Armen Alchian and Bill Meckling on Goals and Incentives
By David Henderson
And the men of Kharkov and Karachi are not different from the men of Kalamazoo. The specific objects of wealth and power may differ between Kalamazoo and Kharkov. But if Kalamazoo teems with thieves and brigands while Karachi is serenely industrious, the explanation lies not in differences in goals. Differences in goals will not explain differences in the way individuals pursue those goals.
This is from William H. Meckling and Armen A. Alchian, “Incentives in the United States,” American Economic Review 50 (May 1960): 55-61, reprinted in The Collected Works of Armen A. Alchian, Vol. 2, Property Rights and Economic Behavior.
I’ve been working on a chapter on Alchian and property rights in a short book on the UCLA School. (Steve Globerman, a fellow UCLAer, and I are writing it for the Fraser Institute.)
So I’ve been going though the Collected Works volume published by Liberty Fund.
So what does explain differences in the way people pursue their goals. The answer is in the title of their piece: incentives.