WP101—EconStitutionalism
Next Generation Capitalism
Summary
EconStitutionalism—short for Economic Constitutionalism—is a new approach for applying constitutional checks and balances to monetary economics. Specifically, to competing, decentralized currencies within both businesses and communities. Some might describe it as Next Generation Capitalism because it retains private ownership of capital and the means of production. But for some people, the word capitalism carries considerable historical and political baggage, including associations with problems EconStitutionalism is specifically designed to address. Thus, while EconStitutionalism is still a form of capitalism, it asks to be evaluated on its own merits rather than through assumptions inherited from existing or prior forms of capitalism.
1.0 Introduction
EconStitutionalism includes organizing businesses and communities into Constitutional Business Alliances (CBAs), with their own Value-Linked Currencies (VLCs) designed to maintain close correspondence between value creation and the quantity of currency issued. CBAs provide the governance structure needed for proper control of VLCs. Value creation, VLCs, and currency supply are addressed more fully in FE610, WP610, FE907, and WP907—collectively referred to as the 1517 Series. EconStitutionalism also includes a new understanding of markets, liquidity, and ownership, referred to as Ownership Exchange Infrastructure (OEI). Together, CBAs, VLCs, and OEI are the three principal components through which the principles of EconStitutionalism are developed and applied.
Its starting premise is simple: human institutions are operated by imperfect human beings. The U.S. Constitution itself was based largely on the same observation. Indeed, in 1788, while promoting ratification of the Constitution, James Madison famously wrote, “If men were angels, no government would be necessary…”[1] Constitutions do not assume that public officials will always be wise, benevolent, competent, or free from self-interest. Instead, they create mechanisms through which different centers of authority can restrain one another. Namely, checks and balances. The objective is not to eliminate human imperfection. It is to design institutions that remain true to their missions and remain functional despite human imperfection. EconStitutionalism applies this same principle to business alliances and decentralized, competing currencies. You can find more on this topic in FE144—If Only Men Were Angels.
The term Economic Constitutionalism—EconStitutionalism—should not be confused with James Buchanan’s Constitutional Economics and the related field of Public Choice.[2] Buchanan also referred to the same quote by Madison and started with the same premise that humans are not angels, so one might assume that Economic Constitutionalism and Constitutional Economics are similar. Or even the same thing. However, Buchanan applied economic reasoning to political institutions, examining the rules within which collective political decisions are made. EconStitutionalism largely travels in the opposite direction: it applies principles associated with constitutional government—distributed authority, checks and balances, and transparency—to business alliances and decentralized currencies. EconStitutionalism utilizes technology originally created to support cryptocurrencies that did not exist when Buchanan developed Constitutional Economics.
EconStitutionalism therefore poses a fundamental question: Why should constitutional checks and balances stop at the boundary of government? Why not include other institutions as well?
2.0 Why Constitutional Principles Should Apply to Businesses
Constitutional principles are usually associated with government. We separate powers, establish checks and balances, define limits on authority, and create institutions capable of restraining one another because experience has taught us that unchecked concentrated political power can be dangerous. Indeed, the consequences have sometimes been extreme: following the Russian Revolution, Bolshevik leaders explicitly defended state-directed terror and mass killings as necessary to preserve their regime.[3] Yet the people who operate governments are not a different species from the people who operate businesses.
Businesses also exercise considerable power. They obviously do not possess the legitimate coercive powers of government, and their power over employees is ordinarily far more limited. Nevertheless, the history of labor relations demonstrates that concentrated business power has sometimes contributed to extreme abuses. Violent labor conflicts such as the Ludlow Massacre of 1914 and the Matewan Massacre of 1920 remind us that disputes between powerful businesses and workers have, at times, even become deadly. Businesses control capital and productive assets, organize the efforts of employees, enter into relationships with customers and suppliers, influence communities, and make decisions that can affect thousands—or sometimes millions—of people. None of this makes business power inherently harmful. Businesses create products and services, provide employment, organize productive activity, and generate much of the wealth upon which modern societies depend. The relevant question is not whether businesses should exercise power, but whether unchecked concentrated power within businesses should also be subject to constitutional principles such as separation of powers and checks and balances.
