The Elgar Companion to the Chicago School of Economics

Published by EH.NET (May 2011)

Ross B. Emmett, editor, The Elgar Companion to the Chicago School of Economics. Cheltenham, UK: Edward Elgar, 2010. xi + 350 pp. $200 (hardcover), ISBN: 978-1-84064-874-4

Reviewed for EH.Net by Arthur M. Diamond, Jr., Department of Economics, University of Nebraska at Omaha.

The Chicago School of economics has been described in a variety of ways.? In the current volume, a useful description is given in the essay of Bruce Kaufman who emphasizes ?… a deep commitment to rigorous scholarship and open academic debate, an uncompromising belief in the usefulness and insight of neoclassical price theory, and a normative position that favors and promotes economic liberalism and free markets?? (p. 133).

The volume has been edited by Ross Emmett, a Michigan State historian of economic thought whose previous research has focused on early Chicago economist Frank Knight.? About two-thirds of the volume consists of fifteen ?Essays on the Chicago School? in Part 1.? The remaining third of the volume, in Part 2, consists of nineteen brief profiles of ?Some Chicago Economists.??

The only essay that attempts any kind of broad overview of the volume is Emmett?s four-page introduction.? His essay briefly establishes the historical context of the Chicago School and points us toward some of the earlier literature in the history of economic thought that discusses the Chicago School.? But it does not attempt to summarize the diverse messages of the essays of the volume, let alone try to synthesize these messages into any overarching conclusions.

Synthesis would have been difficult, if not impossible, because of the apparent absence of any consistent criteria for selection of the contents.? This volume appears to be opportunistic in the sense that the contributors often were culled from those who attended conferences with the editor on the Chicago School, and the editor has left the contributors considerable leeway in the length, content and style of what they have contributed.? Emmett openly admits (p. 3) that some important topics have been left out of the ?Essays? section of the volume.? But he does not identify the most glaring omission:? the contributions of George Stigler and his colleagues, such as Brozen, Demsetz and Peltzman, to industrial organization and the economics of regulation.

Most of the essays adopt a neutral, expository stance, reporting the main research contributions of various Chicago scholars on various topics.? Some of these essays are written by scholars with some connection to the Chicago School, and some simply by scholars with an interest in the history of economic thought.? Among the expository essays, economic historians will especially appreciate David Mitch?s chronicle of Chicago?s contributions to economic history, with some discussion of Earl Hamilton, and special attention to Fogel and McCloskey; and Hugh Rockoff?s extensive account of the genesis and findings of Friedman and Schwartz?s tour de force in A Monetary History of the United States.

Some of the other expository essays are fairly detailed accounts of aspects of the Chicago School, e.g., Daniel Hammond?s thorough account of Friedman and Stigler?s development of Chicago price theory; and Daniel Benjamin?s account of the three most important papers by Armen Alchian. Others paint with a broader brush, but provide useful overviews of their topics, e.g.,? Steven Medema?s account of the development of Chicago law and economics; H. Spencer Banzhaf?s account of the development of Chicago welfare economics; and Gordon Brady?s account of the Chicago School ?roots? of the Virginia School that was James Buchanan?s early intellectual home.??

Parts of Eric Schliesser?s essay are less expository and more tendentious — implying that Milton Friedman was indirectly responsible for the worst that Pinochet did in Chile.? When Schliesser?s essay was earlier presented to the American Economic Association, Deirdre McCloskey powerfully and persuasively defended Friedman.? Part of McCloskey?s defense was her report of a Chicago economics faculty meeting she attended, where Friedman had successfully argued for turning down funding that had been offered to the department from a repressive regime.? But in this volume, Schliesser?s critique of Chicago is left unanswered.? The volume would have been better if it had included both sides.

Nineteen economists are included in the profiles of the ?Some Chicago Economists? part of the volume.? The basis for selecting the nineteen is not obvious.? If we limit ourselves to economists who fit Kaufman?s description of the Chicago School, then it is hard to understand the absence of Nobel-Prize-winning Chicago economists Milton Friedman (yes, Milton Friedman is absent), Robert Lucas, James Heckman, James Buchanan, Robert Mundell, Merton Miller and Robert Fogel.? And if we adopt a broader concept of the Chicago School, as Emmett seems to do when he includes Paul Douglas among his nineteen, then it is also hard to understand the absence of Thorstein Veblen (an early editor of Chicago?s Journal of Political Economy), and F.A. Hayek.

The profiles that are included often have useful information.? But much of importance is omitted, sometimes due to the brevity of the profiles, and sometimes due to the agendas of the profile authors. The four pages on George Stigler, for instance, focus primarily on his biography, who he associated with, and a selection of his political views; but give scant attention to his wit, his erudition, and his contributions to research, especially in the area of the history of economic thought.? And to make matters worse, the bibliography to the profile neglects to reference key works that do focus mainly on Stigler?s research.? (The Wikipedia entry on Stigler does a better job.)

But on the other hand, it was good to see Evelyn Forget?s profile of Margaret Reid included in ?Some Chicago Economists.?? When I was a graduate student at Chicago, Reid had been long retired, but she still regularly attended Becker?s workshop, and still pursued her research.? In those days, graduate students would spend long hours at the computer center with their decks of IBM punch cards, to wait their turn to run their regressions on the mainframe.? And it did not entirely escape our attention that Margaret Reid was there too, with her deck of cards, waiting her turn.? Her presence and her persistence taught us something about the values of the Chicago School –something that Klamer and Colander would later reconfirm in their interviews with graduate students in The Making of an Economist.? At Chicago, economic research was not just some puzzle-solving game by which you earned your living; not something you retired from; economics was a calling that mattered.

References:

Friedman, Milton, and Anna Jacobson Schwartz.? A Monetary History of the United States, 1867-1960, NBER Studies in Business Cycles.? Princeton: Princeton University Press, 1963.

Klamer, Arjo, and David Colander.? The Making of an Economist.? Boulder, CO: Westview Press, 1990.

Arthur M. Diamond Jr. received three graduate degrees from the University of Chicago, and was a Post-Doctoral Fellow in economics at the University.? He has recently published several papers related to Schumpeter?s process of creative destruction and is at work on a book entitled Openness to Creative Destruction. adiamond@unomaha.edu.

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