Virginian public choice and Freiburg ordoliberalism
Despite broad similarities and theoretical sympathies, there is however a fundamental issue on which the two schools of thought might be seen to have followed (or at least suggested) different paths. The divisive issue regards the origins– or ‘paths to discovery’ – of the most “suitable” (set of) rules for a modern liberal democratic society to be built on.
Buchanan, on the one hand, relied on a peculiar version of contractualism, in which rational individuals well conscious of their own socio-economic conditions are driven by the long-term horizon of constitutional choice to agree unanimously on the most efficientset of rules of the game – where efficiency is clearly to be understood with reference to the furthering of those individuals’ interests and values.
On the other hand, one of the basic tenets of the Freiburg school of economic order is the conception of competition (viewed as the economic cornerstone of a well-ordered society) as a discovery process – to recall a familiar expression by Friedrich von Hayek, by himself not a member of the school, though a liberal economist of similar mindset. One is then led to ponder the possibility of extending the idea of a procedure based on trial and erroralso to the historical process of emergence and selection of the most appropriate rules of the game for a particular community of people.
Our aim in the paper is thus to weigh the pros and cons of the two briefly described theoretical avenues for the design of the constitutional economic order of a democratic society, with a view also to applying the discussion to the experience of the Economic and Monetary Union and the recent troubles of the common currency.