Source: http://www-news.uchicago.edu/releases/04/040913.director.shtml 
 
Sept 13, 2004 
University of Chicago News Office 
Press Contact: Larry Arbeiter 
(773) 702-8360 
 
Aaron Director, Founder of the field of Law and Economics 
   
Aaron Director, a distinguished University of Chicago economist who greatly 
influenced the modern course of economics and legal thought through his 
founding of the field of Law and Economics and his mentoring of generations 
of scholars, died Saturday, Sept. 11, at his home in Los Altos Hills, Ca., 
at the age of 102. 
 
A thoughtful and gentle scholar, Director was a passionate defender of 
liberty and free markets. 
 
"Aaron Director was one of the truly pivotal figures in the intellectual 
history of American law and of the University of Chicago Law School," said 
law professor Geoffrey Stone, former Dean of the Law School and Provost at 
Chicago. "As an essential proponent of the economic analysis of legal 
questions, he opened the way to new questions that have illuminated legal 
and political issues for more than half a century." 
 
Director, who at his death held the title of Professor Emeritus in the 
University of Chicago Law School, was trained in economics at Yale and at 
Chicago, taught economics at Chicago, Northwestern University and Howard 
University, and also held positions during World War II in the War 
Department and the Department of Commerce. 
 
But it was his appointment to the faculty of the University of Chicago Law 
School in 1946 that marked the beginning of his greatest influence. With 
fellow faculty member Henry Simons, Director first began to apply the 
principles of economics to legal reasoning, eventually training generations 
of law students and even his colleagues on the faculty in this then-new way 
of thinking about the law. His many students and colleagues, including 
future Federal Judges Richard Posner, Robert Bork and Frank Easterbrook, 
spread his ideas further, creating what has been called "the greatest 
innovation in legal thinking since the adoption of the case method." 
 
"Aaron Director was first and foremost a teacher of teachers," said Douglas 
Baird, Professor and former Dean of the University of Chicago Law School. 
"Take any course in antitrust or turn to any law review and what you 
encounter are the ideas and insights Aaron Director and Edward Levi debated 
in the classroom in the 1950s." 
 
Director's own publications were modest in number, but his contributions to 
his colleagues' thinking were considerable. University of Chicago colleague 
and future Nobel laureate, the late George Stigler often said, "most of 
Aaron's articles have been published under the names of his colleagues." 
 
"Aaron Director's strength as a scholar was a remorseless logic and 
absolute intellectual integrity," said Judge Bork, who was one of 
Director's students at Chicago. "Though he chose to publish little, his 
teaching, beginning with the economics of antitrust, made him the seminal 
figure in launching the law and economics movement, which has transformed 
wide areas of legal scholarship. A warm and patient mentor, he remained my 
friend for a full half-century. I know that many others whom he influenced 
could say the same." 
 
Law and Economics as a field attempts to apply the scientific methods of 
economics-including statistics and price theory-to behaviors that in the 
past had been analyzed solely by appeal to the history and intuitions of 
the law. With coherent theory, precise hypotheses and a willingness to 
subject those hypotheses to empirical tests, it has transformed legal 
thinking in the United States and in many nations around the world. 
 
"Aaron was someone who by his personality as much as anything was able to 
make this great difference in the way that people looked at the law, even 
influencing people whose views were completely different from his own," 
said Nobel laureate Ronald Coase, who was a colleague of Director's at 
Chicago's Law School for many years. "In all, he was a very civilized man. 
But he did not like any argument that was not solid, because his own 
arguments were always very solid." 
 
Director was also intimately involved in a remarkable number of other 
important developments in modern economic thought. When The Road to Serfdom 
by future Nobel laureate Friedrich von Hayek could not find a publisher in 
the U.S. because of its then-unfashionable classical liberal ideas, it was 
Director who interceded, persuading his friends at the University of 
Chicago and its Press to publish the book in a first run of 2,000 copies. 
It went on to sell 100 times that number. 
 
When future Nobelist Ronald Coase was invited to the University of Chicago 
for his famous exposition of what later became known as the "Coase 
Theorem," he faced his inquisitors at a dinner party at Director's home. 
 
And when von Hayek gathered a group of like-minded scholars to discuss the 
threats to freedom that were arising from collectivist government policies 
at the famous "Mt. Pelerin" meetings in Switzerland, he relied on Director 
to recommend others, and he invited two young colleagues named Milton 
Friedman and George Stigler. 
 
Director taught antitrust courses at the law school with Edward Levi, who 
eventually would serve as Dean of Chicago's Law School, President of the 
University of Chicago, and as U.S. Attorney General in the Ford 
Administration. Director continued to co-teach the course for many years, 
with such colleagues as Philip Neal, who would later become Dean of the Law 
School at Chicago; Kenneth Dam, who would later serve as U.S. Deputy 
Secretary of State; and Posner. And Director's 1931 book The Problem of 
Unemployment was co-authored with Paul Douglas, also on Chicago's faculty, 
and who would later become a U.S. Senator from Illinois. 
 
