Myth: The Chicago School of Economics is a leader in the field.
Fact: The Chicago School has lost academic clout.
The Chicago School of Economics is a hotbed of conservative economics that has won eight Nobel prizes and considerable influence in the field. But its stock is rapidly falling. "Monetarism is dead" is the catch-phrase that economists use to describe Milton Friedman's monetary theory. Rational Expectations, although still widely admired, has lost currency in academia. The Coase theorem has taken a drubbing in the academic literature. Public Choice theory is so flawed that it actually predicts that people won't vote. There is also a backlash against the over-reliance on math and perfect starting assumptions so heavily used by the Chicago School. Furthermore, the Chicago School tried their economic policies for sixteen years in near-laboratory conditions in Chile. The results were exactly what liberals predicted: falling wages for workers, soaring incomes for the rich, the destruction of social programs without sufficient replacement, wild swings in the economy, and some of the worst pollution in the world. Even the string of Nobel prizes that the Chicago School has won appears to be the work of Assar Lindbeck, the right-wing Swedish economist who heads the Nobel prize selection committee for economics.
The following essays should serve not only as a readable primer to the Chicago School of Economics, but to the field of economics as a whole. Enjoy.
The Methodology of the Chicago School
A Review of Keynesian Theory
Milton Friedman and Monetarism
Milton Friedman and the Natural Rate of Unemployment
Robert Lucas and Rational Expectations
Ronald Coase and the Coase Theorem
The Laboratory Test: Chile
All those Nobels
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