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List of Figures
- S. M. Amadae, Ohio State University
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11 - Tit for Tat
- from PART III - EVOLUTION
- S. M. Amadae, Ohio State University
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Summary
[Robert] Axelrod, like many political scientists, economists, mathematicians and psychologists, was fascinated by a simple gambling game called Prisoner's Dilemma. It is so simple that I have known clever men misunderstand it completely, thinking there must be something more to it! But its simplicity is deceptive. Whole shelves in libraries are devoted to the ramifications of this beguiling game. Many influential people think it holds the key to strategic defense planning, and that we should study it to prevent a third world war. As a biologist, I agree with Axelrod and [W. D.] Hamilton that many wild animals and plants are engaged in ceaseless games of Prisoner's Dilemma, played out in evolutionary time.
Richard Dawkins, 2009Since the Prisoner's Dilemma is so common in everything from personal relations to international relations, it would be useful to know how best to act when in this type of setting.
Robert Axelrod, 1984Noncooperative game theory has been applied to nuclear strategy, the social contract, public goods, and also evolutionary biology. Everywhere its logic is the same: optimization, or expected utility maximization, occurs on the level of individuals in a population who typically compete for scarce resources. The Prisoner's Dilemma game is emblematic of the perceived problem of cooperation: individuals seek propitious outcomes, but ultimately prefer their own gain, even at the expense of someone else's loss. Having generated the concept of an evolutionary stable strategy (ESS), evolutionary game theorists deduce that every population of actors must be impervious to a deviant member designed to exploit others (see Chapter 10). To protect against individuals’ exploitation by other actors, natural selection eliminates acts of gratuitous altruism because they would undermine its perpetrators’ survival chances, thereby eventually eliminating individuals disposed to this type of behavior. Even if group selection occurs among human societies, still every highly cooperative population must be impervious to individualistic exploiters. This, it is hypothesized, requires individualistic selfishness.
The Prisoner's Dilemma game has proven to be endlessly fascinating for representing the foil against which cooperative behavior must test its viability. Given evolutionary biologists’ interest in the material conditions of survival, that is, caloric intake and wherewithal to procreate, the tendency of organisms to waste resources in the suboptimal Nash equilibrium of the Prisoner's Dilemma inspired copious research.
12 - Pax Americana
- from CONCLUSION
- S. M. Amadae, Ohio State University
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I have, therefore, chosen this time and place to discuss a topic on which ignorance too often abounds and the truth too rarely perceived. And that is the most important topic on earth: peace. What kind of peace do I mean and what kind of a peace do we seek? Not a Pax Americana enforced on the world by American weapons of war. Not the peace of the grave or the security of the slave. I am talking about genuine peace, the kind of peace that makes life on earth worth living, and the kind that enables men and nations to grow, and to hope, and build a better life for their children – not merely peace for Americans but peace for all men and women, not merely peace in our time but peace in all time.
John Fitzgerald KennedyThroughout the twentieth century, despite the shadow cast by US capitalism and dominion, Americans stood confident that their country was grounded by values and commitments that rejected tyranny and oppression in favor of the impartial rule of law and individual self-determination. Progress toward realizing these values was uneven and halting. But for American citizens, hopeful immigrants, and foreigners inspired by these ideals, the US Constitution and Declaration of Independence perpetuated the Enlightenment ethos of self-emancipation. A Pax Americana could be envisioned to be inseparable from the American Dream of inclusive wealth creation “with opportunity for each according to his ability or achievement.”
It goes without saying that one person's claim to freedom cannot, without contradiction, involve denying another's equal claim. However nostalgically one may remember the moral high ground of World War II or the prolific power of mid-century “made in USA” industry, the twenty-first century social contract is blatantly antithetical to an inclusive vision for prosperity. Strategic rationality and the Prisoner's Dilemma model for social relations that is its central logical paradox recommend both political domination and economic chicanery.
Game theory is ubiquitous. It dominates academic curricula and economic models, and its application spans market practices, institutional design, and public policy implementation. Strategic rationality is so much part of our contemporary worldview that it is intertwined with the evolving meaning of the word “cynical.” Game theory, like late twentieth-century cynicism, has three moments.
