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As I said to you the other night Dave, I'm asking a different question: might I understand how human beings interact socially by studying the neuroscientifc foundations of action? Yup. I'm not willing to judge everything by whether or not it makes me (only) a better economist. I cross disciplines enough to sometimes want to ask a different question.

Rothbard? yes!!!! wtf? EXPLAIN PLEASE

Steve, agreed. The exercise makes one a stronger intellectual, etc. Like Mises said, an economist ought to also understand political theory, biology, and so on. The Alchian Test is on the very narrow -- but important -- margin of the economist qua economist.

On Rothbard: As one of my professors once said (I take it on his authority), Alchian didn't believe in macroeconomics. And for good reason. I think that the macro chapters in University Economics would have been better had Alchian read America's Great Depression, for example.

But I mislead, for my "test" is not concerned with criticizing Alchian. Instead, it is a pragmatic method for me to briefly evaluate what I should read in an effort to become a better economist (qua, Steve, economist), especially on the interdisciplinary margin.

(For example I should have used the test 25 years ago when I considered reading Gadamer. I would have chosen differently. Ex post, it didn't make me a stronger economist.)

Yes, sadly when a heap of trendy writers are so widely popular you have to check and find out if there is really something there. In the case of Gadamer, Derrida, Foucault, etc etc it can take a lot of time to realise how little is there, so at the end of it you can say that the time was wasted, except that you can explain to other people why they don't need to go there.

Much the same applies to the logical positivists and logical empiricists. Did Alchain need to read any of them to be a better economist?

I'm confident Alchian read Mises, and quite possibly Rothbard.

To be a better economist, do you need to understand human behavior? human psychology? evolution? various interpretive strategies? culture? anthropology? network theory? systems theory? complexity? self-organization? emergence?

I think so, but I'm an interdisciplinary scholar and not (by training) an economist.

Would anyone be a better economist if they read J.T. Fraser, Clare Graves, Victor Turner? I think so.

He is only 96. There is still time for Alchian to remedy his deficiencies.

Dave, I take from your later comments that Lynne and Steve's presentation didn't change your mind. Care to elaborate?

They were trying to show how recent developments in the neurosciences are largely consistent with Hayek's work in The Sensory Order, and that the discovery of mirror neurons helps establish an empirical basis for methodological subjectivism. They are, it seems to me, doing something different; they are not arguing that learning this research makes one a better economist per se. For example, I asked Steve if this research will improve his economic theory of the family, or his case for monetary equilibrium, and so on, and he said no it won't.

I think this kind of exercise neglects Deirdre McCloskey's humble point that scholarly writing is an exercise in persuasion. Would the economics profession give us better economics if it learned about mirror neurons and the like? Yes.

"Better economics" means better policy advice, better popular writings, and better undergraduate pedagogy. "Better economics" means doing a better job of contributing to an educated citizenry. Stuff like neuroeconomics gives us better economics because it redeems stuff like "verstehen" and makes hyper-rationality assumptions harder to maintain. You know, higher stages of production and all that. Mainstream economics understands and respects "science," while somewhat disparaging "literary economics." Neuro-Hayekianism tends to make such attitudes harder to maintain.

Roger, I think I can agree with you in general, and I do think these kinds of things (including Gadamer) help make us stronger intellectuals in general, we can hold meaningful conversations with others outside our discipline, and so on. What I mean by better economics is narrow -- do we really learn more about the coordination problem by studying these types of things such that the benefits exceed the costs at the margin?

I've always held that we should allow a thousand flowers to bloom. Neuro-Hayekianism is cool. (And as a side point I'll even recommend to my daughter, who has just started studying cognitive psychology, to read Hayek's TSO.) But I do think the Alchian Test is a good check against jumping into the latest developments outside our discipline too quickly, as it allows for a healthy degree of skepticism. I'm willing to wait and see how much better our economics will be ten years from now.

