Hayek, cultural evolution, and the idea of spontaneous order
Eric Angner
Abstract: Most of Friedrich A. Hayek’s writings on cultural evolution appeared after his tenure at the University of Chicago, from 1950 to 1962. There is, in fact, reason to think that his time in Chicago helped shape his evolutionary thought in multiple ways. As a case in point, his paper “Notes on the Evolution of Systems of Rules of Conduct,” which appeared in 1967 and in which he offered the first detailed description of his theory of group selection, shows clear signs of the Chicago connection. Nevertheless, Hayek’s evolutionary thought has a much longer history. Here, I will focus on the historical origins of Hayek's concept of “spontaneous order” – quite arguably the central concept of Hayek's system, sometimes described as “Hayek's greatest contribution,” and in any case closely connected to his evolutionary thought. I will begin by critically examining the received view, according to which Hayek borrowed the idea of spontaneous order from the philosophers of the Scottish Enlightenment (above all, of course, from Adam Smith). Because this view leaves many questions unanswered, I will develop an alternative account. I will maintain that by treating Hayek’s thought as continuous with the Natural Law tradition, in one of its forms, we can develop novel accounts of Hayek’s concept of order, his distinction between natural and artificial orders, his commitment to the superiority of the former over the latter, and, indeed, his theory of cultural evolution though group selection. Finally, I explore how this historical background can be combined with the events at Chicago into one coherent narrative of Hayek’s intellectual development.
A Prehistory of the Chicago School
Angus Burgin
Abstract: This paper reexamines the University of Chicago Economics Department in the period between 1930 and 1946, focusing on the thought of Frank H. Knight, Jacob Viner, and Henry Simons. It reopens the question of the existence of an early Chicago School, drawing on archival correspondence to argue that the commonalities within the approaches to political economy adopted by Knight, Viner, and Simons were limited and that they did not perceive themselves to be part of a coherent intellectual movement. Further, the paper asserts that the limited concordance shared by Viner, Knight, and Simons bears little direct relationship to the hallmarks of the postwar Chicago School. It closes with some consideration of the contextual explanations for this disjunction and its significance in relation to the Mont Pelerin Society and the postwar resurgence of classical liberalism.
"We May Need More Government to Give the Farmer Greater Freedom”: Theodore W. Schultz, Policy Planning, and Agricultural Economics in the Cold-War United States.
Paul Burnett
Theodore W. Schultz was chair of the Chicago department of economics during the
formative years of the so-called "Chicago School" of economics. For a department
composed of enthusiasts of classical liberalism and labor economics, he cut an unusual figure as the department's first hire in agricultural economics in 1943. But just as members of the department hoped to create an institute of liberal political economy, so did the university's leaders hope that Schultz would realize their ambition to build an inter-disciplinary research institute in agricultural economics. Although the university leadership pitched to various philanthropies the idea of a privately funded institution that would remain outside of the politicized land-grant institutions and federal bureaus, the institute never materialized. Instead, Schultz established a network of economists and business leaders linked through private policy planning associations associated with the university that promoted new rationales for agricultural policy, trade liberalization, and international economic development. Drawing on the work of his colleagues and graduate students, Schultz attempted to bring the market back into discussions of domestic agricultural policy and international development in both academic and policymaking circles.
Hayek and the Chicago School
Bruce Caldwell
Abstract: I will examine various aspects of the Hayek-Chicago School connection. First, what was Hayek’s role in the creation of the Chicago School? Next I will offer an alternative (or supplementary, depending on one’s point of view) interpretation of the evolution of neo-liberalism and of the Chicago School’s view on monopoly, and Hayek’s possible role in these matters. Third, I will look at how methodological differences between Hayek and Friedman mattered for these discussions. Finally, I will briefly discuss why he didn’t get a job in the Economics Department, which is the most asked about but probably least interesting question in all of this.
The suspicious consistency of Milton Friedman’s science and politics, 1933-1963
Béatrice Cherrier
Abstract: While charges of ideological biases are not uncommon in economics, those levelled at Friedman have been especially harsh. In addition to seeing his microeconomics and his monetarism as a rationalization of his neoliberal values, some have accused him of manipulating empirical results.