CONCLUSION
- S. M. Amadae, Ohio State University
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6 - Social Contract
- from PART II - GOVERNMENT
- S. M. Amadae, Ohio State University
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In a strictly personalized sense, any person's ideal situation is one that allows him full freedom of action and inhibits the behavior of others so as to force adherence to his own desires. That is to say, each person seeks mastery over a world of slaves.
James M. Buchanan, 1974The reconciliation between morality and self-interest that mutual advantage theorists seek is hard to achieve, since the rules of justice creates a classic prisoners’ dilemma: even if you and I jointly benefit from the rules, I will do still better if you obey them and I allow myself to violate them when it suits me.
Daniel M. Hausman and Michael S. McPherson, 2006The financial crisis of 2008 provoked a lively debate among economists, investors, and consumers. For some, the collapse of the housing market stemmed from “progressive” attempts in the 1990s to make housing more affordable for the less well-off. For others, it was the result of “neoliberal” efforts to roll back regulation of the free market. Whatever the cause, the government's response was clear: a bailout for the banks nearly equivalent to the earnings of the top 1 percent of American income earners from the prior decade.
Roots of the crisis aside, how did we reach a point where such a bailout could become the consensus response? Property transfer laws, lax financial regulations, and neoliberal political philosophy all underlie the practices that led to this eventuality and its relative acceptance. According to the neoliberal Prisoner's Dilemma theory of the social contract, no income disparity is too great. So long as the least well-off are better off than in a state of nature, they have little ground for complaint. In this increasingly individualized and privatized economy, the worth of citizens depends solely on their command of resources and earnings potential. The financial crisis is indicative of late-modern neoliberal economics, which by applying the tool of noncooperative game theory and expected utility theory emphasizes the Prisoner's Dilemma model of the social contract and exchange and therefore inevitably condones profiteering through displacing costs on others. The neoliberal approach to economics also condones coercive bargaining by which negotiator's own profit margin is enhanced by threatening to minimize the best worst-case outcome for rivals.
Index
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PRELIMINARIES
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2 - Prisoner's Dilemma
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Summary
Puzzles with the structure of the prisoner's dilemma were devised and discussed by Merrill Flood and Melvin Dresher in 1950, as part of the Rand Corporation's investigations into game theory (which Rand pursued because of possible applications to global nuclear strategy). The title “prisoner's dilemma” and the version with prison sentences as payoffs are due to Albert Tucker, who wanted to make Flood and Dresher's ideas more accessible to an audience of Stanford psychologists. Although Flood and Dresher didn't themselves rush to publicize their ideas in external journal articles, the puzzle attracted widespread attention in a variety of disciplines. Christian Donninger reports that “more than a thousand articles” about it were published in the sixties and seventies. A bibliography (Axelrod and D'Ambrosio) of writings between 1988 and 1994 that pertain to Robert Axelrod's research on the subject lists 209 entries. A Google Scholar search for “prisoner's dilemma” in 2014 returns 106,000 results.
Steven Kuhn, 2014The Prisoner's Dilemma turned out to be one of game theory's great advertisements. The elucidation of this paradox, and the demonstration of how each player brings about a collectively self-defeating outcome, because she is rational in pursuing her own interests, was one of game theory's early achievements which established its reputation among the social scientists.
Shaun Hargreaves Heap and Yanis Varoufakis, 2004As these opening quotes acknowledge, the Prisoner's Dilemma (PD) represents a core puzzle within the formal mathematics of game theory. Its prominence is evident in the steady rise of incidences of the phrase's use from 1960 to 1995, thereafter remaining stable into the present. This famous two-person “game” has a stock narrative cast in terms of two prisoners who each independently must choose whether to remain silent or confess implicating the other. Each advances self-interest at the expense of the other and thereby achieves a mutually suboptimal outcome, miring any social interaction it is applied to into perplexity. The logic of this game proves the inverse of Adam Smith's invisible hand: individuals acting on self-interest will achieve a mutually suboptimal outcome. However, as this chapter illuminates, the assumptions underlying game theory drive this conclusion.
