2/04/2020

Why Did Armen Alchian Have to Teach Economists About Property Rights?

"Alchian’s unique positioning within the economics profession is largely a consequence of the particularities of his time. To an earlier generation of economists educated in the late 19th and early 20th century, many of his insights were just common-knowledge among serious students of classical and early neoclassical economics. But to the generations educated in the post WWII era, Alchian’s insights were so alien to their way of thinking that either he was dismissed as a relic of an earlier age, or exalted to the status of one of the most clever and creative thinkers in the profession. My position is that Alchian was both—a relic of that earlier age, and a clever and creative thinker in possession of unique insights. The evolution of economic theory between 1930 and 1950 sought to squeeze out the analysis of property, prices, and profit-and-loss, and I might add people and politics as well. All the things studied by the great classical political economists from Adam Smith to John Stuart Mill were now pushed aside as economics became too aggregative, with the consequent loss of the individual and the exchange relationships forged in the market. Economics became too formal in presentation, with the loss of nuance, processes, and institutional framing due to a preoccupation with analytical tractability."