Uneasy Money

On March 23, a memorial service celebrating the life of Armen Alchian was held at UCLA. David Henderson was there and shared some vignettes from the service.

Here is a webpage with pictures from the memorial.

Here is a tribute to Alchian by one of his finest students, Stephen N. S. Cheung. I found this passage especially moving, but follow the link and read the entire eulogy by Cheung.

Back in the old days at UCLA, it was not easy for graduate students to discuss research ideas with Alchian in person.  Most students harbored the impression that he was aloof and not very approachable.  I shared the same view initially, but discovered the contrary later.  The following is a true story.

In early 1967, after finishing the first lengthy chapter of my thesis, I received news from Hong Kong that my elder brother (who was a year older) had passed away.  Understanding that my mother must be shattered by the death of her favorite son, I thought about giving up at UCLA and returning to Hong Kong to be near her.  At that time I was already an assistant professor at the California State University at Long Beach.  I drove back to LA to tell Jack Hirshleifer the sad news and my intention to quit.  Hirshleifer thought that it would be a pity to abandon my dissertation, on which I had already made very good progress.  He then said he would discuss with other members of my thesis committee the possibility of granting me a PhD on the strength of the first long chapter alone.

That afternoon I went to see Alchian, planning to tell him what I told Hirshleifer.  Alchian obviously knew what I had in mind.  But before I had a chance to say anything, he said, “Don’t tell me anything about your personal matters.”  So I left without a word.  One day later in Long Beach, I received a letter from Alchian with a $500 check enclosed and simply two lines: “You can buy candies with this $500 or you can hire a typist to help you finish your dissertation as quickly as possible.”  This $500 was equivalent to my one month’s gross salary, so it was not a small amount.  What other alternatives did I have?  In less than two months I wrapped up my dissertation.  Alchian said it was a miracle.  In retrospect, I regret cashing that check and spending that $500.  If I had kept the check, I could now show it to my children, grandchildren, and students while telling them this proud story.  I know Armen would say, “Steve, put that check up for auction and see how much it would fare now.”

Here is another eulogy from the same website, and another eulogy from that website — in Chinese!

Here are remembrances from some of Alchian’s UCLA colleagues, including David Levine, John Riley and Harold Demsetz.

Here is the obituary about Alchian from the Los Angeles Times.

And finally (for now), here is a video clip of Alchian speaking about property rights.

Bill Allen was a stalwart member of the UCLA economics department in the years of its glory from the late 1950s to the early 1970s. A distinguished economist in his own right, specializing in the international economics and the history of economic thought, Allen is probably best known for having been selected by Armen Alchian to be his co-author in writing the greatest economics textbook ever written and for later becoming the Midnight Economist, delivering daily economic commentaries over the radio from the late 1970s to the early 1980s. The broadcasts are now available on the web or as podcasts, and were also collected in book form.

I have written several earlier posts (e.g., this and this) in which I wrote about what a great place UCLA was to learn economics and what a loss it has been for the economics profession that the special brand of economics taught and practiced at UCLA has been overshadowed by the more formalistic and axiomatic approaches that now dominate the profession, and, alas, even the UCLA economics department itself.

Just yesterday I stumbled upon Bill Allen’s memoir about his own life in Econ Journal Watch and especially about his years at UCLA, and his relationships with his colleagues, and especially, of course, with Alchian. Herewith are a few excerpts:

What defined and distinguished the Core [the central group within the department who were the intellectual leaders of the department and gave the department its unique character, most notably during my day Alchian, Jack Hirshleifer, Allen, George Hilton, Harold Demsetz, Axel Leijonhufvud, and Earl Thompson; Karl Brunner left before I arrived–DG] is a question of considerable subtlety and nuance. The leader of the impressive band clearly was Alchian. His position of prominence evolved and developed, not by his intention or machinationn or the extroverted personality of a self-conscious and self-serving field marshall. (Much later, when as chairman I was recruiting the eminent Jim Buchanan, I apologized to Alchian for being obliged to offer Jim a salary greater than Alchian’s. Armen firmly put me at ease—after all, he had some understanding of how markets work.) Almost always soft-spoken, unaggressive, and seemingly bemused, he was genuinely curious about certain workings of the world, and he was imaginatively and innovatively bold in seeking explanations—and he was remarkably generous in helping other curious analysts. He was confident that much of previously unaccountable behavior and phenomena could be explicated by fundamental and often quite simple (when adroitly utilized) analytic propositions and techniques. The tools of Econ l and 2 can be powerful in masterly hands. Larry Miller observed, with some appreciation, that Alchian “found economics behind every rock.”

The department in its brief Golden Age was aware of being out of step with most of the profession both in the purpose and nature of the work of the Core and in how the work was conducted. For members of the Core, Economics was to be dedicated to genuine, bone fide, real-worldly, enlightening and useful empirical problem-solving. Who is to gain what from the efforts of economists? What is the relevance and worth of their meditations and exercises? How great and widespread would be the net calamity if all the economists suddenly departed for their esoteric Nirvana?

In a 1985 memorandum to me, Leijonhufvud wrote: [Alchian’s] unique brand of price theory is what gave UCLA Economics its own intellectual profile and achieved for us international recognition as an independent school of some importance—as a group of scholars who did not always take their leads from MIT, Chicago or wherever. When I came here (in 1964) the Department had Armen’s intellectual stamp on it (and he remained the obvious leader until just a couple of years ago ….). Even people outside Armen’s fields, like myself, learned to do Armen’s brand of economic analysis and a strong esprit de corps among both faculty and graduate students sprang from the consciousness that this ‘New Institutional Economics’ was one of the waves of the future and that we, at UCLA, were surfing it way ahead of the rest. But Armen’s true importance to the UCLA school did not stem just from the new ideas he taught or the outwardly recognized ‘brandname’ that he created for us. For many of his young colleagues he embodied qualities of mind and character that seemed the more important to seek to emulate the more closely you got to know him.

The entire essay is eminently worth reading, though, like all golden-age stories, it is also, sadly, one of decline and fall. Sic transit gloria mundi.