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Summer 2022

ISSN 0890-913X

Volume 37, Number 2

Categories: Summer 2022 | Austrian Economics

On the Possibility of Inefficiency

Wilson Whitener, Free Market Institute at Texas Tech University

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OnthePossibilityofInefficiencyWilsonWhitenerFreeMarketInstituteatTexasTechUniversityTheJournalofPrivateEnterprise37(2),2022,15-28AbstractThenotionthatallobservedinstitutionsareefficienthascometobeknownasthe“efficiencyalways”viewineconomics.IthasbeendefendedmostrecentlyandexplicitlybyLeeson—althoughitisalsoassociatedwithothereconomistssuchasBarzel,Cheung,StatenandUmbeck,andAlchianetal.First,Iexplicatetheargumentinsupportoftheefficiency-alwaysview,andthenIdefendmymodifiedversionoftheargument.Second,IattempttodelineatethelinesalongwhichskepticalAustrianeconomistswhoarenotpersuadedbytheefficiency-alwaysargumentmightdisagree.JELCodes:B53,D61Keywords:efficiency,maximization,AustrianeconomicsI.IntroductionEveryobservedinstitutionisefficient.Thisnotionhasbeenassociatedwiththe“efficiencyalways”viewineconomics.IthasbeendefendedmostrecentlyandexplicitlybyLeeson(2019),althoughitisalsoassociatedwithothernotableeconomistssuchasBarzel(2002),Cheung(1998),StatenandUmbeck(1989),andAlchianetal.(1996).Mypurposeinthisessayistwofold:First,Iexplicatetheefficiency-alwaysargumentasdefendedbytheseauthors—usingLeeson(2019)asaparadigmaticexample—andthenIdefendamodifiedversionoftheargumentinspiredbyStatenandUmbeck(1989).Second,IattempttodelineatethelinesalongwhichskepticalAustrianeconomistswhoarenotpersuadedbythismodifiedargumentmaydisagree,andIrespondtothoseobjections.BeforeIturntomyversionoftheargument,onequestionmustbeaddressed.Namely,giventhenumberofargumentsalreadyofferedinfavoroftheefficiency-alwaysview,whyofferanother?TheargumentIofferdoestwothingsIbelievetheotherargumentsdonot.First,bypresentingadeductiveargumentinstandardlogicalform,thespecificassumptionsandpremisesaremadeexplicit.Thisnotonlymakesiteasiertoidentifywhichpremisesarecriticalfortheargumenttosucceed,butitalsorequirescriticstoidentifywhichpremisestheydeny.Second,theargumentmakespreciseitslogical

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Metadata [hide]

Title	On the Possibility of Inefficiency
Authors/Creators:	Wilson Whitener, Free Market Institute at Texas Tech University
Year:	2022
Volume:	37
Number:	2
Pages:	15 - 28
Publisher:	The Association of Private Enterprise Education
ISSN:	0890-913X
Document Type:	Articles
Keywords:	efficiency, maximization, Austrian economics

Citation:
Whitener, Wilson / 2022. "On the Possibility of Inefficiency." The Journal of Private Enterprise, 37(2): 15-28.