Chicago and Vienna

by Jerry O’Driscoll

In the last two days, two prominent economists have asked me essentially the same question: what is the difference between Chicago and Austrian economics? It is interesting that both asked, particularly since one has a Ph.D from Chicago.

The second economist asked me specifically if Armen Alchian wasn’t really an Austrian. I’ll respond as I did to him. I learned most of my Austrian economics in the UCLA graduate economics program. (At that time, UCLA was known as Chicago West.) I was never an Alchian student, but one read lots of Alchian anyway. And his influence pervaded the department. It was obvious to me that Mises had influenced Alchian. Also Hayek, as is made clear in a video of Alchian interviewing Hayek.

Hayek’s classic essays on prices and information were on various reading lists at UCLA. Continue reading

“There is no such thing as macroeconomics.”

by Jerry O’Driscoll

Not my words, but those of Armen Alchian, as reported by William Allen in Econ Journal Watch.  Allen has written his memoirs and a history of UCLAs economics department in “A Life Among the Econ, Particularly at UCLA.” To a great extent, it is the story of Alchian and the core group around him in the 1950s, 60s and 70s.  Allen was co-author with Alchian of University Economics, an influential undergraduate textbook that inspired Paul Heyne’s Economic Way of Thinking.

My own way of thinking was influenced as much by the UCLA tradition as by Mises and Hayek. Mises and Hayek had an important influence on that tradition, however. An emphasis on decision making under uncertainty and incomplete information was its hallmark. All social phenomena could be analyzed by economics, and the economic analysis was micro.

Alchian didn’t deny there were aggregate economic phenomena, only that theory must be microeconomic.  In substance, that was Hayek’s view.

Graduate macro classes had as much micro in them as designated micro class. Alchian wrote many of the macro prelim questions, wrongly attributed by students to Axel Leijonhufvud.

Among the luminaries who came and stayed in this period were Harold Demsetz and Robert Clower.  Among those who came and left were James Buchanan, Sam Peltzman and Thomas Sowell. My dissertation committee consisted of Leijonhufvud (Chair), Peltzman and Sowell.