The Prisoner's Dilemma is not only a core problem at the heart of analytic game theory, but it has also been applied to model and explain numerous phenomena throughout politics and economics.
4 - Deterrence
- from PART I - WAR
- S. M. Amadae, Ohio State University
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Rational deterrence is a highly influential social science theory. Not only has it dominated postwar academic thinking on strategic affairs, but it has provided the intellectual framework of Western military policy in the same period as well. The theory's success drives largely from its clearheaded logic, which is as persuasive as it is elegant.
The power of rational deterrence theory is conceptual, not mathematical. It derives from the underlying logical cohesion and consistency with a set of simple first principles, not from the particular language in which it is expressed. In consequence, the model has been astonishingly fecund, both for theory and policy.
No other theoretical perspective has had nearly the impact on American foreign policy … Far from being an abstract, deductivistic theory developed in a policy vacuum, rational deterrence theory has repeatedly taken inspiration from the most pressing policy questions of the day, from decision of bomber-basing in the 1950s to SDI [Strategic Defense Initiative] in the 1980s. It has set the terms of the debate, and has often influenced the outcome.
Christopher Achen and Duncan Snidal, 1989So far we have seen that strategic rationality, which endorses the logic of consequences, accepts an underlying philosophical realism about value in the form of interpersonally transferable utility, and rejects joint maximization, seemed tailor-made to address the as yet counterfactual hecatomb of waging nuclear war. Thomas Schelling had sought to defend mutual assured destruction (MAD), reminiscent of reciprocal security under classical liberalism, by modeling a high-stakes nuclear security standoff with the recalcitrant Prisoner's Dilemma game. Given the existential reality of assured destruction in a nuclear war among superpowers, and the shared goal of avoiding Armageddon, by all counts MAD should have won the theoretical security debate and prevailed over US nuclear strategy.
Yet, with hindsight, observers may now be tempted to conclude both that the nuclear security debate vindicated nuclear utilization targeting selection (NUTS) theoretically and helped the United States win the Cold War in practice. Readers may thus wonder, “Why revisit the nuclear security debate, especially given the successful denouement of the superpower standoff?” The choice of adopting orthodox game theory as the exhaustive statement of coherent action necessarily pronounces escalation dominance logically superior to reciprocal deterrence, despite the fact that maintaining nuclear ascendance over another superpower is impossible.
10 - Selfish Gene
- from PART III - EVOLUTION
- S. M. Amadae, Ohio State University
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Genes are competing directly with their alleles for survival, since the alleles in the gene pool are rivals for their slot on the chromosomes of future generations. Any gene that behaves in such a way as to increase its own survival chances in the gene pool at the expense of its alleles will, by definition, tautologously, tend to survive. The gene is the basic unit of selfishness.
Richard Dawkins, 2009Richard Dawkins's stated mission is to reject that any organism could have evolved to be altruistic, or that group selection is a viable evolutionary mechanism. In The Selfish Gene, originally published in 1976, the British ethologist and evolutionary biologist argues that the process of biological evolution ensures that all organisms, on an individual basis, are inherently selfish. Dawkins fully realizes that his research could have far-reaching implications for our understanding of life. Moreover, he does not shy away from articulating the full ramifications of his vision for human beings, culture, and society. He is open about the repercussions of his argument:
Like successful Chicago gangsters, our genes have survived, in some cases for millions of years, in a highly competitive world. This entitles us to expect certain qualities in our genes. I shall argue that a predominant quality to be expected in a successful gene is ruthless selfishness. This gene selfishness will usually give rise to selfishness in individual behavior.
Although quick to disclaim that he is not “advocating selfishness as a principle by which we should live,” Dawkins still conveys a consistent message that no biological agent is naturally selfless. He boldly states that “much as we might wish to believe otherwise, universal love and the welfare of the species as a whole are concepts that simply do not make evolutionary sense.” Aware he was putting forth a vision of the nature of life itself, perhaps equivalent to that of epic proportions, he recalls, working alongside the British theoretical evolutionary biologist John Maynard Smith and the American sociobiologist Robert Trivers, that 1975 “was one of those mysterious periods in which new ideas are hovering in the air.” Although not directly acknowledged, the new ideas were those of game theory.
