chicago: Bruce Caldwell on Hayek & the Formation of “The Chicago School” of Economics

Bruce Caldwell, “The Chicago School, Hayek & Neoliberalism” (pdf) draft, Feb. 1, 2009.  From the paper:

Friedrich A. Hayek taught at the University of Chicago from the fall semester of 1950 through 1962, a period during which the second, or new, Chicago School of Economics was formed.

The question naturally arises: What was his role in its formation?

A quick look at the historical record, and common sense itself, suggests that it must have been close to nil. Milton Friedman, whom many would consider the central figure in the School, was hired in 1946, before Hayek had arrived. Hayek tried to get a job in the Economics Department in 1948, but they declined to make him an offer. He ended up instead on the Committee for Social Thought. During his time at Chicago (1950-1962) Hayek worked principally on political philosophy rather than economics, with The Constitution of Liberty (1960) being the end result. And Hayek famously disagreed with the leader of the Chicago School, Milton Friedman, on monetary theory and methodology, two of the defining aspects of Friedman’s legacy.

Consistent with the sentiments expressed by Hayek in the opening quotation, this paper will serve as a warning against quick looks at historical records .. in untangling questions of influence. In a remarkable recent paper .. Rob Van Horn and Phil Mirowski offer a compelling revisionist account of the formation of the Chicago School(s), one which places Hayek, Henry Simons and Aaron Director at the heart of the action.

Their paper is based on a meticulous investigation of the relevant archival documents. After briefly summarizing some of their most important findings, I will offer a few comments about their reading of the historical record. Most of these involve small quibbles. In general, I find their new interpretation quite convincing.

Caldwell’s reference is to Rob Van Horn and Philip Mirowski, “The Rise of the Chicago School of Economics and the Birth of Neoliberalism.” In Philip Mirowski and D. Plehwe, eds., The Making of the Neoliberal Thought Collective. Cambridge, MA: Harvard University Press, forthcoming.

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