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The Elgar Companion to the Chicago School of Economics

The Elgar Companion to the Chicago School of Economics

Elgar original reference

Edited by Ross B. Emmett

Many know the Chicago School of Economics and its association with Milton Friedman, George Stigler, Ronald Coase and Gary Becker. But few know the School’s history and the full scope of its scholarship. In this Companion, leading scholars examine its history and key figures, as well as provide surveys of the School’s contributions to central aspects of economics, including: price theory, monetary theory, labor and economic history. The volume examines the School’s traditions of applied welfare theory and law and economics while providing a glimpse into emerging research on Chicago’s role in the development of neoliberalism.

Chapter 14: Armen Alchian on Evolution, Information, and Cost: The Surprising Implications of Scarcity

Daniel K. Benjamin

Subjects: economics and finance, economic psychology, history of economic thought, methodology of economics


Daniel K. Benjamin* Jobs are always easily available. A. Alchian Introduction At first blush a paper on the work of Armen Alchian in a volume examining the Chicago School must seem anomalous. It is true that Alchian published famous papers in the Journal of Political Economy (JPE) and the Journal of Law & Economics (JL&E), gave the keynote address at the dedication of the new University of Chicago Law School building in 1957 and was Ford Foundation Visiting Professor at Chicago in 1968. But Alchian trained at Stanford and spent essentially his entire professional career at UCLA, and I expect any bemusement he felt at Paul Samuelson’s (1970) claim that UCLA was a Chicago ‘farm club’ was mixed with irritation. Yet the linkages, both personal and intellectual, between Alchian and Chicago stretch throughout his career. Alchian’s first published professional paper, ‘Uncertainty, evolution and economic theory’ (1950 [1977]), which I discuss below, was written initially not for publication, but simply to help himself and his graduate students understand the issues more clearly. Only at the suggestion of Stephen Enke did Alchian consider submitting it for publication; even then, it took some strongly encouraging remarks by Milton Friedman (who had seen a copy) to induce Alchian to send the paper to the JPE. This paper dovetails extraordinarily nicely with Friedman’s own work on ‘positive economics’ (Friedman 1953), so it is easy to see why he was interested in having Alchian publish it. And together with Friedman’s work, Alchian’s paper brought an entire...

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