1. Biographical Details
Gordon Tullock was born in Rockford, Illinois on February 16, 1922, four score years ago. His father, George was a hardy Midwesterner of Scottish ancestry, his mother, Helen, was of equally hardy Pennsylvania Dutch stock. He obtained his basic education in the public schools of that city, displaying from early childhood a superior intellectual ability that clearly distinguished him from his peers. In 1940, Tullock left for the School of Law at the University of Chicago to combine a two-year program of undergraduate courses with a four-year formal law program. In fact, he completed the initial two-year program in a single year.
His law school program was interrupted by his being drafted into military service as an infantry rifleman in 1943, but not before he had all but completed a one semester course in economics taught by Henry Simons. This course was to be Tullock’s only formal exposure to economics, a fact that no doubt enhanced rather than hindered his future success in contributing highly original ideas in that discipline.
Tullock served in the US military until shortly after the end of hostilities, returning to civilian life in December 1945. He took part in the Normandy landings on D-Day + 7 as a member of the Ninth Infantry. His life almost certainly was spared by the good fortune of his being left behind at division headquarters to defend three anti-tank guns. The original members of the Ninth Infantry were decimated on their hard-fought route across France and into Germany.
Following behind, Tullock eventually would cross the Rhine, he claims, while still asleep. Ultimately, he would end up in the Russian sector. Although Tullock modestly dismisses his wartime service as uneventful, this can only be with the advantage of hindsight. Participation in a major land war as part of ‘the poor bloody infantry’ is never without the gravest of risks.
Following this three-year wartime interruption, Tullock returned to Chicago and obtained a Juris Doctor degree from the Chicago Law School in 1947. He failed to remit the $5 payment required by the University and thus never received a baccalaureate degree.
His initial career, as an attorney with a small but prestigious downtown Chicago law firm, was controversial and, perhaps, mercifully brief. During his five-month tenure, Tullock handled two cases. The first case he won when he was expected to lose, and only after one of the partners in his firm had advised his client not to pursue the matter. The second case he lost when he should have won and he was admonished by the court for his poor performance (Brady and Tollison, 1991, 1994, 2). Fortunately for the world of ideas, these events persuaded him to seek out an alternative career.
Prior to graduation, Tullock had passed the Foreign Service Examination. He joined the Foreign Service in Fall 1947 and received an assignment as vice consul in Tientsin, China. This two-year assignment included the Communist takeover in 1948. Following Tullock’s return to the United States, the Department of State dispatched him to Yale University (1949-1951) and then to Cornell University (1951-1952) for advanced study of the Chinese language.
In late 1952, he joined the ‘Mainland China’ section of the Consulate General in Hong Kong. Some nine months later he was reassigned to the political section of the U.S. Embassy in Korea. Tullock returned to the United States in January 1955, where he was assigned to the State Department’s Office of Intelligence and Research in Washington. He resigned from the Foreign Service in Fall 1956.
Over the next two years, Tullock held several positions, including most notably that of research director of the Princeton Panel, a small subsidiary of the Gallup organization in Princeton. Essentially, he was in transition, marking time until he was ready to make a bid for entry into academia.
Unusually, Tullock had already published in leading economics journals articles on hyperinflation and monetary cycles in China and on the Korean monetary and fiscal system even during his diplomatic service, thus whetting his own appetite for an academic career and signaling an unusual facility for observing his environment as the basis for creative thinking. Furthermore, he had read and had been intellectually excited by the writings of such scholars as Joseph Schumpeter (1942), Duncan Black (1948) and Anthony Downs (1957), scholarship that provided the basis for reintegrating economics with political science within a strictly rational choice framework. In short, Tullock was ready to play a significant role in extending the empire of economics into the territory of contiguous disciplines.
In Fall 1958, at age 36, he accepted a one-year postdoctoral fellowship at the Thomas Jefferson Center for Political Economy at the University of Virginia. Still a relatively unknown quantity at that time, Tullock nevertheless brought with him to the Center two indispensable assets, namely a brilliant and inquiring, if still-unfocused, intellect and an unbounded enthusiasm for his adopted discipline of political economy. Quickly he forged a bond with the Director of the Center, James M. Buchanan, a bond that would result in some of the most original and important political-economic scholarship of the mid-twentieth century.
