Pareto optimality, rule of law, James Buchanan, unanimity requirement, constructive unanimity, majority rule, convention


In 1959, James M. Buchanan criticized the collectivist misuse of Pareto optimality by the "new welfare economists" and made a first attempt to extend that individualist concept into the political realm. Over the following three decades he further developed his political application of Pareto’s insight to buttress an essentially economic analysis of political exchange that would justify the processes of constitutional democracy in the same way Pareto efficiency justifies free markets. In this paper I will explain why Buchanan’s particular formulations will not work and propose a more comprehensive solution that accomplishes Buchanan’s announced purpose. I will argue that a conventionalist understanding of the rule of law provides a precise and appropriate application of the Pareto criterion in the legal and political realm.

Original Publication Citation

“Pareto Optimality and the Rule of Law,” in Method and Morals in Constitutional Economics : Essays in Honor of James M. Buchanan, (Studies in Economic Ethics and Philosophy), edited by G. Brennan, H. Kliemt, and R. D. Tollison, Berlin, Springer, 2002, pp.237–252.

Document Type

Peer-Reviewed Article

Publication Date


Permanent URL


Springer, Berlin




Family, Home, and Social Sciences


Political Science

University Standing at Time of Publication

Full Professor