Dedication
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8 - Consent
- from PART II - GOVERNMENT
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Ultimately what sets apart the classical liberal and [law and] economic conceptions of rights and liability rules is the case in which liability rules are thought sufficient to justify a transfer…. For it can never be any part of the classical liberal account that by compensating someone for taking what is his without his consent, an injurer respects the victim's rights; whereas the core of [rational choice] economic analysis is the possibility that by compensating a victim, an injurer (at least sometimes) gives his victim all that he is entitled to, thereby legitimating the taking.
Jules Coleman, 1988Richard Posner's law and economics, on examination, is even more distributionally biased in favor of wealthier individuals than Buchanan's minimal constitutionalism. Buchanan's use of the unanimity principle to capture the importance of voluntary consent is at least designed in principle to enable individuals to veto conditions that would erode their current status, even if it fails to live up to this promise given the inevitability of coercive bargaining and de facto possession. Posner's law and economics, on the other hand, overtly privileges wealthy individuals by asserting that resources should be in the hands of those who value them most, as measured by agents’ willingness and ability to pay for them. In effect, Posner's scheme puts resources up for auction to the highest bidder. Rights themselves are subject to dispersion based on considerations of power. The concept of consent that Posner uses to ground his law and economics method is attenuated at least to the extent of Buchanan's unanimous agreement, if not more so.
Posner is one of the most prolific living public intellectuals in the United States, having published at least forty books, and is also a presiding judge on the US Court of Appeals for the 7th Circuit. The legal program he tirelessly promotes can be summarized by the mantra “justice is wealth maximization.” According to the law and economics school, the role of law is to ensure that resources are granted to those who can best use them, with use evaluated in terms of the ability to generate wealth. According to Posner, law only has the positive function of enforcing rules. It does not reflect privileged moral values. It is not inherently normative.
3 - Assurance
- from PART I - WAR
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We may now combine our analysis of PDs [Prisoner's Dilemmas] and commitment devices in discussion of the application that first made game theory famous outside of the academic community. The nuclear stand-off between the superpowers during the Cold War was exhaustively studied by the first generation of game theorists, many of whom worked for the US military … Both the USA and the USSR maintained the following policy. If one side launched a first strike, the other threatened to answer with a devastating counter-strike. This pair of reciprocal strategies, which by the late 1960s would effectively have meant blowing up the world, was known as ‘Mutually Assured Destruction’, or ‘MAD’. Game theorists objected that MAD was mad, because it set up a Prisoner's Dilemma as a result of the fact that the reciprocal threats were incredible.
Don Ross, 2014Some writings on international cooperation have applied game theory – particularly the Prisoner's Dilemma game – to security issues to identify the conditions under which cooperation is likely to emerge … [S]ecurity dilemmas … are often modeled as single play Prisoner's Dilemma.
Joseph S. Nye Jr. and Sean M. Lynne-Jones, 1988In the late 1940s and 1950s, defense intellectuals developed game theory to anchor military strategy in scientific analysis. The last chapter discussed how game theorists developed strategic rationality as a comprehensive science of decision making, which entailed plausibly identifying “a set of rules for each participant which tell him to behave in every situation which may conceivably arise,” and which was immediately developed for application to military and nuclear strategy. Analysts perceived that military strategy could not be contained by zero-sum game theory and John von Neumann's minimax concept of securing the least bad outcome for oneself. In the Prisoner's Dilemma model of bargaining, John Mayberry discovered that threatening the adversary with the worst outcome that one could credibly muster was the superior approach.
In 1960, Thomas Schelling used a Prisoner's Dilemma model to defend the nuclear strategy of mutual assured destruction (MAD). The Prisoner's Dilemma model of the nuclear security impasse implies that one actor's self-defense necessarily compromises the other's security because each has the first preference of achieving supremacy through preferring the outcome least acceptable to the opposition. Schelling's hope was that in addressing the worst-case scenario for achieving security, MAD would provide a blueprint for achieving peaceful coexistence in a nuclear age.