His fellowship year at the Center was productive, resulting in an important publication on the problem of majority voting (Tullock, 1959). In Fall 1959, Tullock was appointed as Assistant Professor in the Department of International Studies at the University of South Carolina. Publications continued to flow (Tullock, 1961a,b) while Tullock crafted a seminal draft paper entitled ‘An Economic Theory of Constitutions’ (Tullock, 1959) that would become the fulcrum for The Calculus of Consent (Buchanan and Tullock, 1962).
On this basis, Tullock quickly advanced to the rank of Associate Professor before returning to the University of Virginia, and renewing his relationship with James Buchanan, in February 1962, just as the University of Michigan Press was publishing their seminal book, The Calculus of Consent. In 1966, Tullock edited and published the first issue of Papers on Non-Market Decision Making, the precursor to Public Choice. Between 1962 and 1967, Tullock published innovative books on bureaucracy (Tullock, 1965), on method (Tullock, 1966) and on public choice (Tullock, 1967a) as well as a rising volume of scholarly papers that earned him international recognition as a major scholar.
Despite this distinguished resume, Tullock would be denied promotion to Full Professor of Economics on three consecutive occasions by a politically hostile and fundamentally unscholarly University administration. In Fall 1967, Buchanan protested these negative decisions by resigning to take up a position at the University of California at Los Angeles. Tullock also resigned to become Professor of Economics and Political Science at Rice University. With Ronald Coase having resigned for similar reasons in 1964 to take up a position at the University of Chicago, it appeared that the nascent Virginia School of Political Economy might have been deliberately nipped in the bud by the left-leaning administration of the University of Virginia.
As a result of a successful initiative by J. Goetz, the University of Virginia plot failed. Goetz succeeded in attracting Tullock to Virginia Polytechnic Institute and State University in Blacksburg as Professor of Economics and Public Choice in Fall 1968. Goetz and Tullock immediately established the Center for Studies in Public Choice in 1968, as the basis for promoting scholarship in the field and as a means of attracting James Buchanan to join them at VPI. This initiative bore fruit in 1969, when James Buchanan joined the VPI faculty and assumed the General Directorship of the Center, which was immediately renamed as the Center for Study of Public Choice. Simultaneously, Tullock renamed his journal Public Choice and the new sub-discipline set down fruitful roots in the foothills of the Appalachian Mountains.
Henceforth, Tullock would never again look back. Over the next one-third of a century he forged for himself a reputation as a brilliant entrepreneurial scholar and a formidable debater. To this day he refuses to rest on well-earned laurels as a Founding Father of three sub-disciplines of economics, namely public choice, law and economics and bio-economics.
Universities have recognized his contributions by appointing him to a sequence of Distinguished Chairs (VPI & SU 1972-1983, George Mason University 1983-1987 and 1999-, and the University of Arizona 1987-1999). Professional associations have honored him by electing him to their presidencies (Public Choice, the Southern Economic Association, the Western Economic Association, the International Bio-Economics Society, the Atlantic Economic Society and the Association for Free Enterprise Education). In 1992, an Honorary Doctorate of Laws was conferred on him by the University of Chicago, in 1996 he was elected to the American Political Science Review Hall of Fame and in 1998 he was recognized as a Distinguished Fellow of the American Economic Association. These awards and honors reflect powerful entrepreneurial contributions across three major scholarly disciplines.
2. A Natural Economist?
James Buchanan has described Gordon Tullock as a natural economist, where natural is defined as having "intrinsic talents that emerge independently of professional training, education, and experience" (Buchanan, 1987, 9). A natural economist, therefore, "is someone who more or less consciously thinks like an economist" (ibid., 9). In Buchanan’s judgment, there are very few such natural economists and most of those who claim competence in economics as a discipline are not themselves natural. Buchanan identifies Gary Becker and Armen Alchian along with Gordon Tullock as prominent members of the rare natural economist species.