This paper reconsiders the consistency between Friedman’s science and politics. It argues that his political beliefs should be considered in relation to his other beliefs such as individual rationality, economic stability, government inefficiency, competitive markets, policy oriented science and empirically based scientific objectivity.
This paper relates how Friedman’s worldview, which consisted of these fundamental beliefs, was formed early in his life and almost settled by the time he moved to Chicago in 1946. It goes on to show that this worldview shaped the development of his scientific and political thinking between 1946 and 1963. Friedman’s worldview informed his hypotheses, the statistical and historical evidence used to test them, and eventually the modeling and testing procedure itself. It also surfaced in his macroeconomic policy recommendations and in the belief that market solutions could be scientifically demonstrated superior to government intervention, a view shared by his Chicago colleagues.
Ideology or Infrastructure?
The Institutional Design of Research and Teaching in the Department of Economics at The University of Chicago, 1940-1980
Ross B. Emmett
Abstract: In the post-war period, the economics department at the University of Chicago consciously designed an institutional infrastructure to support the application of the analytical tools of price theory, monetary theory and econometrics to the study of competitive markets. Drawing upon a particular conception of what social scientific work could be, the teaching and research missions of the department for both students and faculty were merged by the construction of the workshop model. The creation and evolution of the workshops in the department will be traced from their origins in the early 1940s to the height of their success in the late 1970s (the history of the workshops in the business and law schools is different, and will only be briefly mentioned). Whatever the ideological power of their work in the market of ideas, it was the infrastructure that formed the basis for the success of the Chicago School.
Richard Posner, Chicago School Economics, and the Evolution of Law and Economics: A Personal, Intellectual, and Institutional Biography
James Hackney
Abstract: Richard Posner is synonymous with the law and economics movement. However, as I’ve previously written, his version of law and economics (more appropriately labeled law and neoclassical economics) has a particular affinity to the Chicago School of economics. This talk will explore the personal, intellectual, and institutional connections between Richard Posner and Chicago School economics. The source material for this exploration are an interview I conducted with Judge Posner, reflections from a Chicago School law and economics roundtable, and a variety of secondary materials (including texts authored by Posner and others associated with Chicago School law and economics). In essence, this is an attempt to blend Posner’s biography into my account of law and economics rendered in a recently published book, “Under Cover of Science: American Legal–Economic Theory and the Quest for Objectivity” (Duke University Press). In examining the life of Judge Posner and its relationship to Chicago School economics, I want to begin an exploration and offer some hypotheses regarding how some of his life experiences and sensibilities are reflected in Chicago School economics and its influence in the market place of ideas in the latter part of the twentieth century.
Transcendental Commitments of Economists: Friedman, Knight, and Nef
J. Daniel Hammond
Abstract: In this paper I use Milton Friedman, Frank H. Knight, and John U. Nef, Jr. as case studies of how economists have dealt with religious questions. Friedman (1912-2006) was a student of both of the two older economists, Knight (1885-1972) and Nef (1899-1988), at the University of Chicago. He represents the mainstream of positivist economic science. Knight and Nef rejected positivism, a philosophy not unconnected with the widespread loss of religious faith among intellectuals. Knight’s and Nef’s visions of economics, and more generally of intellectual life, were broader than Friedman’s specialized positivist bent allowed. Knight saw himself as a scientist, but not a positivist scientist. Nef’s self image was as an historian of civilization. By seeking to preserve room in social science for the transcendental, Knight and Nef were brought into confrontation with religious questions that appear not to have troubled Friedman.
The Collected Writings of Milton Friedman: Chicago from the Archives
Robert Leeson
Abstract: Milton Friedman, possibly with an eye on posterity, kept a large amount of correspondence, much of it still to be deposited in the Hoover archives. (Palgrave Macmillan will shortly publish all of his essays and a sizeable proportion of his correspondence). These archives shed light on the influence wielded by Friedman and the Chicago School. This conference paper will illustrate the importance of this archival material by analyzing the dispute over the Chicago “oral tradition” dispute, the Free to Choose television series (which influenced the political environment in which Ronald Reagan 1980 Presidential campaign prospered) and the school voucher campaign.
