the nature of the social relationships among individuals examined by each field of study?

The essay can be found here:

http://mx.nthu.edu.tw/~cshwang/teaching-economics/econ3171/References/01-Buchanan=What%20should%20Economists%20Do.pdf