Curiously, popular opinion sometimes points in the opposite direction. When government appears inefficient, bureaucratic, or unresponsive, some people say that “government should be run more like a business.” Their unstated assumption is that the hierarchical structures common within businesses are inherently more efficient and therefore provide a useful model for government. But that assumption deserves much closer examination.
It was in direct opposition to the perceived injustices of capitalism that many communist movements gained support and eventually came to power. This raises an important historical question: If constitutional principles had been applied more extensively within businesses 150 years ago, might some of the grievances that fueled communism have been addressed without communist revolutions? We cannot know how history might have unfolded differently. But we can ask whether constitutional principles can address similar grievances going forward.
Applying constitutional principles within businesses does not require any particular management philosophy. Some departments might operate effectively with traditional managers, while others might choose self-managing structures. EconStitutionalism allows different approaches to develop and compete rather than assuming that one organizational structure should be imposed throughout an enterprise. Constitutional principles establish the rules and restraints within which that experimentation can occur; they do not predetermine how every group of employees should organize their work.
Investors, executives, employees, customers, suppliers, and communities frequently have different interests. EconStitutionalism does not assume that these differences can—or should—be eliminated. Constitutional government does not depend upon everyone wanting the same things either. Instead, constitutional structures allow different interests and different centers of authority to coexist, compete, cooperate, and restrain one another. The objective is not to make businesses operate like constitutional governments, but to apply useful principles learned through centuries of constitutional experience to other institutions also operated by imperfect human beings.
EconStitutionalism applies these principles through Constitutional Business Alliances. Businesses can remain privately owned and independently operated while participating in a larger constitutional structure designed to provide checks and balances among competing interests. CBAs will be examined more fully later in this paper.
Reflecting upon the contrasting histories of capitalism and communism brings us to two remarkable paradoxes.
3.0 The Dual Paradoxes of Capitalism and Communism
Capitalism and communism present two remarkable and opposing paradoxes. Capitalism has produced extraordinary material prosperity and productive achievement, yet it is widely criticized, distrusted, and sometimes even despised. Marxist communism, by contrast, has repeatedly failed to deliver the prosperity, justice, and freedom promised by its advocates, yet it continues to attract admiration and intellectual support. These are the dual paradoxes of capitalism and communism.
(Please see this note on terminology regarding communism and socialism.[6])
To understand these paradoxes, we must distinguish between reputation and results. The historical records of capitalism and communism provide a useful place to begin.
The productive accomplishments of capitalism are difficult to dismiss. Industrial capitalism transformed transportation, manufacturing, agriculture, communications, medicine, technology, and standards of living. Remarkably, one of the strongest early descriptions of its productive accomplishments came from Karl Marx and Friedrich Engels themselves. In The Communist Manifesto, they wrote that the bourgeoisie had “created more massive and more colossal productive forces than have all preceding generations together.” Marx opposed capitalism, but he did not deny its extraordinary productive power.
The historical record of Marxist communism presents a very different picture. Beginning with the Soviet Union, communist governments promised greater equality, economic security, liberation from exploitation, and improved conditions for ordinary workers. Yet communist experiments repeatedly struggled to deliver the prosperity they promised, while political power became highly concentrated and dissent was frequently suppressed. The Soviet Union ultimately collapsed. The Khmer Rouge experiment in Cambodia was more catastrophic still: its radical attempt to create a classless agrarian society contributed to the deaths of nearly two million people between 1975 and 1979.[7] China and Vietnam eventually incorporated substantial market mechanisms into their economies, while Cuba, North Korea, and Laos provide little evidence that Marxist economic organization has produced the broadly shared prosperity its advocates anticipated.
Ludwig von Mises argued that the apparent viability of socialist enterprises could itself be misleading because they remained dependent upon surrounding market economies. Socialist enterprises could use market prices generated elsewhere for economic calculation, while governments could cover losses through taxes or obtain resources from capitalist economies. In Socialism: An Economic and Sociological Analysis, Mises argued that even Soviet Russia depended upon assistance and economic information originating outside its socialist structure. His broader point was that the performance of socialism could not be evaluated independently of the capitalist environment upon which socialist institutions continued to rely
Yet the reputation of communism has often proved remarkably resilient. Its appeal frequently rests less upon the historical performance of communist governments than upon the moral aspirations associated with the philosophy: concern for workers, opposition to exploitation, greater equality, shared prosperity, and economic justice. Those are powerful aspirations. The failure of governments claiming to pursue them does not necessarily diminish the attractiveness of the aspirations themselves.