In 1958 he founded the Journal of Law and Economics, where Coase eventually 
joined him as co-editor, and which has been of fundamental importance in 
developing the field. 
 
In 1962, Director helped to found the Committee on a Free Society at the 
University of Chicago, which was established to "clarify and reinforce the 
tradition of individual liberty in its economic, political, historical and 
philosophical dimensions." 
 
While Simons had concentrated on the tax aspects of law and economics, 
Director then focused on antitrust law. Director showed early on that 
antitrust laws governing patents and resale prices have little effect and 
should focus instead on issues of price fixing and on the largest mergers 
of competing firms. Today, law and economics ideas are fundamental to 
teaching and rulings in areas as diverse as corporate law, torts, criminal 
law and even constitutional law. As early as 1993, articles using economic 
analysis were cited in major U.S. law journals more often than those using 
any other methodology. 
 
Kenneth Scott, an emeritus professor of law at Stanford University, recalls 
Director as a man of gentleness but also a rapier intellect. 
 
"His comments in workshops were few but invariably penetrating," Scott 
said. "They reminded me of a Thurber cartoon in which one fencer slices 
through the neck of the other (who seems not to realize what has just 
happened), saying merely 'Touche.'" 
 
Maurice Rosenfield, a retired Chicago lawyer who earned his J.D. degree at 
the University of Chicago, recalls Director as "an incredibly influential 
member of the faculty, among both students and also his colleagues. He was 
also the most interesting man you could imagine. He was always available to 
anyone with a question, and so wise and eloquent, and with such unique 
insights. Yet he carried no pretension-he was always gracious." 
 
"I was especially grateful to him, not only as a beneficiary of his 
education, but also because of his friendship and his accessibility to me 
and my colleagues at the University," said Bernard Meltzer, the Edward H. 
Levi Distinguished Service Professor Emeritus at the University. "My family 
also benefited from his capacity for friendship, particularly his special 
touch with children. Each Christmas he was the bearer of intriguing new 
jigsaw puzzles which he had crafted in his own shop. He demonstrated that 
he worked with his hands as effectively as he worked with his head. The 
puzzles reflected a unity of his personal and professional life, in which 
he strove to understand the roots of puzzles in the law and how best to 
solve them. We all will cherish the memory of his friendship." 
 
Many of Director's ideas, though out-of-fashion at the time, have become 
increasingly accepted in recent years. At a panel discussion at the 
University in 1950, he stated that "there is room neither for subsidies to 
individual economic activities or for price fixing of particular products," 
and he argued as well for the removal of all tariff protection, elimination 
of the tax bias toward large corporations and a drastic revision of patent 
laws to increase innovation. He also said, "Monopolistic determination of 
wages is in no sense different from monopolistic fixing of enterprises. If 
they are not to be trusted with governing industry, neither are unions." 
And "I know that there is widespread belief that the proper solution is 
responsible or statesmanlike behavior on the part of those who hold too 
much power. I regret to say that I am skeptical and find more wisdom in 
Adam Smith's observation: 'I have never known much good done by those who 
affected to trade for the public good.'" 
 
In 1965, Director retired from the University of Chicago and moved to 
California, where he built a home in Los Altos Hills. He accepted a 
position at the Hoover institution, and for several years he returned to 
Chicago to co-teach the antitrust course with Posner. 
 
Aaron Director was born in 1901 in Charterisk, which was then in Russia and 
now in the Ukraine. He immigrated with his family to Portland, Ore., in 
1913. At Lincoln High School, he was editor of the yearbook, which 
predicted that he "will eventually become a newspaper editor." After 
graduating from Yale University in 1924 after only three years, he took his 
then "progressive" politics on a journey traveling around the world, or "at 
least those aspects of the world of interest to a young radical," as Ronald 
Coase wrote in a biography of Director in the Palgrave Dictionary of 
Economics and the Law. Director worked at times in a coal mine, as a 
migrant farm worker, and in a textile factory. He returned to Portland and 
taught labor history for two years at Portland Labor College, before coming 
to Chicago as a graduate student in 1927. At Chicago, he took courses with 
some of the most distinguished scholars of the day, including Frank Knight 
and Paul Douglas. But according to Coase, the course that transformed his 
thinking was taught by Jacob Viner. "It is easy to understand why a solid 
course by this great teacher and great economist would have swept away like 
chaff in a windstorm the nebulous idealism and Socialist views of 
Director's Yale days," Coase wrote in Palgrave. 
 
He stayed at Chicago for several years as an instructor, also bringing his 
younger sister Rose to the University. There, she finished her 
undergraduate work and entered graduate school in economics, where she 
would meet her future husband, Milton Friedman. 
 
Director is survived by his sister, Rose Director Friedman, of San 
Francisco, Calif. Services are pending at the University of Chicago. 
Contributions may be made to the Law and Economics Program at the 
University of Chicago Law School.