Buchanan recognizes that all economists of repute rely upon the rational choice model as the basis for analyzing the market interactions of human beings. Human beings are depicted as self-interested, utility maximizing agents for whom social interchange is initiated and exists simply as a preferred alternative to isolated action. Even though the large majority of economists do not fully endorse this model as an accurate depiction of individuals in society, they utilize it in market analysis on an ‘as-if’ basis.
Yet many of them waver or object when confronted with extending the rational choice model to the analysis of non-market behavior especially, one might conjecture, prior to Tullock’s successful contributions in the 1960s. The behavior of such agents as politicians, voters, bureaucrats, judges, preachers, research scholars, family members, criminals, revolutionaries, terrorists and media anchors, they argue, cannot be effectively captured in terms of the rational self-interest model. The natural economist has no such inhibitions.
In this perspective of Tullock’s work, individuals exist as isolated islands in an ocean of exchange, solipsist in vision and poised irreversibly on the edge of the jungle.Because the natural economist is imbued comprehensively with a Hobbesian vision of the world, he cannot comprehend the contractarian promise expounded by Hume, Locke and the young John Stuart Mill. He cannot model man as rising above his narrow self-seeking instincts.
George Stigler once suggested that a major difference between his own scholarship and that of Milton Friedman was that whereas Friedman sought to change the world he (Stigler) sought merely to understand it. This distinction holds with equal force with respect to the scholarship of Buchanan and Tullock. Precisely because Tullock seeks to understand — even when what he learns is unappetizing — he adopts no subterfuge in his analytical approach.
If consent exists, Tullock notes and explores its rationale. If conflict is manifest, Tullock investigates the social dilemma to the extent possible with the tools of neoclassical economics. No judgment is passed; no policy recommendations are advanced. Tullock chronicles observed events as part of the pattern of a diverse universe that he is ever eager to explore. In this sense, Buchanan’s insight, as I shall demonstrate, is accurate with respect to much of Tullock’s scholarship, but inaccurate in important respects.
I should close this section by noting, however, that a natural economist need not manifest extreme solipsism in his own behavior. There is no reason why those who utilize self-seeking assumptions in scientific analysis should be seduced by the assumptions that they deploy into adopting an entirely solipsist mode of personal behavior.
Certainly, Tullock does not live the life of homo oeco-nomicus, as the many faculty visitors and graduate students who have diverted him from his writings to share his intellectual curiosity, his ideas and his wit will readily testify. If Tullock is generous with respect to his time, he is equally generous with respect to his modest wealth, as those who have dined — and dined well — at his table and those who he has supported financially in times of need will also testify. He may well raise homo oeconomicus as his indomitable standard on the field of intellectual battle. This standard is by no means the appropriate measure for evaluating his life.
3. The Calculus of Consent
The two most widely cited of Gordon Tullock’s many contributions are The Calculus of Consent (co-authored with James Buchanan) published in 1962, and "The Welfare Costs of Tariffs, Monopolies and Theft" published in 1967. Let us focus briefly on Tullock’s contributions to The Calculus as a means both of assessing his insights and of teasing out the limits of the natural economist hypothesis.
The Calculus is a momentous work of scholarship, the first major foray by Buchanan and Tullock into the terrain of political science and the cornerstone of the Virginia political economy program. The principal objective of the book was to rationalize the Madisonian enterprise in strictly economic terms and to provide a logical rational choice foundation for constitutional democracy.
Fundamentally, the book was an exercise in team production, yet with each author bringing distinctive qualities to the enterprise.Buchanan brought to the task an emphasis on modeling politics-as-consentaneous-exchange under the influence of Knut Wicksell. Tullock focused on modeling all agents in the constitutional endeavor in strict self-interest terms. By resolving this tension the co-authors wrote a masterpiece. In Tullock’s contributions on logrolling and its implications for the simple majority voting rule, and in his contributions on the bicameral legislature and the separation of powers,we see the natural economist in his most unrelenting guise.
However, Tullock’s central contribution to The Calculus was the economic theory of constitutions written at the University of South Carolina in 1959. This economic theory provides the logical foundation for constitutional democracy and indeed it is the anvil on which The Calculus of Consent was forged. Ironically, it is a chapter in which Tullock suppresses the self-interest axiom in its most myopic form as a means of identifying the unanimity principle as a rational individual decision-making rule for effecting constitutional choices.