Capitalism faces almost the reverse problem. Its historical accomplishments can be substantial while its moral reputation remains surprisingly weak. Some of this criticism is undoubtedly directed toward genuine problems that have existed within capitalist societies. But some may also result from institutions operating within those societies whose failures are subsequently attributed to capitalism itself.
Friedrich Hayek identified monetary institutions as an important example. He argued that recurring inflation, depression, and unemployment attributed to capitalism could instead arise partly from government monopoly over money. His proposed solution was competition among currencies rather than centralized monetary control. Whether or not one accepts Hayek’s entire prescription, his argument raises an important question for EconStitutionalism: How much of capitalism’s poor reputation arises from capitalism itself, and how much arises from the institutional structures within which capitalism has historically operated?
The dual paradoxes therefore cannot be understood simply by comparing the ideals proclaimed by each philosophy. Intentions matter, but so do institutional structures and actual results. Capitalism should not be defended merely because its advocates believe in markets, nor should communism be admired merely because its advocates promise justice. Both should be examined according to what their institutions actually produce.
That still leaves an important question unanswered. Why has capitalism, despite its extraordinary productive record, so often acquired the moral vocabulary of self-interest and selfishness, while communism, despite its historical record, has retained the moral vocabulary of equality, solidarity, and concern for others.
4.0 Capitalism’s Moral Image Problem
Part of the explanation for the dual paradoxes may lie in how capitalism and communism have been described by their own supporters. Capitalism has frequently been explained in terms of self-interest, while communism has been promoted in the language of equality, justice, solidarity, and liberation from exploitation. Judged by stated motivations alone, communism can therefore appear morally attractive while capitalism can appear morally suspect. But intentions and results are not necessarily the same thing.
Then comes Adam Smith.
We can say that capitalism’s association with self-interest isn’t merely an accusation invented by its enemies. One of capitalism’s foundational thinkers famously explained how people pursuing their own interests can unintentionally advance the interests of society.
Then Ayn Rand intensifies the problem. We move from:
Smith: self-interest can produce unintended social benefits
to
Rand: The Virtue of Selfishness
That is precisely where we can explain that these are not identical philosophical positions—but both have contributed, in different ways, to capitalism’s association with self-oriented motivation.
Then we can contrast that with the language used by Communist advocates:
workers → equality → solidarity → ending exploitation → justice.
Now your observation becomes extremely powerful:
If economic philosophies are judged primarily by what their supporters say motivates them, communism has an enormous rhetorical advantage.
But Section 3 will already have demonstrated why stated motivation is an inadequate measure.
Hayek then provides a second explanation
Section 4 can say capitalism’s moral image problem has at least two sources:
First: capitalism’s own defenders have often framed it around self-interest—and sometimes selfishness.
Second: failures of institutions operating inside capitalist societies have been attributed to capitalism itself.
That’s where Hayek and currency enter.
So Section 4 becomes much more coherent:
Moral problem: Smith → self-interest → Rand → selfishness → capitalism sounds morally self-centered.
Institutional attribution problem: Hayek → centralized currency problems → capitalism receives blame for institutions that may not themselves embody market principles.
Then FE144 provides the response:
Capitalism doesn’t need selfishness as its moral foundation.
EconStitutionalism can recognize self-interest as a human reality without celebrating selfishness. Constitutional restraint can instead arise from concern for others—from voluntarily limiting what we may do because our actions affect our neighbors.
And that hands us naturally to:
5.0 Bringing Constitutionalism to Capitalism
So yes—the old Paragraph 3 contains essential material. We were right to remove it from Section 3, but we would be making a serious mistake if we deleted it. It belongs at the beginning of Section 4, where it can become the premise for the entire section.
Explore another reason for the first paradox. Begin with Adam Smith and the invisible hand: individuals pursuing their own interests can unintentionally produce benefits for others. Distinguish that descriptive insight from the much stronger proposition that selfishness itself constitutes a moral virtue.