1 - Neoliberalism
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The political effects of nuclear weapons are also a serious consideration. American values have been affected. Our central government is larger, and the executive branch plays a larger role in foreign affairs. Interaction between strategic adversaries involves secrecy, and secrecy is difficult to reconcile with democracy. Many of these changes began before 1945, but enormous life-and-death decisions are nevertheless delegated to the president or his successors, and the circumstances may not permit congressional involvement. Knowledge of the details of nuclear targeting plans tends to be restricted to the military, and there have been cases in the past where a significant gap existed between military plans and what elected officials thought to be policy.
Joseph S. Nye Jr., 1986The distinction between acting parametrically on a passive world and acting non-parametrically on a world [of game theory] that tries to act in anticipation of these actions is fundamental. If you wish to kick a rock down a hill, you need only concern yourself with the rock's mass relative to the force of your blow. … By contrast, if you wish to kick a person down the hill, then unless the person is unconscious, bound or otherwise incapacitated, you will likely not succeed unless you can disguise your plans until it's too late for him to take either evasive or forestalling action.
Don Ross, 2006The resultant dominant ideology is founded on the illusion that observed inequality is not to be explained in terms of the social power of one class or group over the other but, instead, is the result of different abilities, work ethic, etc. … Indeed, mainstream economics, and by association game theory, may be thought of as the highest form of this ideology …
Our world may have never before been so ruthlessly divided along the lines of extractive power between those with and those without access to productive means. And yet never before has the dominant ideology been so successful at convincing most people that there are no systematic social divisions; that the poor are mostly undeserving and that talent and application is all the weak need in order to grow socially powerful.
Shaun Hargreaves Heap and Yanis Varoufakis, 2004After September 11, 2001, it became obvious that Francis Fukuyama's predicted End of History failed to materialize in prosperous global markets and inclusive democratic governance.
Frontmatter
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PART III - EVOLUTION
- S. M. Amadae, Ohio State University
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Game theory is a general lexicon that applies to all life forms. Strategic interaction neatly separates living from nonliving entities and defines life itself. Strategic interaction is the sole concept commonly used in the analysis of living systems that has no counterpart in physics or chemistry.
Game theory provides the conceptual and procedural tools for studying social interaction, including the characteristics of the players, the rules of the game, the informational structure, and the payoffs associated with particular strategic interactions. The various behavioral disciplines (economics, psychology, sociology, politics, anthropology, and biology) are currently based on distinct principles and rely on distinct types of data. However, game theory fosters a unified analytic framework available to all the behavioral disciplines. This facilitates cross-disciplinary information exchange that may eventually culminate in a degree of unity within the behavioral sciences now enjoyed only by the natural sciences …. Moreover, because behavioral game-theoretic predictions can be systematically tested, the results can be replicated by different laboratories. This turns social science into true science.
Herbert Gintis, 2009Prisoners of Reason argues that neoliberal capitalism and governance reflect a new theoretical rationale that was initially developed and applied to prosecute the Cold War through exercising credible military threats, many of unimaginably devastating nuclear destruction. Policy analysts and social scientists came to accept strategic rationality as the epitome of human reasoning, thus rendering obsolete formerly accepted perspectives on intelligible action. Most prominently, in its orthodox operationalized form, strategic rationality only permits agents to pursue outcomes in competition with others over scarce, instrumentally salient resources. This book's primary goal is to render clearly how this new understanding of rational action sustains neoliberal markets and government in direct contradiction to classical liberalism.
Noncooperative game theory adopts a stance toward action that accepts actors’ preferences as given; models action choices descriptively, normatively, or prescriptively depending on the context; and seeks solutions or equilibrium outcomes that will obtain assuming that actors maximize expected utility with varying attitudes toward risk. In John von Neumann and Oskar Morgenstern's original articulation, this science of choice claims to be an exhaustive treatment of rationality in all decisions involving more than one individual. Therefore, it offers to agents the imperative to comply with its principles of choice, tacitly linked to survival and success, or to suffer the fate of irrationality and loss.
