Old School: A Belgian author tackles the Chicago economics tradition in his latest book

In 1965, Time Magazine interviewed University of Chicago economist Milton Friedman about the sustained success of Keynesian economic doctrine then used by the United States government. At the time, presidential policy had purportedly “lift[ed] the nation through the fifth, and best, consecutive year of the most sizable, prolonged, and widely distributed prosperity in history.” Friedman, coming off a term as an informal economic adviser to presidential hopeful Barry Goldwater, said, famously, “We are all Keynesians now.” What Time construed as an unlikely conservative endorsement was actually misquoted. As Friedman’s son, David, makes clear on his blog, his father actually said, “In one sense, we are all Keynesians now; in another, no one is a Keynesian any longer.” The actual quote bespeaks an attitude Friedman, George Stigler, and a generation of University of Chicago scholars that would follow them emulated: Acknowledging the intellectual achievements and prescriptions of the past while constantly working to overturn them.

Though the same attitude could be plausibly applied to all of the University of Chicago’s intellectual history, it became the salient feature of the University’s storied economics department. The “Chicago School” argued for the free market and against government intervention, reinstated the primacy of classical price theory (strict adherence to supply-and-demand), advocated empirical–rather than theoretical–analysis, and, perhaps most controversially, championed the theory that “inflation is always and everywhere a monetary phenomenon.” Such free-market radicalism was controversial, but the intellectual achievements made by UofC economists are inarguable. The department has collected more Nobel Prizes in economics than those at other institutions, double that of the runner-up.

Yet, for all its prestige, the Chicago School’s colorful history and the characters that populate it have never been recorded in an intellectual history. This fact is all the more remarkable when considering the international impact that Chicago theories have had not only on academia, but also on developing economies and political bodies from Kenya to Chile. In the United States alone, the cultural impact of the Chicago School from the time of its inception was quiet, but steadily growing. Another twenty years after Time misquoted Milton Friedman in praise of John Keynes, the country was led by Ronald Reagan, who implemented tax cuts and smaller government as legitimate tools of the state. The market, the godhead of Chicago laissez faire, was safe again. But no one has ventured to describe who made such a radical change happen and why until recently.

Dr. Johan Van Overtveldt, director of the Belgium-based think-tank VKW Metena, took up the challenge, and wrote “The Chicago School: How the University of Chicago Assembled the Thinkers Who Revolutionized Economics and Business.” Released by Evanston-based Agate Publishing, “The Chicago School” has turned into a surprising sleeper hit, in Chicago and elsewhere. Though on the surface the subject material seems narrowly appealing, the first printing of the book sold out within three weeks of its release date in June, and the second is selling almost as fast. The secret may be that the book, through anecdotes and interviews, uncovers the latent intensity of intellectual debate.

On a phone call from Belgium, Van Overtveldt explains why he decided to write such a lengthy tome on such a specific subject: “There are two things: When I was at university in Belgium, [the Chicago school] was changing economics all over the place. I had one professor who taught us specifically in the mode of the Chicago economists, and not the ‘black box’ model popular at the time, and, for me, that approach to economics was what it was all about. Second, I was the editor-in-chief of Trends Magazine in Belgium during the 1990s, when the Nobel Prize [in economics] was going predominantly to Chicago economists–Gary Becker, Robert Lucas. At that point in time, I said to myself, ‘Why is this happening?’ So I wanted to know more about it.” Because he never had a prolonged sabbatical from his other work, Van Overtveldt wrote the book over a period of twelve years and twenty-odd visits to Chicago. “I spent ten to fifteen weeks in the library and the archives, but also a lot of time especially talking to people. These include the major figures–Robert Lucas, Theodore Schultz, Milton Friedman before he died. I think that this characteristic gives the book an extra dimension,” Van Overtveldt says. After conducting preliminary research, it turned out that the ground the author intended to cover was expansive. Van Overtveldt, speaking about writing the book, says, “The biggest challenge was trying to streamline the huge amount of information–books, papers–at the University of Chicago. The first draft was about 600 pages. Obviously, that was too much and I had to cut it down.” Even after edits, however, the book still contains 423 pages.

“The Chicago School” cites the University of Chicago as the formative crucible for the school of thought that would bear its name. Doubly isolated, first in the only large metropolis in the middle of the United States and then in a neighborhood seven miles south of downtown, the University of Chicago was a gargoyle-bedecked ivory tower reflecting its environment. The seclusion sponsored argument rather than repose, in the absence of other activities. The effects of this isolation and the contemplative atmosphere became apparent even before the Chicago economists started making noise in the ’50s and ’60s. The Chicago school of sociology from the ’20s and ’30s–not only the first private-school sociology department in the country, but the most influential in studying urban society and development–and the Neo-Aristotelian literary response to the New Critics in the ’40s all predated the free-market ideology of the Chicago school of economics. The economists, however, would make the University famous. It could easily be said that the free-market spirit that came to dominate the school’s image emerged from the institutional culture, where the freedom of inquiry placed ideas above ideology, such that ideas had to triumph on their own merits. The result was a cycle in which certain ideas and their proponents triumphed, while others went extinct. George Neumann, cited in Kim Phillips-Fein’s Chicago Tribune review of “The Chicago School,” once commented, “Chicago has been accused of being a school that not only believes in survival of the fittest, it practices it.”

Van Overtveldt’s book claims that the influence of the Chicago school has yet to diminish, even though Paul Samuelson and his disciples at MIT have begun stealing some of the national limelight. On the phone, Van Overtveldt comments about the current prestige of the University of Chicago and its potential influence, “It’s hard to judge things that are happening right under your nose. I think what needs to be said is that Chicago [and the Chicago school] has to some extent been absorbed by others. So the distinctive aspect is not so distinctive anymore.”

What may be most interesting about the enduring effect of the Chicago economists may be something “The Chicago School” doesn’t cover: The reciprocal influence that the school of economics has exerted on the institutional culture that formed it. The Chicago school’s free-market radicalism may have been the logical end of the University’s spirit of competitive inquiry–and the hothouse of intellectual battle it furnished–but the Chicago school’s enduring influence may be the conservative libertarianism that continues to influence University of Chicago products today. It is not hard to imagine that a school that places so much emphasis on studying the classics, whose school of literary criticism reached back to Aristotle for influence, and whose social sciences are now synonymous with free-market economics and libertarian social policy, would count no less a personage than neo-conservative wonder-boy Paul Wolfowitz among its modern graduates (not to mention former Attorney General John Ashcroft and self-proclaimed judicial conservative John Paul Stevens). It is not obvious, but maybe the Chicago school was the most prominent expression of a pioneering conservative spirit–indicative of both America’s prairie metropolis and the school founded there–that it helped perpetuate to this day. Maybe that is its legacy.