Chain of Syllogisms

From E.K.Hunt (History of Economic Thought: A Critical Perspective) via Mark Thoma:

If, when reading Veblen's critique of John Bates Clark, the reader thought that Veblen's mocking example (in which "a gang of Aleutian Islanders slushing about in the wrack and surf with rakes and magical incantations" could be understood as harmonious neoclassical maximizers) was a little extreme, then one should read Alchian and Allen, or anyone of the writers of the Austrian or Chicago schools who piously announce the universality of their value-free science.

Their science applies everywhere because it applies nowhere. Most theorizing by these schools is purely tautological. The argument goes like this:

1. All human behavior involves choice.
2. In any choice situation, whichever alternative is chosen involves gains and costs (whether explicit costs or implicit "opportunity" costs).
3. Therefore, all human behavior involves exchange, since it involves acquiring gains in exchange for costs.
4. All human beings choose rationally; that is, they exchange in such a manner as to maximize the excess of the utility of the gain over the disutility of the cost (or the utility forgone in the opportunity cost).
5. Therefore, all choices are rational and represent the best possible alternatives among those available in the exchange process (the utilitarian neoclassicists have always avoided facing the issue of how capitalist society gives some individuals so many alternatives and others so few) .
6. Since all choices, or exchanges (they amount to the same thing), are rational and maximize each chooser's or exchanger's utility, then total utility is always maximized .
7. Therefore, free exchange in a capitalist society harmonizes all interests, maximizes utility, results in rational prices, results in efficient resource allocation, and, in general, automatically creates the best of all possible worlds.
8. Furthermore, since all human activity is in reality exchange, each and every aspect of a capitalist society is rational and blissful.