Burying X-Efficiency: Chicago Economics vs. the World

I am asking for some help.  I am ready to send my article for publication.  I have already followed instructions to tone way down my critique of Chicago. Anything that can make the story stronger would be appreciated.



4 comments so far

  1. Jim Farmelant on

    I suppose that for such a paper it will not do to mention J.K. Galbraith, whose name is rarely mentioned in polite company, but of course this paper would seem to support or vindicate several Galbraithian theses, including his skepticism concerning the principle of profit maximization (he tended to think that large firms sought to maximize growth instead), his skepticism concerning the importance of allocative efficiency in promoting economic welfare (hence, Galbraith’s willingness to support extensive government regulations and his famous support for incomes policies to hold down price inflation).

  2. Philip on

    Good article on the Chicago school of thought. You’ve mentioned that you had to tone down your critique of the Chicago school, which journal are you submitting to?

    I suspect that a lot of the work by Leibenstein is to show that there is something fundamentally wrong with neoclassical microeconomic theory, especially that of the firm.

    The neoclassical theory of the firm and perfect competition is pseudo-science. It has been known empirically since the late 1940s that firms can’t produce at where MR=MC. In fact, when the empirical evidence is contrasted with neoclassical theory, approximately 95% of firms have the internal cost curves of natural monopolies!

    For firms to set P=MC will result in loss-making. Across many industries, firms set P > MC, often substantially so.

    I quite liked that quote about economists focusing on the problems of labor, but ignoring those of management.

  3. purple on

    I have no advice but find the sports examples most intriquing. Despite exact empirical statistics, no one has been able to really predict players careers or teams performances to a decent degree of accuracy (beyond what one can achieve by quickly surveying trends and past history). Human behavior is quite complex and economics is mostly a study in human behavior.

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