ANYTHING PEACEFUL

Armen Alchian: Economic Man (RIP, Professor)

FEBRUARY 19, 2013 by THE FREEMAN

This is how brilliant Armen Alchian was:

Economics sometimes has been described (and condemned) as the study of selfish behavior. The conception of the "economic man" has been ridiculed as a bloodless abstraction which constitutes a calumny on real people who are warm in spirit and generous in heart. For (most) real people are not wholly self-centered creatures, coldly calculating only how best to aid themselves even at the cost of injuring others, if need be.

This is but a parody of the "economic man" notion specifically and of the concern of economic study generally. Economics, accurately conceived, is directed to the analysis not of selfish behavior as such, but of efficient behavior. The basic question asked by the economist is not, "In light of the egocentric avariciousness of people, how can one best skin one’s neighbor?" Rather, he asks, "In light of the scarcity of resources, how can one squeeze the greatest return—which can take myriad forms, e.g., goods, power, utility, inner glow of contentment—from given productive services, talents, and environment? Or, alternatively, how can one achieve his desired goals with the minimum cost?" His goals can involve not only his own immediate welfare, but also that of other people.

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R. I. P. Professor Alchian.