ABSTRACT
The premise that individuals are capable of maximizing behavior in the markets in which they operate, whether as consumers, producers, savers, investors, workers, and/or employers, is the leitmotif of the tradition that has become associated with the Chicago School of economics. Members of this group of academic economists, who have taught or studied at the University of Chicago or other institutions (among them The University of California at Berkeley, Stanford, and MIT) where they have come under the energizing influence of the Chicago view, share an identifiable intellectual bond. Although their professional association is very loose and they disagree about many specifics, they are, nevertheless, relatively homogeneous with respect to their methodology, philosophy, and policy preferences. Chicago economists are, first and foremost, advocates of an individualistic market economy. Indeed, they are sometimes referred to as 'the Chicago school of libertarian economists." It is the degree of this advocacy that sets the Chicagoans apart from other economists, who may also prefer a predominantly market-oriented economy, but who do not necessarily believe that individual liberty (political as well as economic) cannot exist outside a free enterprise system, or that a
free-enterprise system IS more productive than any other. 2
A related difference between Chicagoans and many other economists is their belief that the market economy is characterized by commodity prices and wage rates that are, by and large, flexible. This view, as was pointed out in the preceding chapter, with particular reference to the concept of the natural rate of unemployment, is an integral part of monetarist macroeconomic analysis. Chicago economists tend to be less concerned with, and give less weight than others to, the implications of oligopoly and labor unions largely because they maintain that these do not significantly alter the essentially competitive nature of the economy. Their concern with questions relating to the distribution of income and wealth is similarly limited.