Discuss how capitalism consequently became associated with self-interest, and sometimes explicitly with selfishness, as illustrated vividly by Ayn Rand’s The Virtue of Selfishness. Explain why this leaves capitalism rhetorically vulnerable to philosophies promising solidarity, equality, justice, and concern for others.
Then reconnect with FE144. Self-interest can be economically useful without becoming the moral foundation of society. Constitutional restraint can arise precisely because people recognize their own imperfections and care about the consequences their actions may have for others.
This section can make the crucial distinction:
Markets can make productive use of self-interest without requiring selfishness to become a virtue.
999.0 Unknown
e little evidence that Marxist economic organization has produced the broadly shared prosperity its advocates anticipated.
Ludwig von Mises argued that the apparent viability of socialist enterprises could itself be misleading because they remained dependent upon surrounding market economies. Socialist enterprises could use market prices generated elsewhere for economic calculation, while governments could cover losses through taxes or obtain resources from capitalist economies. In Socialism: An Economic and Sociological Analysis, Mises argued that even Soviet Russia depended upon assistance and economic information originating outside its socialist structure. His broader point was that the performance of socialism could not be evaluated independently of the capitalist environment upon which socialist institutions continued to rely
Yet the reputation of communism has often proved remarkably resilient. Its appeal frequently rests less upon the historical performance of communist governments than upon the moral aspirations associated with the philosophy: concern for workers, opposition to exploitation, greater equality, shared prosperity, and economic justice. Those are powerful aspirations. The failure of governments claiming to pursue them does not necessarily diminish the attractiveness of the aspirations themselves.
Capitalism faces almost the reverse problem. Its historical accomplishments can be substantial while its moral reputation remains surprisingly weak. Some of this criticism is undoubtedly directed toward genuine problems that have existed within capitalist societies. But some may also result from institutions operating within those societies whose failures are subsequently attributed to capitalism itself.
Friedrich Hayek identified monetary institutions as an important example. He argued that recurring inflation, depression, and unemployment attributed to capitalism could instead arise partly from government monopoly over money. His proposed solution was competition among currencies rather than centralized monetary control. Whether or not one accepts Hayek’s entire prescription, his argument raises an important question for EconStitutionalism: How much of capitalism’s poor reputation arises from capitalism itself, and how much arises from the institutional structures within which capitalism has historically operated?
The dual paradoxes therefore cannot be understood simply by comparing the ideals proclaimed by each philosophy. Intentions matter, but so do institutional structures and actual results. Capitalism should not be defended merely because its advocates believe in markets, nor should communism be admired merely because its advocates promise justice. Both should be examined according to what their institutions actually produce.
That still leaves an important question unanswered. Why has capitalism, despite its extraordinary productive record, so often acquired the moral vocabulary of self-interest and selfishness, while communism, despite its historical record, has retained the moral vocabulary of equality, solidarity, and concern for others.
5.0 Bringing Constitutionalism to Capitalism
Make the conceptual turn.
Communism does not possess a monopoly on cooperation, justice, compassion, or concern for one’s neighbor. Nor does capitalism require society to embrace greed or unlimited self-interest.
Capitalism has flourished within societies whose governments are constrained by constitutional principles. Ask whether some of those principles can now be extended into economic life.
This is where the central proposition can emerge:
Capitalism has flourished within a culture of constitutional checks and balances. But capitalism itself can benefit from the checks and balances of constitutionalism. That is EconStitutionalism.
Introduce the distinction between changing ownership ideology and changing institutional architecture. EconStitutionalism retains private ownership and markets while redesigning particular structures around them.
6.0 Constitutional Business Alliances (CBAs)
Present CBAs as the organizational application of EconStitutionalism. Businesses remain privately owned and independently operated while participating in alliances incorporating deliberately engineered constitutional checks and balances.
Explain enough of the architecture to demonstrate the concept without turning WP101 into the definitive CBA paper. Emphasize competing interests, distributed authority, stakeholder participation, structural restraint, and cooperation without requiring perfect trust or identical interests.
Constitutional Business Alliances provide an organizational architecture for cooperation among businesses, stakeholders, and communities.
A CBA is not simply a larger corporation, trade association, cooperative, or government agency. It is an economic institution deliberately structured around constitutional relationships among participants with different interests and responsibilities.
The objective is not to eliminate competing interests. It is to use them.
