A Conversation with Armen A. Alchian
Recognized as one of the most influential voices in the areas of market structure, the theory of the firm, law and economics, resource unemployment, and monetary theory and policy, in this 2001 interview, Armen Alchian (1914-2013) outlines the “UCLA tradition” of economics which he founded and explores the many unanticipated consequences of self-seeking individual behavior.
Below are some prompts for further conversation:
Childhood, Family & Education
1- How did the Great Depression influence Alchian’s views and career trajectory?
2- What does Alchian regard as his most important work and why? What should a scholar focus on in your opinion, writing for students, the general public, or the profession? Why?
Uncertainty, Evolution, and Economic Theory
3- According to Alchian, do businessmen really maximize profits? Explain.
4- In his research, what did Alchian discover about the way airplane engineers measured the costs of production versus the way economists measure the costs of production? What makes this difference so impiortant?
5- How does Alchian distinguish between public and private property? Is his distinction is specific enough? Why?
6- What does Alchian mean when he says, “If you’ve got property rights, you don’t have to talk about free speech.”? What constitutes free speech, according to Alchian?
7- Why does Alchian suggest it is important to distinguish between anticipated and unanticipated inflation?
8- Alchian argues that inflation can serve to transfer wealth between classes. How can this happen, and what effects can this have?
9- Alchian says you can learn different things from “stories” versus data. What does he mean by this, and how does it help to explain why shopping during times of inflation can be like a part-time job?
Information Costs and the Firm
10- What are search costs, and how can they explain unemployment, according to Alchian?
11- What does Alchian mean when he asserts that a firm is an attempt to subvert the market? What aspect of Coase’s work on the theory of the firm does Alchian believe is wrong, and why?
12- Alchian says he’d like to change the title of his co-authored textbook to Universal Economics. Why does he think this would be a good title change, and to what extent would you agree? (Note: In 2018, Liberty Fund books published Alchian and Allen’s text as Universal Economics.)
13- Alchian notes the trade-off of time spent on his textbook. Did he make the right decision, in your opinion? Why?
Economics, Individuals, and Clans
14- What might a greater attention to human gene structure contribute to economics, according to Alchian? To what extent have you seen this trend in recent scholarship, and to what extent does it confirm Alchian’s suppositions?
15- What does Alchian mean when he says economics is fundamentally about groups? How does the individual factor into his view of economics?
16- Benjamin asks Alchian whether markets enhance freedom. How does Alchian reply? Describe how satisfactory you find his answer.
17- Alchian is known as the founder of the “event study.” What does this mean, and how are such studies used today?
Armen Alchian, “The Economic and Social Impact of Free Tuition:”
Armen Alchian interviews Friedrich Hayek. (from UFM New Media)
David Henderson, “An Economist Who Made the Science Less Dismal,” (from the Wall Street Journal)
Entries from the Concise Encyclopedia of Economics:
- David Henderson, “Economics Works” (A Liberty Classic on Alchian’s Collected Works)
- Fred McChesney, “Armen Alchian: An Economist-Lion in Winter:“
- Anthony de Jasay, “Property or ‘Property Rights’?“
- Anthony de Jasay, “Treasure Island.”
- David Henderson, “How Property Rights Solve Problems.“