February 21, 2013 - 09:08 AMT
PanARMENIAN.Net - Armen A. Alchian, a UCLA economist known for groundbreaking research on the employee–employer relationship, the hidden inefficiencies of governmental regulation, and the forces that determine the success of firms, died at his home in Los Angeles, UCLA said on its website.
Alchian, a professor emeritus of economics at UCLA, was 98.
Alchian, whose colleagues call him "the Armenian Adam Smith," joined UCLA in 1946 and retired in 1984 but did not close his campus office until 2007. Generations of undergraduates received their introduction to the field from "University Economics," an influential textbook co-authored by Alchian in 1964 that eventually appeared in six editions. His work is characterized by a common-sense approach to economics that puts more emphasis on explaining phenomena in writing than laying them out in complicated equations.
Born in Fresno in 1914, and a recipient of both a bachelor's degree and doctorate from Stanford University, Armen Albert Alchian first grabbed widespread attention in 1950 with "Uncertainty, Evolution and Economic Theory," a scholarly article that argued that a kind of evolutionary force determines which firms succeed and which fail in the marketplace — and not necessarily the conscious efforts to maximize profits on the part of business owners or operators.
Alchian, who had an 18-year affiliation with the RAND Corp., also is known for work that looked at the hidden costs of regulation. In a 1962 study of heavily regulated industries, for instance, he found employers less likely to hire well-qualified minorities. With government regulations restraining their incentive to chase profits, he argued, management tends to look for other means of serving their own interests. Rather than choosing employees most qualified to improve the bottom line, managers in heavily regulated industries instead surround themselves with the kind of people they'd most like to associate with, who frequently turn out to be people like themselves.
He also wrote a pioneering study on the efficiencies to be gained not just from the number of units produced per year — the so-called economy of scale — but also the total number of units to be produced over all the years production takes place.
In addition to his work as a researcher, Alchian was known for his two-decade involvement in the work of the Law and Economics Center, first located at the University of Rochester, then the University of Miami and Emory University, and now at George Mason University. The center aims to provide insight into economic theory to legal scholars and judges. As one of the first professors involved in the project, Alchian has given courses in economics to hundreds of law professors and members of the federal judiciary, some of whom have gone on to serve on the U.S. Supreme Court.
Alchian was a fellow of the American Academy of Arts and Sciences, former president of the Western Economic Association and a member of the Mont Pelerin Society, an international organization composed of economists, intellectuals, business leaders and others who favor heavy reliance on markets.
A resident of the Mar Vista area of Los Angeles, Alchian was married for 73 years to Pauline, a former elementary school teacher. They have two children, six grandchildren and three great-grandchildren.