Political constitutions do not attempt to make legislators, executives, judges, states, citizens, and interest groups want exactly the same things. They establish structures within which different interests interact, constrain one another, negotiate, and cooperate.
CBAs apply a comparable principle economically.
Businesses can remain privately owned and independently operated while participating in a larger constitutional structure. Stakeholder interests can be represented without requiring those stakeholders to become the sole owners or managers of the enterprise. Independent institutions can perform specialized functions, provide oversight, validate information, or challenge decisions.
The result is neither conventional corporate hierarchy nor centralized economic planning. It is structured economic pluralism.
CBAs therefore address an important aspect of the Capitalist Paradox. Instead of solving concentrated private power by transferring that power to government, they seek to create additional centers of authority and accountability within the economic system itself.
7.0 Value-Linked Currencies (VLCs)
Move from organizational architecture to monetary architecture.
Explain VLCs as decentralized, competing currencies intended to maintain close correspondence between validated value creation and currency issuance. Connect back to Hayek and the monetary problem introduced in Section 3.
Make clear that technologies originally developed for cryptocurrencies create possibilities for decentralized monetary organization unavailable to earlier constitutional and economic thinkers.
Refer readers to the 1517 Series—FE610, WP610, FE907, and WP907—for the fuller monetary argument.
Economic constitutionalism also requires attention to money.
Money is not merely a medium through which economic activity occurs. It is one of the principal information systems through which economic achievement is measured, exchanged, accumulated, and redirected toward new purposes.
Conventional monetary systems place responsibility for monetary issuance within highly centralized institutions. Whatever their sophistication or independence, those institutions face an extraordinary information problem: the real economy consists of countless acts of value creation occurring throughout society, while decisions about the quantity and distribution of money are made through comparatively centralized mechanisms.
Value-Linked Currencies approach the problem differently.
VLCs connect monetary issuance more directly to validated value creation. Instead of assuming that a central monetary authority can accurately determine the appropriate monetary response to an enormously complex economy, VLC architecture distributes important informational and validation functions closer to the economic activity from which value emerges.
The key word is validated.
Claims of value creation cannot simply be accepted because an interested party makes them. A constitutional monetary architecture therefore requires independent verification, competing perspectives, transparent rules, and mechanisms for correcting error or abuse.
VLCs extend the constitutional principle from organizational governance into monetary architecture. They seek to preserve Monetary Integrity by creating a closer correspondence between currency and the real economic value that currency represents.
8.0 Ownership Exchange Infrastructure (OEI)
Define OEI carefully as a new understanding of markets, liquidity, and ownership, not as another system parallel to CBAs and VLCs.
Explain that markets, ownership, and mechanisms for exchanging ownership have existed for centuries, but EconStitutionalism recognizes these collectively as an underlying infrastructure. Explore why recognizing OEI explicitly matters to understanding how ownership can become more liquid, transferable, competitive, and adaptable.
The third component concerns ownership itself.
Modern economies have developed extraordinarily sophisticated systems for exchanging products, services, currencies, securities, and information. Yet the infrastructure through which ownership and control of productive enterprises are established remains heavily shaped by institutions developed for an earlier economic era.
Ownership Exchange Infrastructure treats ownership as another domain capable of constitutional redesign.
OEI provides mechanisms through which ownership interests can be created, transferred, exchanged, distributed, and reorganized within clearly defined institutional rules. Its purpose is not to abolish private property but to make ownership more adaptable, transparent, and responsive to changing relationships among capital, enterprise, and participants.
This matters because ownership determines more than who receives financial returns. Ownership frequently carries governance rights, control over productive resources, and the ability to influence the future direction of organizations.
If economic power is to be constitutionally structured, the infrastructure governing ownership cannot be ignored.
OEI therefore complements CBAs and VLCs. CBAs address institutional cooperation and governance. VLCs address monetary representation and validated value creation. OEI addresses the architecture through which ownership and control can change hands.
Each addresses a different problem. Their significance becomes clearer when they are viewed together.
9.0 Three Components. One Design.
Bring CBAs, VLCs, and OEI together.
Make explicit that they are not three systems:
CBAs are organizational structures.
VLCs are monetary systems.
OEI is a conceptual understanding of the ownership and market infrastructure within which economic activity occurs.