In Chapter 6, Tullock assumes that the domain of collective action has already been determined and that the specific institutions through which collective action occurs are already in place. On this basis, he analyzes the choice of optimal rules by any random individual in society as a function of minimizing expected costs. Tullock distinguishes between two categories of expected cost, namely the expected external costs imposed on them by collective action and the expected costs of making decisions through collective action.
By recognizing that individuals fear the imposition of external costs upon them by government, Tullock challenged head-on the Platonic model of beneficent government that then dominated the political science literature. Only a rule of unanimity can protect any random individual from the imposition of such costs. By recognizing that expected decision-making costs are a monotonically increasing function of the number of individuals who must agree in order to effect collective action, Tullock was able to check the unanimity instincts of James Buchanan and to demonstrate that only voting rules short of unanimity are capable of minimizing the combined expected external and decision-making costs of collective action.
The rational individual, at the stage of constitutional choice, thus confronts a calculus not unlike that which he must face in making everyday economic choices. By agreeing to more inclusive rules, he accepts the additional burdens of decision-making in exchange for additional protection against adverse outcomes and vice versa (Buchanan and Tullock, 1962, 72). Tullock recognizes that differences in the burden of these costs with respect to specific constitutional choices will result in the selection by rational individuals of more or less inclusive rules. This insight explains the choice of supra-majority rules for collective actions involving such fundamental collective choices as life, liberty and property in combination with the choice of significantly less inclusive rules for collective choices involving lower perceived external costs.
At this point, however, Tullock retreats from the concept of homo oeconomicus in its narrow myopic form in order to focus on the mechanism through which random individuals who have selected optimal constitutional rules for themselves translate these choices into universally endorsed constitutional rules for society. This is a significant issue. Individuals differ in many ways and, at any specific time, such differences will obstruct the achievement of universal consent.
Agreement, according to Tullock, is more likely regarding general rules for collective choice than for later choices to be made within the confines of certain agreed-on rules, because in the former case individuals are separated from their particular interests by a veil of uncertainty. Because general rules are expected to govern choices over lengthy time periods, individuals cannot predict with any degree of certainty whether they are likely to be in winning or losing coalitions on any specific issue. Their own self-interest in such circumstances will lead them to choose rules that maximize the expected utility of a randomly selected individual.
Consent will not occur without discussion. This is not the hypothetical world depicted by John Rawls in A Theory of Justice (1971). The discussion envisaged in The Calculus of Consent can be likened to that among players determining the rules of a card game before the cards are dealt. It is in the self-interest of each player at this stage to devise a set of rules that will constitute the most interesting game for the representative player. Once the cards are dealt, of course, no such agreement is likely as homo oeconomicus re-emerges to follow his self-serving instincts.
For universal consent over rules to be feasible, Tullock recognizes that participants must approach the constitutional convention as equals in the sense that differences are accepted without rancor and that there is no discernible dominant group that holds political power. For such a group would not rationally divest itself of its authority. Therefore, The Calculus of Consent has little relevance for a society characterized by sharp distinctions between social classes, religious or ethnic groupings where one such grouping has a clearly advantageous position at the constitutional stage.
In 1787, this may not have appeared to be a problem for the United States because the limited suffrage went largely unchallenged. By 1860, it clearly was sufficiently important to destroy the Union. It is very surprising that Tullock completely failed to anticipate that this problem would re-emerge in the United States during the mid 1960s as long-term minorities began seriously to question the rules that had subjugated them to the whims of a dominant majority. The collapse of the US Constitution in 1860, and its near collapse between 1968 and 1974, in any event strongly conform to the predictions of the economic model.
Like all original insights, Buchanan and Tullock presented The Calculus of Consent to its intellectual audience in an embryonic form. Some forty years after its birth, significant and unresolved problems remain as is inevitable for any theory that purports to rationalize universal consent for less than unanimous decision-making rules in the real world.
Foremost among these problems is the silence of The Calculus with respect to the characteristics of the state of nature in the pre-constitutional environment. Written as the book was in the late 1950s it is reasonable to infer that the authors envisaged a Lockeian state of nature governed by natural law that allowed individuals to protect inalienable rights to life and liberty and imprescriptible rights to private property.
