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Quotation of the Day…

… is from page 513 of Armen Alchian’s 1975 Conservative Digest Special Report essay, “Energy Economics,” as it is reprinted in The Collected Works of Armen A. Alchian (2006), Volume 1 (“Choice and Cost Under Uncertainty”) (Daniel K. Benjamin, ed.):

Free market prices are powerfully effective means of (1) comparing different use values so as to (2) reveal wasteful use while (3) making amounts demanded equal the available supply (4) without having to know what aggregate supplies are, and (5) compensating people for diverting it [as well as resources used to produce it] from the low value to the more high value uses.  But with price controls all of that is prevented and confusion reigns.  It is as simple as that.

Were Alchian (1914-2013) still alive he would today celebrate his 102nd birthday.

As regular readers of this blog know, I believe Alchian to be one of history’s greatest economists – and, in all likelihood, history’s absolutely greatest price theorist.  Alchian identified real-world margins of adjustments that are missed by lesser minds.  Alchian asked probing questions that never occur to weaker minds.  Alchian pointed out important parallels that would otherwise have remained invisible to poorer economists.  Alchian saw and revealed that which ordinary economists don’t.

It’s both a pity and a serious indictment of the economics profession that so few young economists today read Alchian’s works.  If his works were widely studied, the quality of current economic scholarship and research would be far higher than it is.


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