Despite those differences, all three belong to a common EconStitutionalist design. Show how they interact rather than merely summarizing Sections 6–8.
This should remain one of the conceptual high points of WP101.
CBAs, VLCs, and OEI are not three unrelated innovations.
They are different expressions of the same design philosophy.
CBAs constitutionalize cooperation.
They create structures through which independently owned organizations and diverse stakeholders can cooperate without requiring either complete consolidation or complete trust.
VLCs constitutionalize monetary issuance.
They create structures through which claims of economic value can be independently validated and translated into monetary representation without depending exclusively upon centralized monetary judgment.
OEI constitutionalizes ownership.
It creates infrastructure through which ownership and control can be distributed, exchanged, and reorganized according to transparent rules rather than treated as static features of conventional corporate organization.
Together, these systems create multiple interacting centers of economic authority.
A CBA can provide the institutional environment within which value is created. VLC mechanisms can help validate and represent that value. OEI can provide infrastructure through which ownership interests respond to the evolving economic relationships that result.
None requires perfect participants.
Owners can pursue their interests. Workers can pursue theirs. Customers, investors, communities, managers, validators, and other participants can pursue theirs. The architecture does not depend upon eliminating self-interest. It attempts to arrange institutions so that competing interests provide information, constraints, and corrective pressure upon one another.
That is the constitutional principle at the heart of EconStitutionalism.
The objective is not to create an economic system in which everyone agrees. It is to create one in which disagreement, competition, cooperation, and self-interest can coexist within institutions deliberately engineered to prevent any single interest from becoming permanently dominant.
In this sense, EconStitutionalism is not merely a collection of economic proposals. It is a common design discipline applied across governance, money, and ownership.
Three components. One design.
10.0 EconStitutionalism: From Economic Ideology to Constitutional Design
Return to the larger argument.
The twentieth century was dominated by arguments about who should own productive capital: private individuals or the collective state. EconStitutionalism introduces another dimension: How should economic organizations and monetary institutions be constitutionally designed?
It retains private ownership, markets, entrepreneurship, competition, and decentralized economic decision-making while rejecting the assumption that the institutional structures inherited from earlier forms of capitalism represent the end of economic evolution.
Return finally to FE144’s imperfect-human premise. EconStitutionalism does not require angels, perfectly altruistic business leaders, perfectly informed governments, or perfectly selfless citizens. It seeks institutions designed for real human beings.
That is why Next Generation Capitalism is an appropriate subtitle—not because EconStitutionalism abandons capitalism, but because it attempts to build upon what capitalism has demonstrated it does extraordinarily well while constitutionally addressing weaknesses that should not simply be accepted as inevitable.
For generations, debates about economic organization have repeatedly returned to competing ideological labels: capitalism, socialism, collectivism, free enterprise, mixed economies, and others.
Those debates remain important. Ownership matters. Markets matter. Government matters.
But they are not the only questions that matter.
Political history teaches that the structure of institutions can be at least as important as the intentions of the people who operate them. Constitutional government emerged from the recognition that society should not have to choose between trusting leaders completely and abandoning collective action altogether. It became possible to cooperate on a large scale while simultaneously limiting the authority entrusted to any particular person or institution.
EconStitutionalism extends that insight into economic life.
It retains private ownership, decentralized markets, entrepreneurship, investment, competition, and the price system. In that respect, Next Generation Capitalism is an understandable description.
But the more important change is architectural.
EconStitutionalism asks us to stop treating existing economic institutions as though their present structures were inevitable consequences of private property or markets. Corporate governance can evolve. Monetary architecture can evolve. Ownership infrastructure can evolve.
CBAs, VLCs, and OEI represent three applications of that proposition.
The ultimate question is therefore not whether human beings can devise an economic ideology capable of overcoming human imperfection.
They cannot.
The more promising question is whether we can design economic institutions that expect human imperfection—and work with it.
That is the challenge of EconStitutionalism.
