Everything about Chicago School Economics totally explained
The
Chicago school of economics is a
school of thought favoring
free-market economics practiced at and disseminated from the
University of Chicago in the middle of the 20th century. The leaders were
Nobel laureates
George Stigler and
Milton Friedman.
It is associated with
neoclassical price theory and
free market libertarianism, the refutation and rejection of
Keynesianism in favor of
monetarism (until the 1980s, when it turned to
rational expectations), and the rejection of regulation of business in favor of
laissez-faire. In terms of methodology the stress is on "positive economics" -- that is, empirically based studies using statistics to prove theory.
The school is noted for its very wide range of topics, from regulation to marriage, slavery and demography.
The term was coined in the 1950s to refer to economists teaching in the Economics Department at the
University of Chicago, and closely related academic areas at the University such as the
Graduate School of Business and the
Law School. They met together in frequent intense discussions that helped set a group outlook on economic issues, based on price theory. The 1950s saw the height of popularity of the Keynesian school of economics, so the members of the University of Chicago were considered outcast. Famed economist
Friedrich Hayek was teaching there because that's the only place he could find employment at the time
(External Link
).
Not all economists within the Department of Economics at the
University of Chicago shared the beliefs in the "Chicago school." The University of Chicago department, widely considered one of the world’s foremost economics departments, has fielded more
Nobel Prize winners and
John Bates Clark medalists in economics than any other university. Approximately 70% of the professors in the economics department were considered part of the school of thought.
Chicago School theories lay behind many of the policies of the
World Bank and other
Washington-based financial institutions, such as the
International Monetary Fund and
U.S. Treasury Department, which embraced free market solutions as the recipe for the reform of economically wrecked countries, as was expressed in the
Washington consensus. Under its influence, from the mid-1980s to the mid-1990s, large portions of the state-owned companies in many
Third World countries were privatized.
Further Information
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