|Peter Boettke|
Though I never met Armen Alchian, he was a looming figure in my economic education. Upon embarking on graduate study in economics, admist the required readings of a technical nature was University Economics by Alchian and Allen. I learned quickly while it was necessary that we master the material from Henderson and Quandt, Varian, and Silberberg, it was not sufficient. The various micro professors I had, all stressed that we learn to reason as an economist, not just learn the formal language of economists. And to acquire that ability, they all pointed us to Armen Alchian. We studied his textbook, we read his articles, we listened to his former students relay stories about how he taught and what he taught. When we were studying for our microeconomics qualifying exam, my study partners often joked that we needed to do our best to become Alchian to succeed on the exam. And, the exam format did in large part take the form of the True, False, Uncertain questions which are in University Economics and the pass rate in those early years of GMU's PhD program did not get above 50% by design. If we could learn to reason like Alchian in tackling questions, then we could pass the exam. If we couldn't think like Alchian, then we would need to take the exam again. Many of my classmates needed a second or even third try.
That time spent studying Alchian (usually with Dave Prychitko, who taught me so much in the way that only peer-to-peer learning teaches) are some of my favorite memories from graduate school, and also have stayed with me throughout my career as the way I strive to reason through concrete problems in economics. Dave and I continue to try to "be like Armen" in our various editions of The Economic Way of Thinking. Paul Heyne in writing that book was heavily influenced by James Buchanan and F.A. Hayek, but he was also trying to fill a market niche that University Economics fell between. Alchian and Allen was perceived as too difficult for basic principles, but not technical enough for advanced courses. The Economic Way of Thinking from largely the same perspective of economics as a coordination problem, sought to provide the material in a way that was easier to digest for the student of basic economics. Alchian and Allen, however, remains the original text upon which The Economic Way of Thinking draws educational inspiration. We just finished the revisions for the 13th edition, and that influence is still evident. Paul's message was to "Teach the principles of economics class as if it will be the last class in economics your students will ever have, and it will turn out to be the first of many." The idea would be that students who have gotten a taste of the power of the economics from The Economic Way of Thinking, will now be encouraged to tackle University Economics by Alchian and Allen, as well as embark upon the study of thinkers such as Buchanan, Coase, Demsetz, Friedman, Kirzner, Hayek, Mises, North, Olson, Ostrom, Rothbard, etc. In short, welcome to the wonderful world of economics and Alchian was just a giant in presenting subtle economic arguments in the most straightforward of ways possible.
The older Liberty Fund edition of his papers, Economic Forces at Work, I believe captures his style and substance perfectly. Alchian was just a brilliant economic mind and a master craftsman of the exposition of economic ideas. Students today can get Alchian's Collected Works in 2 volumes through Liberty Fund. They can also listen to Liberty Fund's Intellectual Portrait of Alchian.
Alchian conducted interviews with F. A. Hayek in the 1970s that are also very worthwhile.
Today marks the passing of one of the true intellectual giants on the second half of the 20th century of economics.
I spent a the summer before starting my PhD voraciously reading *Economic Forces at Work* on Pete's advice, and it was one of the best human capital investments I ever made. The whole time I thought, "This is the way I want to think, and the way I want to write." Foolishly, at the time I worried that maybe even though I was in love with the style of thinking and writing I found in Alchian, I was deficient in the way "modern" price theorists thought and communicated. One thing I've realized over the past few years is that the deficiency that I (and probably all of us) have is that I wasn't thinking and communicating enough like Alchian. It's a sad day to mark his passing but his legacy will live on.
Posted by: Zac Gochenour | February 19, 2013 at 12:51 PM
Alchian and Allen's "University Economics" is one of the great economics textbooks of the 20th century.
Any student who successfully goes through that book and masters the logic and method of economic reasoning developed there is way ahead in becoming an "economist."
It was recommended to me long, long ago, when I was still an undergraduate back in the 1970s. The months I spend with it on my own was one of the most rewarding "courses" in economics I ever experienced.
Then reading through "Economic Forces at Work" made clear to me what a non-Austrian economics could be at its very best.
It is unfortunate that the Nobel Committee did not see fit to award a prize to Alchian. He would truly have been deserving of that high honor -- far more than some recent recipients!
Richard Ebeling
Posted by: Richard Ebeling | February 19, 2013 at 07:12 PM
A few days ago I chanced across http://alchian-allen.com/index.html
This site must be a legacy promo for their 2005 universal economics with table of contents and preface that can be downloading. An early draft of the first half of the 2005 book is on the web.
The web site for the paperback of universal economics has been down for several months.
Alchian had a most penetrating mind. He was always looking for a better answer.
He was at his most confronting and most creative when he said "Whatever is, is efficient." If it wasn't efficient it would have been something different. Of course, if you try to change anything that is there, that is efficient too.
Alchian would ask "If something is so optimal, why don't we see it then?"
The notion was essentially that there must be other costs that you left out of your model; either costs involved in the political system, in organizing support, or in changes for this other solution which might seem to be such a low-cost option.
The basic point was why are we weighing only some costs and not others?
Why are these costs (involved in minimizing particular dead-weight losses that would be involved in setting a particular tax) less important than other types of costs (involved in informing people of what the options are or of organizing them to adopt the alternative option)? Entrepreneurship is not a free lunch.
Posted by: Jim Rose | February 20, 2013 at 01:30 AM
The recents deaths of Buchanan, Ostrom and now Alchian remind me that so many of the economists we Austrians think of as great are of the old generation. And now there are the predictable events. The obvious question, for me, is whether we are still in the same discipline as these people were in. In the prime of their days economics was not as obsessed with formalism as it is now. There was a more frequent effort not to lose contact with the "intuitive" roots of economics. True, there were many exceptions. But being that kind of economist did not preclude getting a job at a very top department. Now largely it does.
Economists is not defined by its subject matter nor its point of view, but by its method of analysis. This method now goes beyond simple maximization subject to constraint. It is rooted in the severe application of the axiomatic method. Inutition (so-called) is now just motivation; it is not fundamental.
It will take a long time for the relevant institutions to take account of the differences in the ways certain phenomena are studied. But it has to come. Just as in the 1960s and earlier many schools lumped sociologists and anthropologists into the same department, there will surely come a time when economics will break apart.
I do not know exactly how this will occur but I am convinced it will.
Mario Rizzo.
Posted by: Thinkmarkets.wordpress.com | February 21, 2013 at 10:33 AM
see http://oll.libertyfund.org/?option=com_staticxt&staticfile=show.php%3Ftitle=2136&chapter=195441&layout=html&Itemid=27 for STANLEY G. LONG's New individualist review of University Economics by Armen A. Alchian and William R. Allen. Belmont, California: Wadsworth Publishing Co., 1964,
Posted by: Jim Rose | February 23, 2013 at 10:53 PM