Contents
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9 - Collective Action
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The facts that there is a lot of collective action even in many large-number contexts … and that, therefore, many people are not free riding in relevant contexts suggest [that] … the actors in the seemingly successful collective actions fail to understand their own interests.
Despite the fact that people regularly grasp the incentive to free ride on the efforts of others in many contexts, it is also true that the logic of collective action is hard to grasp in the abstract. The cursory history… [of collective action] suggests just how hard it was to come to a general understanding of the problem. Today, there are thousands of social scientists and philosophers who do understand it and maybe far more who still do not. But in the general population, few people grasp it. Those who teach these issues regularly discover that some students insist that the logic is wrong, that it is, for example, in the interest of workers to pay dues voluntarily to unions or that it is in one's interest to vote …. It would be extremely difficult to assess how large is the role of misunderstanding in the reasons for action in general because those who do not understand the issues cannot usefully be asked whether they do understand. But the evidence of misunderstanding and ignorance is extensive.
Russell Hardin, 2003The failure of collective action in large-scale interdependent efforts, this chapter shows, is the consequence of causal negligibility rather than the intention to free ride on others’ efforts. Rational choice theory puts forward a different explanation: that collective enterprises are doomed to failure because of the overriding logic of the Prisoner's Dilemma game, extended from two individuals to countless individuals. This deep-seated worry over individually enacted globally destructive action, which resonates with contemporary concerns over climate change, overfished seas, and boycotts, has been labeled “the tragedy of the commons,” and the free rider problem. Just as in a two-person PD game, individual self-interest recommends defecting and thus leads to mutual impoverishment, so, too, in a situation with multiple persons, such logic will necessarily lead to the failure of collective action, whether in the case of an environmental commons or the provision of public goods such as infrastructure.
7 - Unanimity
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Agreement that results from the physics of threat advantage bargaining is not underwritten by genuine consensus. So, even if a Nashian bargain succeeds in producing an agreement to create a property rights scheme, those who are relatively disadvantaged by the agreement will seek to destabilize it by engaging in post-contractual rent-seeking behavior. As the discussion of the properties of property rights schemes illustrates, there are ample opportunities for rent-seeking. In Nashian bargaining, hold-out behavior may make agreement impossible, or if successful, inefficient. On the other hand, since Nashian bargaining is not based on genuine consensus, even if it is successful the agreement may not endure. Moreover, whatever agreement is reached, those who feel they are exploited will seek to destabilize the agreement, and there is ample opportunity for them to do so.
Jules Coleman, 2002Free market liberalism and democratic government have traditionally accepted that unanimous agreement is the highest form of validation for establishing terms of trade and law. The previous chapter discussed how the Prisoner's Dilemma view of the social contract disregards any motivationally binding quality of the exact terms of an agreement. Yet, at the same time, rational choice theorists still present unanimous agreement as the central means of securing legitimacy for trade and democracy. This chapter questions whether the shell of agreement left can serve to ground the unanimity principle. In voting procedures, unanimity signifies that all members are on board with a resulting outcome and are therefore presumably inherently motivated to endorse it with their actions. Similarly, in market exchange, unanimity implies that every participating in a transaction finds the terms of exchange sufficiently agreeable to uphold them.
UNANIMITY VS. UNANIMOUS AGREEMENT TO TERMS
The idea that agreement to terms is motivationally irrelevant is so radical for liberalism that even Buchanan only suggests it in a mixed and inconsistent fashion. Following his work with Gordon Tullock in Calculus of Consent, Buchanan defends a contractarian approach to liberalism reminiscent of Thomas Hobbes's idea that the fundamental role of government should be to fulfill each individual's direct interest in procuring security. Even though he rejects the idea that agreement to terms mobilizes compliance, he still hopes to identify principles of government that would achieve the virtually unanimous assent of all citizens.
Acknowledgments
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