ABSTRACT
A strong Chicago participation in development economics was inevitable during the field’s boom years, 1954–1968, because market incentives do have awesome power. During the 1950s came what might be called the Houdini phase of mainstream development economics, and the Chicago group as usual stayed out, avoiding both mistakes and some subsequent learning. A curious urge made Chicago economists present their veneration of the market as not only logical, but also as novel and exciting. The aim of development policy at Chicago is more competitive markets with brave, more innovative entrepreneurs. The objective may be to condition new psychological responses, more tolerance of anxiety, to encourage learning of simple facts and procedures, or merely to gain participation. Harvey Leibenstein has criticized the Chicago approach to human fertility. An inadequate view of rationality and the learning process is perhaps the principal limitation of the Chicago approach to development.
