Money and Markets: Essays in Honor of Leland B. Yeager

212 Randall G. Holcombecar and would probably have bought them willingly if I had had a free choice,but the fact remains that I did not have a free choice and that the belts wereinstalled under compulsion of law.(1985: 285)Yeager then says,Far from the state’s being a voluntary arrangement, then, its essence iscompulsion. It relies as a last resort on its power to seize goods and persons, toimprison, and to execute. If obedience to government is not compulsory, thenwhat is? . . . To say this is not to glorify the compulsory aspects of government. Iconcede their necessity only with regret. I want to keep them tightly restrained,as the cause of human liberty requires. One serves that cause poorly if onedeludes oneself into thinking that government embodies free exchange and thatcompliance with its orders is voluntary. . . . Society and government are not andcannot be the results of a social contract. 4 (1985: 285)Both of Yeager’s points are well-taken, but the second point (that government isbased on coercion, not agreement) struck me more forcefully than the first (that aconceptual agreement is not an actual agreement). The chapter of my book thatYeager cites was a critique of the social contract theory, and I had written it to concedethe basic assumptions of the contractarian framework, and then proceeded toshow that even under these assumptions, there would be a bias toward big governmentwithin Buchanan’s (1975) contractarian framework. Thus, I was willing togrant the conceptual nature of the theory in order to tease out its logical implications.Furthermore, economists often make unrealistic assumptions in theirmodels, so this by itself does not seem problematic. However, unrealistic assumptionsmay loom larger in frameworks that have heavy normative implications,like the contractarian framework, and I do think that Yeager’s critique of contractarianismon this ground has merit.Leland’s critique that government is based on coercion, not consent, appears tome to be a more serious problem with the contractarian framework, and one that Iconfess I had not fully recognized before Leland stated it to me. If the strong canforce the weak to give up some of their resources, then conceptual agreement as ananalogy to anything in the real world seems to completely vanish. How could asocial theory be based on the idea of unanimous agreement when the strong canforce the weak to go along with their desires whether or not the weak agree? I thinkthat many of the contractarian conclusions remain after taking account of thesecriticisms, as I explain in Holcombe (1994). 5 But Yeager’s insistence that thecontractarian theory is invalid as an analogy to real-world government becausegovernments impose their policies by force certainly strikes at the heart of anyattempt to claim that people have a duty to abide by government mandates becausepeople are party to a social contract.Yeager’s later writing softens his critique of contractarianism when compared tohis work in the 1980s. Yeager says,