Chicago Price Theory and Chicago Law and Economics:
A Tale of Two Transitions
Steven G. Medema
Abstract: It is common practice to equate “law and economics” with the Chicago school and Chicago law and economics with Richard Posner and the economic analysis of law. Just as common is the tendency to equate Chicago microeconomics, or price theory, with Gary Becker, George Stigler, and the hard-nosed rational
choice approach. In fact, however, these are distinctly modern variants of what
are lengthy Chicago traditions in law and economics and price theory. The old
Chicago law and economics of, e.g., Aaron Director and Ronald Coase has its
foundations in the old Chicago price theory tradition of Frank Knight and,
especially, Jacob Viner. The new Chicago law and economics—the economic
analysis of law—is grounded in the rational choice theory of Becker, a form of
price theory quite different from the “old” Chicago version, in spite of elements
of common lineage.
This paper will attempt to bring out the distinctions between the old and the
new versions of Chicago price theory, and how this transition on the price
theory side made possible and indeed gave rise to a significant structural shift
in the form of law and economics as practiced at Chicago—that is, from “law
and economics” to the “economic analysis of law.”
On the Origins (at Chicago) of Some Species of Evolutionary Economics
Philip Mirowski
Abstract: The theorists of Neoliberalism have had a funny relationship to the natural sciences over the course of the 20th century. This paper begins an exploration of one aspect of that ambivalent liason: If there is one natural science they said they liked to imitate, it was evolutionary biology. Indeed, they have spent much effort seeking to reinterpret biology as supporting their political position, particularly within economics. In this paper I track a selection of neoliberal theorists of “evolution”: Friedrich Hayek, Milton Friedman, Armen Alchian, and some of their critics. Using both published works and unpublished interviews, I clarify the strange roles that evolution was thought to play in their constructions of Neoliberalism.
It is my contention that this entire literature is profoundly misunderstood by most readers, due to a deficiency in appreciation for the context surrounding these writers and the ongoing (almost systematic) mischaracterization of the concept of “evolution” amongst economists. My goal is not to chide economists for getting the biology wrong— after all, what are the odds of ever getting it right? --; rather, it is to counteract the rather widespread impression that this work constitutes a dramatic departure from prior orthodox microtheory, and to point out the ways some rather more grand appeals to evolution which would radically alter the way we think about the economy have been shunted aside by systematic biases in this literature.
George Stigler and Industrial Organization at Chicago
Eddie Nik-Khah
Abstract: Recent scholarship has approached that the development of the
“Chicago School” with reference to structures of funding, the prominence of
‘applied’ areas, and the ideological orientations of certain crucial
figures. Existing scholarship has investigated work in the area of
antitrust analysis, has located a primary source of patronage, and has
identified a corresponding set of ideological imperatives. However, the
mapping of these imperatives onto the entirety of Chicago IO is complicated
by the absence of some crucial figures — viz. George Stigler. The purpose
of this paper is to provide a comprehensive account of development of the
Chicago approach to IO.
Complications Regarding the Overall Professional Influence of "Chicago" in American Economics
Mike Reay
Abstract: Interviews with a wide range of American economists at century’s end suggest several phenomena relevant to assessing the impact of the Chicago school, especially among nonacademics. First, as others have noted, the more complicated mathematical work of Chicagoans in the 1970s and 1980s had only an oblique impact on the daily activities of most economists. Second, those practices were dominated by basic quantitative microeconomics consistent with a Chicago emphasis on market mechanisms, but hardly derived from Chicago work, and hardly in line with the anti-mathematical stance of earlier, Austrian-influenced Chicagoans. Third, admiration for supposed Chicago economists was widespread but no more so than appreciation of “MIT” figures. In addition, Chicagoans were admired not just for their analytic abilities and pro-market politics, but also for their maverick determination in the face of widespread professional criticism. Overall then, the interviews suggest that “the” influence of “Chicago” at this time was a complicated mix of actual and perceived elements of theory, politics, micro-macro focus, and professional practice.
