------ EH.NET BOOK REVIEW ------
Title: 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/. [log in to unmask]

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Geographic Location: North America
Subject: History of Economic Thought; Methodology
Time: 20th Century: Pre WWII, 20th Century: WWII and post-WWII