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The Elgar Companion to the Chicago School of Economics

The Elgar Companion to the Chicago School of Economics

Elgar original reference

Edited by Ross B. Emmett

Many know the Chicago School of Economics and its association with Milton Friedman, George Stigler, Ronald Coase and Gary Becker. But few know the School’s history and the full scope of its scholarship. In this Companion, leading scholars examine its history and key figures, as well as provide surveys of the School’s contributions to central aspects of economics, including: price theory, monetary theory, labor and economic history. The volume examines the School’s traditions of applied welfare theory and law and economics while providing a glimpse into emerging research on Chicago’s role in the development of neoliberalism.

Chapter 3: Adam Smith and the Chicago School

Steven G. Medema

Subjects: economics and finance, economic psychology, history of economic thought, methodology of economics


Steven G. Medema* Introduction Adam Smith’s discussion of the system of natural liberty, its effects on the functioning of the market system, and the resultant implications for the economic role of the state has formed the basis for much of the subsequent economic literature analyzing the interplay of market and state. That there is no settled interpretation of this and any number of other aspects of Smith’s work is clear; what is equally clear is that Smith’s ideas have, via particular interpretive turns, been used to support the development of theories and frameworks for the analysis of economic policy. This is interesting for the interpretation given to Smith’s ideas, the uses made of them in light of that, and how both of these factors influence the larger professional (and even popular) view of Smith. The present essay examines what may be the most fertile of these uses of Smith in the twentieth century: that associated with the Chicago School. George Stigler opened his banquet speech at the Glasgow Wealth of Nations bicentennial conference by saying: ‘I bring you greetings from Adam Smith, who is alive and well and living in Chicago’ (Meek 1977, p. 3). This ‘genial proprietary claim’, as Ronald Meek calls it, was not pulled out of thin air. For, while Smith is shared by virtually all economists, it would be hard to argue that the association of his name with any subset of them since the classical period is as strong as that with the Chicago School....

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