"[D]o we really learn more about the coordination problem by studying these types of things such that the benefits exceed the costs at the margin?" Sure! TSO was part of Hayek working out both methodology and his complexity ideas, both of which were important to his knowledge project. Adam Smith said our "propensity to truck, barter, and exchange" comes from our capacity for "reason and speech." All this stuff about neuroscience, oxytocin, and language evolution support precisely the Smithian view. How is it possible that strangers trade and otherwise cooperate? What promotes such cooperation? What frustrates it? These are basic, Smithian, questions for economics. The many sciences of man all speak importantly to this question. If our basic model of man is off, our answers to these basic questions may contain errors we cannot detect. I mean, come on. Surely "Austrians" should recognize that mistaken notions of "reason" or "rationality" can lead one to false solutions to social problems. The attempt at collective planning is merely one of the more salient examples of a recurring problem.

This is fun. I wish I would have had this conversation with you at the SEA meeting.

This literature does appear to support the Smithian argument. And so does the Gadamerian argument that man is an interpretive being -- it supports our whole verstehen tradition. That said, the neurosciences are better because they undertake empirical research as opposed to making ontological claims that really cannot be tested. It is nice to get that kind of confirmation. But once again, I'm skeptical that it will change our (Austrian) economic theory in a substantial way. I don't think it is likely to improve -- and there is room for improvement -- our theory of capital, the business cycle, monetary equilibrium, our case against comprehensive planning, our use of public choice, rent seeking, moral hazard, Big Players, constitutional rules, etc., and probably not even our theory of the coordination of expectations. I could be wrong on this, especially the expectations question, so I'll wait and see.

Or perhaps economists should work at perfecting their skills at communicating basic truths. We now have a central bank that believes, once again, it can coin jobs by printing money.

"That's Interesting, But Does It Pass The Alchian Test?
David L. Prychitko"

That's Interesting, But Does It Pass The Alchian Test?

"Or perhaps economists should work at perfecting their skills at communicating basic truths. We now have a central bank that believes, once again, it can coin jobs by printing money."

Jerry, doesn't everyone believe this? Isn't the debate simply how many jobs can be created this way and how long until everything goes fubar?

The cultural/hermeneutic/psychological turn might have done better feeding on the likes of Rene Wellek (lit theory), Jacques Barzun (history and cultural studies) and the Buhlers (language, learning and purposeful behavior). This might not have improved their economics but they would have found much more content than the chosen gurus like Gadamer.

It is fascinating to find the importance that Adam Smith attached to language and this points up the significance of Karl Buhler as a leading pioneer of modern linguistics. He is also a kind of honourary Austrian because his best work was done at the Vienna Pedagogical Institute. He was locked up when the Germans took over in 1938 and his career was cut off in his prime (he was released and he walked over the border to join his wife in the US). Previously he knocked back a plum post in the US because he loved the culture of Vienna, that upset some influential academic and he paid a price by having his work substantially written out of the history of psychology.

BTW Jacques Barzun turns 103 this month!


Alchian is 96 and is certainly going strong.

A revised edition of his universal economics (2005) is in preparation.

for features, preface and table of contents.

Universal Economics is a significant expansion upon and major reworking and reorganization of the famous textbooks, University Economics and Exchange and Production, of Armen A. Alchian and William R. Allen.

I participated in a Liberty Fund colloquium on Alchian, whom I met for the first time there. We had read and discussed some of those manuscript chapters, and I've been patiently waiting for the book to find its way to print ever since.


There are different stages in the production process or, to shift lingo, different discussions going on, all of which matter at different time frames. Philosophy matters; so do op eds. Mises is an excellent model of someone hitting the academic heights and popular press at the same time. I think that's a good model to follow. Presumably, you would agree with all that unreservedly?


I had no idea of this book. Great news!


I do not know when the liberty conference was held.

The paperback will be a revised edition of the 2005 hardcover.

Bobby McCormick has posted a 2000 draft of the first 12 chapters of universal economics at this link

I think that learning anything that allows us to understand the limits of human beings regarding behavior and action will make one a better economist. Thus, economists should understand human ethology, human evolution, and cognitive and evolutionary psychology inside and out. I also imagine that anything that requires interpretation and analysis would benefit greatly from knowing the theories of interpretation and analysis that are out there -- especially those that have proven most successful at explaining real-world phenomena. Hayek concluded that the only way one could be a good economist was to be an interdisciplinarian. Why do we suppose he thought that?

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