Liberty Fund Books

Description

Armen Alchian has helped found several schools of economic thought and is the founder of the UCLA tradition in economics and one of the most influential voices in the areas of market structure, property rights, and the theory of the firm. His career has spanned seven decades, with a stint in the military during World War II. Alchian has left an indelible mark on economics and has taught and inspired generations of students.

Liberty Fund is proud to present, in two volumes, The Collected Works of Armen A. Alchian, bringing together Alchian’s most influential essays, articles, editorials, and lectures to provide a comprehensive record of his thinking on a broad range of topics in economics. As various and as specific as some of this collection’s topics are, they are unified, as editor Daniel K. Benjamin writes, by “both a coherent methodology for doing economics, and a view of the world that celebrates the importance of individual liberty.” Benjamin goes on to state that, in Alchian’s view, “the purpose of theory is never theory in and of itself; it is instead to help individuals understand the world around them.”

The first of two volumes, Choice and Cost under Uncertainty, is a collection of Alchian’s major scholarly articles, some short papers published in nontechnical periodicals, and some monographs from his years at the RAND Corporation. These papers range over topics from the energy crises to linear progress curves, yet all focus on the effect of the individual on markets and costs through various decision-making processes. This volume also presents Alchian’s unique work on the effects of inflation.

The second volume of this collection, Property Rights and Economic Behavior, focuses on Alchian’s merging of law and economics, in particular the economics of property rights. Here Alchian, with assistance from Ronald Coase and Harold Demsetz, expands upon the economic rationale behind property rights and demonstrates that these are not distinct from human rights but rather are integral to them. These seminal works go against the grain of conventional wisdom, pointing out among other things the lack of wealth-maximization objectives in various levels of government and nonprofit organizations. Alchian’s powerful economic methodology resists the tide, for the sake of the individual and hence for all of society.

As these volumes vividly illustrate, Armen Alchian has transformed the way economists think about the world. He is responsible, for example, for some of the earliest work on the economics of property rights, showing how governments and nonprofit organizations can be understood with the same tools that are applied to the private sector. He has also demonstrated the crucial importance of legal institutions in shaping economic decisionmaking and laid the foundations for the modern understanding of the business firm. Testimony to the scope and depth of Alchian’s work is that his papers continue to be influential decades after their initial publication.

Armen A. Alchian is Professor Emeritus of Economics at UCLA.

Daniel K. Benjamin is Professor of Economics at Clemson University.

Reviews

Armen A. Alchian is Professor Emeritus of Economics at UCLA and in the course of his long and accomplished career helped to found several schools of economic thought, being justifiably considered by his peers to be one of the most influential voices in the areas of market structure, property rights, and the theory of the firm. Complete in two volumes, The Collected Works of Armen A. Alchian is professionally edited and provided with an informative introduction by Daniel K. Benjamin who drew upon Professor Alchian’s most important essays, articles, editorials, and lectures to provide a comprehensive and detailed record of this thought on a broad range of topics in the field of economics. Volume One focuses upon the economic themes of “Choice and Cost Under Certainty”; Volume Two deals with “Property Rights and Economic Behavior” issues. The Collected Works of Armen A. Alchian: Volumes 1 & 2 is also available in a hardcover edition (0865976368, $30.00), and very strongly recommended for professional and academic library Economics Studies reference collections and supplemental reading lists.

The Midwest Book Review
January 2007

Table of Contents

Volume 1

Introduction ix
Introduction to Economic Forces at Work (Ronald H. Coase) xvii
Principles of Professional Advancement xxi

PART 1 UNCERTAINTY AND INFORMATION COSTS
Uncertainty, Evolution and Economic Theory 3
Biological Analogies in the Theory of the Firm: Comment 18
Review of The Investment Decision 22
The Meaning of Utility Measurement 26
Information Costs, Pricing and Resource Unemployment 53
What Is the Best System? 78
Market Value Effects of Take-Overs? An All-or-Nothing 106
Tender of Conjectures
(Armen A. Alchian, Henry Manne, and Susan Woodward)
Information, Martingales and Prices 113
Why Money? 123
Trading Stamps (Armen A. Alchian and Benjamin Klein) 132
There Really Is a Free Service 143
Why Brand Names? 148
The Chef, Gourmet and Gourmand 151

PART 2 COST
Costs and Outputs 161
Cost 180
Reliability of Progress Curves in Airframe Production 202

PART 3 THE SOURCE AND MEASUREMENT OF INFLATION
On a Correct Measure of Inflation 225
(Armen A. Alchian and Benjamin Klein)
Be Wary of the CPI Commission Report! 248
(Armen A. Alchian and Harold M. Somers)
There’s Only 1 Cause for Inflation 249
Problems of Rising Prices 253

PART 4 EFFECTS OF INFLATION
Effects of Inflation (Reuben A. Kessel and Armen A. Alchian) 277
Redistribution of Wealth Through Inflation 301
(Armen A. Alchian and Reuben A. Kessel)
More Evidence on Inflation-Caused Wealth Redistribution 314
(Armen A. Alchian and Reuben A. Kessel)
Inflation and Distribution of Income and Wealth 381
Effects of Inflation upon Stock Prices 397
(Armen A. Alchian and Reuben A. Kessel)
How the Government Gains from Inflation 405
(Armen A. Alchian and Reuben Kessel)
The Meaning and Validity of the Inflation-Induced Lag 414
of Wages Behind Prices (Reuben A. Kessel and Armen A. Alchian)
Real Wages in the North During the Civil War: 442
Mitchell’s Data Reinterpreted
(Reuben A. Kessel and Armen A. Alchian)

