By Steve Rhodes
“Chicagonomics, a new book by Lanny Ebenstein, a prolific author on the history of economic thought, sets out to investigate the history of the Chicago school of economics, to see what can be learnt for today from its past,” the Economist writes.
“The author chronicles the intellectual history of what began life in the 1890s as the Department of Political Economy. Before the 1940s, Chicago’s professors were much closer to the liberalism of British political economists such as Adam Smith, Jeremy Bentham and John Stuart Mill than the libertarianism of Hayek and Friedman in the 1980s and early 1990s. Mr Ebenstein looks at the ideas of scholars such as Jacob Viner and Frank Knight, and concludes that while they favoured individual freedom, their policy prescriptions did not exclude government action. Both perceived Smith as justifying the state intervening in the economy at times, such as with the provision of infrastructure, education for the young and the funding of arts, culture and science.
“By the 1940s, the use of redistribution to ensure that everyone had a basic standard of living was accepted by most Chicago economists. For instance, Henry Simons, when he worked at Chicago between 1939 and 1946, set out how redistribution, by diffusing economic power in a society, was necessary in a free society. Even Hayek, in his libertarian polemic of 1944, The Road to Serfdom, supported the use of environmental regulation and state-run social-insurance systems.”
Posted on October 28, 2015