Between Washington & Wall Street: Chicago and the Study of Consumer Demand, 1920-1960
Thomas A. Stapleford
Abstract: The study of consumer demand invites strange bedfellows. For several decades following the First World War, businessmen, government officials, and left-wing labor activists all sought detailed knowledge about consumer behavior. Market researchers wanted to sell more products; technocratic bureaucrats hoped to mitigate business cycles; and labor reformers sought to demonstrate the economic benefits of expanded working-class consumption. Simultaneously, theories of consumer demand became a central component of larger struggles over American political economy, pitting advocates of free market capitalism against critics who believed consumer markets had been distorted by corporate power and required state intervention. This combination of shared research interests and conflicting goals led to a tangled set of relationships among economists studying consumer demand through the mid-twentieth century. My paper will explore this larger story and its multiple connections to the Chicago economics department, focusing especially on two aspects: research into consumer expenditures and studies of pricing and product quality.
Stigler, Friedman and the curious connection between the methodology of Chicago philosophy of science and Thomas Kuhn
Eric Schliesser
Abstract: In this paper, I will use the correspondence of George Stigler with Thomas Kuhn (unpublished) and his exchanges with Milton Friedman to offer a historical and critical account of Chicago Philosophy of Science. The main aim of the paper is to re-focus attention away from Friedman's famous 1953 paper, and to highlight Stigler's role in formulating the doctrine and rhetoric that became associated with Chicago. This paper will argue that Stigler constructed a philosophy of science that could simultaneously promote neo-Liberal values and what he thought of as best-practices while allowing for dramatic paradigm shifts. Part of the paper is based on original archival research which suggests that Stigler had a hand in getting Kuhn's Structure of Scientific Revolutions published. So, an unintentional consequence of my analysis is to offer a new dimension to the revolution in philosophy of science that Kuhn promoted.
The Development of Human Capital Research and the Chicago Department of Economics
Pedro Teixeira
Abstract:
The idea that education can provide benefits, including economic ones, is certainly an old one. However, the use of metaphors such as human capital or human wealth, to portray the economic effects of education and training, only started to be developed into a coherent research program by the late fifties of the twentieth century. Henceforth, human capital theory developed quite quickly and eventually became one of the most popular and influential research programs of contemporary economics. This text analyses the changes brought about by the post WWII context that turned human capital into a major area of research. In particular, it identifies the crucial role that certain economists institutionally and/or intellectually linked with the University of Chicago’s Department of Economics, such as T. W. Schultz, H. Gregg Lewis, Gary Becker and Jacob Mincer, had in the development of this area of research.
Allusions to evolution: Edifying evolutionary biology rather than economic theory
Jack Vromen
Abstract: The ‘selection arguments’ advanced by Alchian (1950) and Friedman (1953) were clearly meant to boost confidence in neoclassical economics. But whereas Friedman didn’t show the slightest reservation, Alchian warned economists “not to push their luck too far” in relying on the argument. Alchian’s warning spurred some economists (such as Nelson and Winter) to engage with evolutionary theorizing in a more profound way, if only to find out under which sort of circumstances the “constrained maximization” framework of neoclassical economics is able to predict the outcomes of evolutionary processes. But this is not the path that subsequent generations of the Chicago School of Economics took. Friedman’s reassuring reliance on the argument won the day. Instead of opening up economics to evolutionary theorizing, the second generation (with Tullock, Becker and Hirshleifer as important exponents) pleaded mainly for the reverse opening up of evolutionary biology to the “constrained maximization” framework of economic theory. To be sure there were suggestions that evolutionary biology (sociobiology, in particular) can enrich economic theory, especially by identifying what basic preferences people have. But the few attempts made in this direction once again amounted to demonstrations of the usefulness of “constrained maximization” in evolutionary biology.