Notes:
1. James Madison — If Men Were Angels. In Federalist No. 51, published in 1788 during the debate over ratification of the proposed U.S. Constitution, Madison explained why a government administered by imperfect human beings requires internal restraints. He famously wrote, “If men were angels, no government would be necessary,” followed immediately by: “If angels were to govern men, neither external nor internal controls on government would be necessary.” Madison then identified the central constitutional challenge: government must first be enabled “to control the governed; and in the next place oblige it to control itself.” His proposed solution relied not upon perfect leaders but upon structural checks and balances, including the principle that “Ambition must be made to counteract ambition.” See Federalist No. 51, Library of Congress.[Return]
2. James Buchanan, Constitutional Economics, and Public Choice. Economist James M. Buchanan (1919–2013) was a principal founder of Public Choice theory, which applies economic analysis to political decision-making rather than assuming that political actors invariably pursue the public good. Buchanan emphasized the importance of examining the constitutional “rules of the game” within which political decisions are made, rather than concentrating only on particular policy outcomes. With Gordon Tullock, he developed many of these ideas in The Calculus of Consent (1962). Buchanan received the 1986 Nobel Memorial Prize in Economic Sciences “for his development of the contractual and constitutional bases for the theory of economic and political decision-making.” In his Nobel lecture, The Constitution of Economic Policy, Buchanan described his approach as examining “the rules, the constraints within which political agents act.” His work helped establish both Public Choice and what became known as Constitutional Economics. See the Nobel Prize, James M. Buchanan Jr.—Prize Lecture and James M. Buchanan Jr.—Facts.[Return]
3. Lenin and Trotsky — The Red Terror. During the Russian Civil War, Vladimir Lenin and Leon Trotsky defended the use of organized state violence against opponents of the Bolshevik Revolution. Trotsky argued in Terrorism and Communism (1920) that coercion and terror were necessary instruments for defeating counterrevolutionary resistance and preserving the revolutionary regime. Lenin likewise defended revolutionary dictatorship and the use of force against opponents of Bolshevik rule. See Wikipedia—Terrorism and Communism.[Return]
4. Karl Marx and Friedrich Engels — Capitalism’s Productive Achievement. In Manifesto of the Communist Party (1848), Marx and Engels acknowledged the extraordinary productive accomplishments of bourgeois capitalism, writing that the bourgeoisie “has created more massive and more colossal productive forces than have all preceding generations together.” The passage appears in Part I, “Bourgeois and Proletarians.” See Karl Marx and Friedrich Engels, Manifesto of the Communist Party (1848), Part I.[Return]
5. Karl Marx and Friedrich Engels — Centralization of Production in the State. In Part II, “Proletarians and Communists,” Marx and Engels described measures they believed would be applicable in advanced countries following the proletariat’s acquisition of political supremacy. Among them was the “Centralisation of credit in the hands of the state” and, more broadly, the “Centralisation of the means of communication and transport in the hands of the State.” They then stated that the proletariat would use its political supremacy “to centralise all instruments of production in the hands of the State.” See Karl Marx and Friedrich Engels, Manifesto of the Communist Party (1848), Part II, “Proletarians and Communists.”[Return]
6. Socialism and Communism — Related but Not Identical. The terms socialism and communism have been defined differently by different writers and should not be treated as exact synonyms. Within the Marxist tradition, however, they are closely related. Later Marxist-Leninist usage commonly described socialism as a transitional stage leading toward a fully communist society. The historical terminology itself illustrates the overlap: the Soviet Union—the first enduring state created by a Marxist Communist revolution—was formally the Union of Soviet Socialist Republics (USSR), while its ruling political organization became the Communist Party of the Soviet Union. In WP101, references to historical communism therefore refer primarily to the Marxist tradition and governments established by Communist movements, including the socialist economic systems through which they sought to advance toward communism.[Return]
7. Cambodia and the Khmer Rouge. From 1975 to 1979, the Communist Khmer Rouge attempted to transform Cambodia into a self-sufficient, classless agrarian society. The regime abolished the national currency and free markets, confiscated private property, collectivized production, and subjected much of the population to forced labor. Nearly two million people—roughly one-quarter to one-third of Cambodia’s population—died through execution, forced labor, starvation, disease, and persecution during Khmer Rouge rule. See the United States Holocaust Memorial Museum, Cambodia 1975–1979 and Forced Labor and Collectivization.[Return]
8. Endnote 8 Title. Endnote 8 content. Unlinked Reference.[Return]
9. Endnote 9 Title. Endnote 9 content.Wikipedia.[Return]
10. Endnote 10 Title. Endnote 10 content. Wikipedia.[Return]