The Virginia School of

political economy Political economy is the study of how economic systems (e.g. markets and national economies) and political systems (e.g. law, institutions, government) are linked. Widely studied phenomena within the discipline are systems such as labour m ...

is a

school of economic thought In the history of economic thought, a school of economic thought is a group of economic thinkers who share or shared a common perspective on the way economies work. While economists do not always fit into particular schools, particularly in moder ...

originating at the Thomas Jefferson Center of the

University of Virginia The University of Virginia (UVA) is a public research university in Charlottesville, Virginia. Founded in 1819 by Thomas Jefferson, the university is ranked among the top academic institutions in the United States, with highly selective adm ...

in the 1950s and 1960s. Some of its proponents established the Center for the Study of Public Choice at

Virginia Tech Virginia Tech (formally the Virginia Polytechnic Institute and State University and informally VT, or VPI) is a public land-grant research university with its main campus in Blacksburg, Virginia. It also has educational facilities in six regi ...

in 1969, moving it to

George Mason University George Mason University (George Mason, Mason, or GMU) is a public research university in Fairfax County, Virginia with an independent City of Fairfax, Virginia postal address in the Washington, D.C. Metropolitan Area. The university was origi ...

in 1983. The school focuses primarily on

public choice Public choice, or public choice theory, is "the use of economic tools to deal with traditional problems of political science".Gordon Tullock, 9872008, "public choice," ''The New Palgrave Dictionary of Economics''. . Its content includes the st ...

theory,

constitutional economics Constitutional economics is a research program in economics and constitutionalism that has been described as explaining the choice "of alternative sets of legal-institutional-constitutional rules that constrain the choices and activities of econom ...

, and

law and economics Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of law, which emerged primarily from scholars of the Chicago school of economics. Economic concepts are used to explain the effects of laws, ...

Development

The Virginia school emerged first at the Thomas Jefferson Center at the

established by

James M. Buchanan James McGill Buchanan Jr. (; October 3, 1919 – January 9, 2013) was an American economist known for his work on public choice theory originally outlined in his most famous work co-authored with Gordon Tullock in 1962, '' The Calculus of Cons ...

and G. Warren Nutter in 1957. It was there that

Ronald Coase Ronald Harry Coase (; 29 December 1910 – 2 September 2013) was a British economist and author. Coase received a bachelor of commerce degree (1932) and a PhD from the London School of Economics, where he was a member of the faculty until 1951 ...

formulated his famous

theorem In mathematics, a theorem is a statement that has been proved, or can be proved. The ''proof'' of a theorem is a logical argument that uses the inference rules of a deductive system to establish that the theorem is a logical consequence of th ...

the problem of social cost "The Problem of Social Cost" (1960) by Ronald Coase, then a faculty member at the University of Virginia, is an article dealing with the economic problem of externalities. It draws from a number of English legal cases and statutes to illustrate Coa ...

(1960) and that Buchanan and

Gordon Tullock Gordon Tullock (; February 13, 1922 – November 3, 2014) was an economist and professor of law and Economics at the George Mason University School of Law. He is best known for his work on public choice theory, the application of economic thinking ...

wrote ''

The Calculus of Consent ''The Calculus of Consent: Logical Foundations of Constitutional Democracy'' is a book published by economists James M. Buchanan and Gordon Tullock in 1962. It is considered to be one of the classic works from the discipline of public choice in ...

'' in 1962. The latter would form the basis of the Virginia school of thought, as the seminal text in public choice theory. In 1969, Buchanan, Tullock, and Charles J. Goetz established the Center for the Study of Public Choice at

, which moved with them to

in 1983. Other prominent scholars associated with the school include Dennis C. Mueller, Robert D. Tollison, Andrew B. Whinston, and Leland B. Yeager.

Economic approach

The Virginia approach to political economy focuses on comparing private and public sector institutions as imperfect alternatives. The Virginia approach is also favored by some economists of the Chicago and

Austrian Austrian may refer to: * Austrians, someone from Austria or of Austrian descent ** Someone who is considered an Austrian citizen, see Austrian nationality law * Austrian German dialect * Something associated with the country Austria, for example: ...

schools. Virginia School economists are often seen as 'fellow travelers' with Austrian economists, as members of both schools of economic thought generally favor free-market outcomes. There are several main lines of research in the Virginia School. James Buchanan and Gordon Tullock were among the earliest economists to apply economic analysis to national constitutions; this is one of the greatest and longest-lasting contributions that ''The Calculus of Consent'' made in the field of

. Tullock also founded the modern

rent seeking Rent-seeking is the act of growing one's existing wealth without creating new wealth by manipulating the social or political environment. Rent-seeking activities have negative effects on the rest of society. They result in reduced economic effic ...

literature.

Mancur Olson Mançur Lloyd Olson Jr. (; January 22, 1932 – February 19, 1998) was an American economist and political scientist who taught at the University of Maryland, College Park. His most influential contributions were in institutional economics, and i ...

founded modern research on

collective action Collective action refers to action taken together by a group of people whose goal is to enhance their condition and achieve a common objective. It is a term that has formulations and theories in many areas of the social sciences including psych ...

and special interest groups. Olson taught at the University of Maryland, not one of the universities of Virginia, but his work deals with ideas that are central to the Virginia school of thought, including the effects of special interest groups. Despite some common ground, the Virginia School is opposed to the Chicago school of political economy on two fundamental points. Chicago believes that politics tends towards efficiency due to the fact that free-riders provoke stiffening resistance in risk takers, because of the exponentially increasing

deadweight loss In economics, deadweight loss is the difference in production and consumption of any given product or service including government tax. The presence of deadweight loss is most commonly identified when the quantity produced ''relative'' to the amou ...

imposed by free-riding. Chicago also believes that, because political markets tend towards efficiency, policy advice by scholars is irrelevant. Charles Rowley is a prominent opponent of these notions: in the Encyclopedia of Public Choice he writes that Chicago's "… interpretation of the political process emanates from a fundamentally flawed application of … microeconomics to the political marketplace … ile the Journal of Political Economy publishes papers that defend the U.S. federal farm program as an efficient mechanism for transferring income to poor farmers, there is justifiable cause to worry whether CPE Chicago_political_economy.html" ;"title="Chicago school of economics">Chicago political economy">Chicago school of economics">Chicago political economyscholars and their journal editors ever look out from their ivory towers and survey the real world." The Public Choice Society, a

501(c)(3) A 501(c)(3) organization is a United States corporation, trust, unincorporated association or other type of organization exempt from federal income tax under section 501(c)(3) of Title 26 of the United States Code. It is one of the 29 types of 50 ...

organization that facilitates research and discussion of the social sciences, is an outgrowth of the Virginia School.

References

{{DEFAULTSORT:Virginia School Of Political Economy Schools of economic thought Virginia Tech Public choice theory Law and economics 1957 establishments in Virginia