Public Choice

Hoppe: "Contrary to the claim of the public choice school, states and private firms are not
doing essentially the same sort of business, but instead are engaged in categorically
different types of operations. Both types of institutions are the outcome of different,
antagonistic interests. The "political" interest in exploitation and expropriation under-
lying the formation of states obviously requires and presupposes the existence of wealth, and hence an "economic" interest of at least one person in producing such wealth in the first place (while the reverse is not true). But at the same time the more pronounced and successful political interests are the more destructive of economic interests this will be.

The public choice school is perfectly correct in pointing out that everyone-a government
smployee no less than an employee of an economic firm-normally prefers a higher to a
lower income and that this interest explains why government should be expected to have
no less of a tendency to grow than any other enterprise. However, this discovery-that
politicians and bureaucrats are no more altruistic or concerned about the "public good"
than are people in other walks of life-is hardly new even if it has sometimes been
werlooked. Yet what is in fact new with public choice-the inference drawn from this
correct insight then, that all institutions should hence be regarded as an outgrowth of identical motivational forces and be treated analytically on a par with each other-is false. Regardless of a person's subjective beliefs, integrating one's actions into the
institutional framework of either the state or a "normal" economic enterprise and
pursuing one's wealth maximizing interests here or there will in fact produce categori-
cally different outcomes. On a representative statement of the public choice school
regarding the idea of the "state as a firm," and of "political exchange" as essentially the
same as "economic exchange," see James Buchanan and Gordon Tullock, The Calculus of
Consent (Ann Arbor: University of Michigan Press, 19651, p. 19; for a critique of this view
and the fundamental difference between economic and political means, see Franz Oppen-
heimer, The State (New York: Vanguard Press, 1914), pp. 24-27; Murray N. Rothbard,
Power and Market (Kansas City, Kans.: Sheed Andrews and McMeel, 1977), chap. 2.