The philosophy of economy of James M. Buchanan

Starting from the assumptions of methodological individualism, 'homo economicus' and the modeling of politics as exchange, Buchanan develops contractual and constitutional bases for the theory of economic and political decision making. For him, knowledge is intellectual and subjective. The process, and not the end state, is reality, and it is on process that the economist should concentrate. Also fundamental is his confidence concerning the possibilities of undertaking exchanges among individuals and the political sphere, which lead to consent among them, and finally to contractual constitutionalism. In this way, Buchanan develops a positive theory of politics.