In such an environment, individuals predictably will consent only to a set of rules that will require government to protect their natural rights (i.e., that limit the domain of collective action to government as a minimal state). Because government will be so constrained, individuals anticipate that decision rules will be fully enforced by government as a referee and that collective action within those rules will not be reneged upon in the post-constitutional environment.
Once collective action bursts out of this restricted domain, as occurred in the United States in 1937 in the Supreme Court judgment of West Coast v. Parrish that destroyed forever the primacy of liberty to contract, considerations of conflict rapidly overwhelm those of consent, and constitutional rules are reformulated in a much less promising, more Hobbesian environment. This environmental shift was recognized simultaneously in 1974 at the peak of the Watergate crisis, by both co-authors of The Calculus of Consent.
Tullock’s response was to write The Social Dilemma (1974) and to focus forever after on positive public choice in a Hobbesian environment. Under pressure, Tullock’s natural economist instincts have resurfaced with a vengeance as his intellectual focus has switched from the potential for gains-from-trade to the reality of generalized prisoners’ dilemmas and intractable hold-out situations.
Buchanan’s response, in contrast, was to write The Limits of Liberty (1975) striving to rationalize the survival of consentaneous decision-making in a Hobbesian world. Thereafter, Buchanan has focused almost exclusively on constitutional political economy, frequently changing tack to protect limited government from the adverse consequences of the predatory state (Brennan and Buchanan, 1980, 1985; Buchanan, 1990; Buchanan and Congleton, 1998). Under pressure, Buchanan has reached beyond homo oeconomicus in his attempt to provide an intellectual platform through which concerned private citizens might forestall the re-emergence of Leviathan in the United States.
4. The Political Economy of Rent Seeking
If Tullock dips his standard in The Calculus of Consent, he resurrects it with a vengeance in his seminal contributions to the rent seeking literature. Here we see the natural economist in his favorite role as he analyzes narrow self-seeking by individuals in the unrelenting Hobbesian environment of the redistributive state.
Economic rent is a familiar concept to economists. It is simply defined as any return to a resource owner in excess of the owner’s opportunity cost. Economic analysis identifies various categories of such returns — monopoly rents, quasi-rents, infra-marginal rents — that arise in market economies as a consequence of the less than perfect supply elasticity of factor inputs. Within a competitive market, the search for rents is nothing more than the normal profit seeking incentive that shifts resources to their most highly valued uses and creates new products and values (Tollison, 1987, 144). Positive temporary rents induce new entry and negative temporary rents compel exit in both cases impacting beneficially on economic output.
Tullock’s rent seeking insight focuses attention on a malignant rather than a benign phenomenon. The notion that individuals and groups dissipate wealth by utilizing scarce resources to seek rents created for them by government is a classic insight by Gordon Tullock (Tullock, 1967b). The insight is of pivotal importance for Virginia political economy. Arguably, it is the single most important contribution to the public choice research program and it remains, some thirty-five years after its inception, a major engine motivating public choice scholarship.
Tullock’s insight was first presented in 1967 in an article published by The Western Economic Journal following its rejection by the well known editors of three leading economics journals. The term ‘rent seeking’ was associated with Tullock’s insight some seven years later by Anne Krueger (1974) in a paper that failed to reference Tullock’s several prior contributions to the literature.
Tullock’s attention was energized by a growing tendency for 1960s’ economists to dismiss the welfare costs of monopolies and tariffs as unimportant in view of the minute values associated with Marshallian deadweight loss triangles of consumers’ surplus imposed by such instruments (one tenth of one-percent of US gross domestic product according to one measure devised by Arnold Harberger (1954, 1959). Instinctively, Tullock sensed that such complacency was ill founded, and noted that "the classical economists were not concerning themselves with trifles when they organized against tariffs, and the Department of Justice is not dealing with a miniscule problem in its attacks on monopoly" (Tullock, 1967b).