PART 5 PRICE CONTROLS
Review of the Council of Economic Advisers’ 1972 Report: 467
A Comment
An Introduction to Confusion 477
Abbott and Costello in Washington 495
There’s Gas in Your Future 504
Oil Decontrol Windfall: Magical or Real? 509
Energy Economics 513
It’s Easy to End Gas Shortage 517
To Be Fair, Let Each Solve His Own Fuel Crisis 521

PART 6 SEMANTICS AND METHODS
The Economics of Power 527
Summary Notes on Misleading Economic Jargon 537
Words: Musical or Meaningful? 549
Rent 586
Allocative Efficiency with Edgeworth-Bowley Boxes 594
The Rate of Interest, Fisher’s Rate of Return over Costs 612
and Keynes’ Internal Rate of Return
Linear Progress Curves Are Illusions 619
Linear Progress Curves Are Not Illusions 623
Why the Learning Curve Is Convex on Double Log Scale 626
Review of Dynamic Equipment Policy 630
Meanings and Uses of Equations and Models 635
Review of Essays in Economics and Econometrics: 645
A Volume in Honor of Harold Hotelling

Economic Replacement Policy 649
1. Introduction 657
2. Elements of the Replacement Problem 664
3. Mathematical Formulation 672
4. Specific Assumptions, Forecasts, and Computations 680
5. Illustration of Procedure 691
6. Some Issues Common to All Applications 707
Appendixes (abridged) 715

Analysis Procedures 725
20. Principles of Statistical Analysis 727
21. Univariate Analysis 736
22. Bivariate Analysis 756
23. Multivariate Analysis 785

Authors Cited 803
Subject Index 807


Volume 2

Introduction ix
Of Golf, Capitalism and Socialism xiii

PART 1 THE ECONOMIC THEORY OF PROPERTY RIGHTS
Some Economics of Property 3
Some Economics of Property Rights 52
Pricing and Society 68
The Property Rights Paradigm (Armen A. Alchian and Harold Demsetz) 84
Property Rights [1987] 96
Property Rights [1993] 105
The Bishops and the Lay Commission: Comments on Two Letters
(Armen A. Alchian and William H. Meckling) 111
Some Implications of Recognition of Property Right
Transactions Costs 126
The BeneQciaries of Cleaner Air 145

PART 2 THE THEORY OF THE FIRM
Production, Information Costs, and Economic Organization
(Armen A. Alchian and Harold Demsetz) 151
Vertical Integration, Appropriable Rents, and the
Competitive Contracting Process
(Benjamin Klein, Robert G. Crawford, and Armen A. Alchian) 179
First Negotiation, First Refusal Rights
(Armen A. Alchian, Benjamin Klein, and Earl A. Thompson) 214
Decision Sharing and Expropriable Specific Quasi-Rents:
A Theory of First National Maintenance Corporation v. NLRB 223
Amicus Curiae: Monsanto Company vs. Spray-Rite Corporation
(Wesley J. Liebeler, Armen A. Alchian, Jeffrey Connor,
Harold Demsetz, Michael Granfield, Robert L. Jordan,
and Stanley Ornstein) 238
Reminiscences of Errors: A Tribute in Honor of
Dean William H. Meckling on His Retirement 258
Specificity, Specialization, and Coalitions 269
Reflections on the Theory of the Firm
(Armen A. Alchian and Susan Woodward) 287
Concluding Remarks 317
The Firm Is Dead; Long Live the Firm: A Review of
Oliver Williamson’s The Economic Institutions of Capitalism
(Armen A. Alchian and Susan Woodward) 321
Development of Economic Theory and Antitrust:
A View from the Theory of the Firm 346
Thoughts on the Theory of the Firm: A Tribute to Eirik G. Furubotn 350
Vertical Integration and Regulation in the Telephone Industry 355
Baldarelli vs. H&R Block 362

PART 3 THE BEHAVIOR OF GOVERNMENT AND
NONPROFIT ORGANIZATIONS
Private Property and the Relative Cost of Tenure 375
Economics of Tenure 393
Competition, Monopoly and the Pursuit of Money
(Armen A. Alchian and Reuben A. Kessel) 402
Review of The Economics of Discrimination 421
The Meaning of Collusion 424
Electrical Equipment Collusion: Why and How 429
Dollars or Scholars: The Economics of College Football
(Armen Alchian and William Meckling) 437
The Basis of Some Recent Advances in the Theory of
Management of the Firm 441
Incentives in the United States
(William H. Meckling and Armen A. Alchian) 453
Market Prices, Property and Behavior 460
Customs, Behavior, and Property Rights 481
An Economist Looks at Secondary Education in California 487
Cost Effectiveness of Cost Effectiveness 492
An Economic Analysis of the Market for Scientists and Engineers
(A. A. Alchian, K. J. Arrow, and W. M. Capron) 507

PART 4 LAW AND ECONOMICS
On Private Property and Freedom 595
Economic Laws and Political Legislation 599
Review of Public Law Perspectives on a Private Law Problem:
Auto Compensation Plans 611
Corporate Management and Property Rights 615
Private Rights to Property: The Basis of Corporate Governance
and Human Rights 636
On Corporations: A Visit with Smith 650
Constitutional Baselines by Virtual Contract: A General Theory
and Its Application to Regulatory Takings
(Wesley J. Liebeler and Armen Alchian) 661

PART 5 THE ECONOMICS OF GIFTS
The Economics of Rational Assistance
(Armen A. Alchian and William R. Allen) 695
The Economic and Social Impact of Free Tuition 700
What Price Zero Tuition? (Armen A. Alchian and William R. Allen) 716
The Pure Economics of Giving (Armen A. Alchian and William R. Allen) 722

Authors Cited 731
Subject Index 735