Abstract
The latest financial and economic crisis has undoubtedly reawakened public and academic interest for the scholarly discourse on economics of the 1930s. Large think tanks foster a reenactment of John Maynard Keynes or Friedrich August von Hayek with various methods and intentions, while scholars invite their audience to rediscuss economic ideas of the Great Depression and its subsequent period. One of these scholars is James M. Buchanan, who has highlighted the importance of the “Old Chicago” School (and sharply contrasted it from the “New Chicago” School’s tenets); another is Viktor Vanberg, who has highlighted the importance of the Freiburg School of Economics. The Chicago School and the Freiburg School have remarkably influenced the design of post-war economic orders as well as scholarly discourse in economics in the United States and Germany.
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Notes
The three authors, however, differ with regard to which extent they treat individuals as sovereigns and ultimate addressees of their proposals for a free society. By the end of the 1940s, they nevertheless share, as “most economists,” “basic long-run objectives” such as “political freedom, economic efficiency, and substantial equality of economic power”—and that “all three objectives can best be realized by relying, as far as possible, on a market mechanism within a ‘competitive order,’” as stated by Friedman in a very early paper of his, presented in September 1947 to the Econometric Society, only a few months after Friedman’s attending the first MPS meeting. It is noteworthy that here Friedman consistently uses the language of “Old Chicago” when it comes to the terms “economic power” and “competitive order,” and refers to Simons’s articles on different topics. Milton Friedman, “A Monetary and Fiscal Framework for Economic Stability,” The American Economic Review 38, no. 3 (June 1948): 246.
Melvin W. Reder, “Chicago School,” in The New Palgrave: A Dictionary of Economics, vol. 1, ed. John Eatwell, Murray Milgate, and Peter Newman (New York: Palgrave Macmillan, 1987), 413–18.
Razeen Sally, Classical Liberalism and International Economic Order: Studies in Theory and Intellectual History (London and New York: Routledge, 1998).
Henry C. Simons was born in Virden, Illinois in 1899. He graduated from the University of Michigan in 1920, and began teaching immediately after graduation at the University of Iowa. In 1927 he moved to the University of Chicago, where he remained for the rest of his life. He died at the early age of 47, in 1946. Simons was surrounded by an unusually brilliant set of colleagues—Jacob Viner (1882–1970), Frank Knight (1885–1972), Henry Schultz (1893–1938), and Paul Douglas (1892–1976). (See Mark Blaug, “Henry Simons,” in Pioneers in Economics: Frank Knight (1885–1972), Henry Simons (1899–1946), Joseph Schumpeter (1883–1950), vol. 37, ed. Mark Blaug (Aldershot: Edward Elgar, 1992), xi.
Aaron Director, “Prefatory Note,” in Economic Policy for a Free Society, Henry C. Simons (Chicago, IL: University of Chicago Press, 1948), v–vii.
For the original statements of Ronald Coase, Milton Friedman, and George Stigler, see Edmund W. Kitch, “The Fire of Truth: A Remembrance of Law and Economics at Chicago, 1932–1970, ” Journal of Law and Economics 26, no. 1 (April 1983): 178–79.
See J. Bradford De Long, “In Defense of Henry Simons’ Standing as a Classical Liberal,” Cato Journal 9, no. 3 (Winter 1990): 601–18.
Henry C. Simons, “Introduction: A Political Credo,” in Economic Policy for a Free Society, Henry C. Simons (Chicago, IL: University of Chicago Press, [1945] 1948), 7–11.
Henry C. Simons, “A Positive Program for Laissez Faire: Some Proposals for a Liberal Economic Policy,” in Economic Policy for a Free Society, Henry C. Simons (Chicago, IL: University of Chicago Press, [1934] 1948), 41–42.
See also Simons , “Rules versus Authorities in Monetary Policy,” in Economic Policy for a Free Society, Henry C. Simons (1936; Chicago: University of Chicago Press, 1948), 160.
Henry C. Simons, “Some Reflections on Syndicalism,” in Economic Policy for a Free Society, (Chicago, IL: University of Chicago, [1944] 1948), 123.
Walter Lippmann, The Good Society, 3rd ed. (London: Allen & Unwin, [1937] 1944).
For more details of the economists’ Nazi involvement see Hauke Janssen, Nationalökonomie und Nationalsozialismus. Die deutsche Volkswirtschaftslehre in den dreißiger Jahren des 20. Jahrhunderts, 3rd ed. (Marburg: Metropolis, [1998] 2009).
Daniel Johnson, “Exiles and Half-Exiles: Wilhelm Röpke, Alexander Rüstow and Walter Eucken,” German Neo-Liberals and the Social Market Economy, ed. Alan T. Peacock and Hans Willgerodt (New York: St. Martin’s Press, 1989), 40.
John Richard Hicks, “The Hayek Story,” in Critical Essays in Monetary Theory, (Oxford: Clarendon Press, 1967), 203–15.
Brian J. McCormick, Hayek and the Keynesian Avalanche (New York: St. Martin’s Press, 1992).
Friedrich A. Hayek, “Freedom and the Economic System,” in Collected Works and Correspondence of F. A. Hayek, ed. Bruce Caldwell, vol.10, Socialism and War: Documents and Reviews (Chicago, IL: University of Chicago Press, [1939] 1997), 189–212.
Friedrich A. Hayek, The Road to Serfdom, 50th anniversary ed. (Chicago, IL: University of Chicago Press, [1944] 1994).
Walter Eucken, Grundsätze der Wirtschaftspolitik, 7th ed. (Tübingen: MohrSiebeck, [1952] 2004), 26–27.
Hans-Hermann Hoppe, “F. A. Hayek on Government and Social Evolution: A Critique,” The Review of Austrian Economics 7, no. 1 (1994): 67.
Friedrich A. Hayek, “‘Free’ Enterprise and Competitive Order,” Address to the Mont Pèlerin Society founding meeting on April 1, 1947, in F. A. Hayek Archives, Box 81/Folder 3, Hoover Institution Archives, Stanford University; Friedrich A. Hayek, “‘Free’ Enterprise and Competitive Order” in Individualism and Economic Order, Friedrich A. Hayek (Chicago, IL: University of Chicago Press, [1947] 1948), 117. The pagination for Hayek’s address is taken from the reprint in Individualism and Economic Order since this is widely available. In Director’s and Eucken’s addresses, the pagination is taken as in the archival documents.
Rob Van Horn, “Reinventing Monopoly and the Role of Corporations: The Roots of Chicago Law and Economics,” in The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective, ed. Philip Mirowski and Dieter Plehwe (Cambridge, MA: Harvard University Press, 2009), 204–237.
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© 2013 Sandra J. Peart and David M. Levy
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Köhler, E.A., Kolev, S. (2013). The Conjoint Quest for a Liberal Positive Program: “Old Chicago,” Freiburg, and Hayek. In: Peart, S.J., Levy, D.M. (eds) F. A. Hayek and the Modern Economy. Jepson Studies in Leadership. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137354365_10
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