Tullock identified the Harberger fallacy by introducing a shift of emphasis based on a classic public choice insight. Generally, governments do not impose tariffs and do not create monopolies in a political market vacuum. They must be lobbied or pressured into so doing by the expenditure of resources in political activity by those who stand to benefit from such market protections. According to Tullock, rational producers would invest resources in lobbying, say for a tariff, until the expected marginal return on the last dollar so spent was equal to its expected marginal cost. Those who opposed the transfer would expend resources similarly in the opposite direction. All such outlays dissipate the rents expected by those who lobby. In certain adverse circumstances, such dissipation constitutes a complete waste of society’s resources.
Tullock went on to demonstrate that rent seeking is not limited to the lobbying of government by private interests. In his 1975 article on ‘Competing for Aid,’ (Tullock, 1975b) he demonstrated how rent seeking for fiscal aid from the federal or state governments occurred among lower levels of government. This insight came from Tullock’s experience in China where he observed how individuals deliberately mutilated themselves to make themselves attractive as recipients of charity. Similarly the City of Blacksburg deliberately under-maintained its own roads in order to become eligible for road-fund support from the Commonwealth of Virginia.
One of the major activities of modern government is the granting of special privileges to various politically influential organizations. Tullock observed that with notable exceptions, the profit record of such groups does not differ systematically from that of unprotected sections of the economy. In part, this may be because the rents either have been dissipated up front or eroded by new entrants. In part, however, the phenomenon is due to the capitalization of monopoly rents so that only the original beneficiaries of the privilege make abnormal gains. Market capitalization gives rise to a transitional gains trap where the revoking of a government privilege imposes capital losses on second generation rent recipients (Tullock, 1975a). It would seem, as David Friedman has put it, that "the government cannot even give anything away." It is also evident that rational individuals will lobby virulently to avoid the imposition of capital losses, making it extremely difficult for politicians to support the abolition of special privileges once they have been bestowed.
As with The Calculus of Consent so it is the case with rent seeking, that Tullock’s original insight was presented to public choice in embryonic form. Many of the gaps have now been closed (see Tullock, 1993). Two significant problems yet remain unresolved.
The first is the ad hoc nature of rent seeking theory that constrains the generality of its predictive power and that allows critics such as Stiglitz (1991) to contend that "while these theories share with stock market analysts the ability to provide ready interpretations of whatever occurs, their success in predicting these political forces is much more limited". This is a fair criticism. Following the collapse of the Soviet Empire in 1989 and the collapse of Enron in 2001, rent seeking rationalizations abound. However, no public choice scholar predicted either of these collapses in advance.
The second is the marked disparity between the magnitude of rents created by the US federal government and the relatively small level of observed rent seeking outlays. Even if the efficient rent-seeking model (Tullock, 1980a) is adjusted to take account of risk aversion and increasing returns in rent seeking, this gap by no means is reconcilable. In his 1989 book on The Economics of Special Privilege and Rent Seeking Tullock ingeniously rescues the rational choice model by suggesting that rent seekers succeed in opaque rather than transparent markets and thus are forced to utilize inefficient techniques in rent seeking in order to escape voter scrutiny. Such inefficient techniques are very costly and reduce the returns to rent seeking. Ironically, the very inefficiency of their methods reduces the total of rent seeking in society and ultimately mitigates the loss of wealth to society.
In this context, consider two types of worlds. In one, Tullock waste is exact and complete. Here the incentive to create monopoly is low because there are no excess returns from so doing. However, the social cost per instance of realized monopoly is high. In the other world, politicians succeed in converting rent-seeking costs into transfers. There are significant excess returns to monopoly creation. Hence there will be many more realized monopolies and many more Marshallian triangles of deadweight loss imposed on society. It is not clear a priori which type of world is preferable from the viewpoint of wealth maximization.
Let me conclude this discussion with an accolade to Gordon Tullock from one of his former colleagues, Robert Tollison, much of whose career has been expended on researching the rent-seeking research program initiated by Tullock:
The theory of rent-seeking is here to stay. As I have observed in another context the most interesting thing about Tullock’s ingenious insight is how simply he put it. Like Coase, he communicated his vision in terms that every lay economist could follow. This is a criterion by which greatness in science is measured. In economics, the Tullocks of our profession are more indispensable than ever. To wit, the scarcest thing in any science is a good idea, clearly communicated. (Tollison, 1987, 156)
