Chicago Fundamentalism: Ideology And Methodology In Economics Ideology and Methodology in Economics

"Cold war ideology infected the development of economics in ways its practitioners were often not fully aware. The Chicago counter-revolution against the dominant post-war triumph of Keynesian analysis had an essential subtext, a perceived struggle between freedom and collective slavery, ideological objectives subsequently influenced methodological concerns, pushing economists to adopt the zero-sum tactics of the courtroom rather than the mutually beneficial manners of the senior common room. In these ideologically charged times, economists stopped reading opposing views carefully, seeking instead to dismiss, out of hand uncongenial ideas." "In this collection of previously published and new material, Craig Freedman examines the problem of ideology through the reflection cast by the architects of the Chicago counter-revolution, George Stigler and Milton Friedman. The second half of the volume demonstrates the legacy of these ideological fires, namely a profession where the methodology of careless reading and zero-sum exchanges have persisted and come to dominate."--Jacket Contents 14 Foreword: A Touch of the Billy Joels 8 Acknowledgements 12 Chapter 1 And Only I Was Left to Tell the Tale: Blindness as an Act of Will 16 1. Picking Through the Methodological Slagheaps: How Not to be an Economist 16 2. Nobody Here But Us Chickens: The Unappreciated Importance of Ideology 25 References 32 Part I. Resurrecting the Chicago Revolution: The Cold War and the Economics Profession 34 A. George Stigler 35 Chapter 2 George Joseph Stigler (1911–1991) 36 References 38 Chapter 3 Power Without Glory — George Stigler’s Market Leviathan 40 1. Ricardo’s Wrong Track — Distribution and Power 46 1.1. Explaining rent 47 1.2. What the market has wrought let no man rent asunder 50 1.3. Stigler slices the Gordian Knot of economic power 55 2. Freedom as Choice 58 3. The Problem of Ideological Blinders 64 4. Stigler and Post-War Economics — The Three Pillars of Wisdom 69 5. Cold Warriors Fade Away — The Cost of Ideology 79 References 81 Chapter 4 Five Easy Pieces — George Stigler’s Blueprint for a Counter-Revolution 86 1. A Time and a Place 86 2. A Good Egg Gives Some Lectures — The Background 90 3. Conservatives of the World Unite — How the LSE Manifesto Created an Economic Framework 93 3.1. Banking on a moral imperative 97 3.2. A gorgon’s look at monopolistic competition 101 3.3. Redeeming the classical economists 107 3.4. On being mathematically dysfunctional 110 3.5. An economist plays a game of monopoly 113 4. Future Directions — How These Lectures Influenced Stigler’s Future Work 116 5. The Race is to the Swiftest — What has Chicago Wrought? 121 References 122 Chapter 5 Countervailing Egos — Stigler versus Galbraith 126 1. Matter and Anti-Matter 129 2. A Survey of Contemptible Economics 133 3. An Economist Plays with Blocs 147 4. The Blocs Come Tumbling Down 161 Appendix A. Contents of a Survey of Contemporary Economics 165 References 166 Chapter 6 Was George Stigler Adam Smith’s Best Friend? — Studying the History of Economic Thought 172 1. Field Versus Foundation 176 2. Sheltered Workshops 179 3. Adam Smith’s George Stigler Problem 186 4. The Advantage of Having a History 192 References 194 Chapter 7 Do Great Economists Make Great Teachers? — George Stigler as a Dissertation Supervisor 198 1. Good Teacher/Good Researcher 199 2. Protestant Fathers/Renegade Students 203 3. Open Season on Ideas/Open Season on Students 208 References 211 B. Milton Friedman 212 Chapter 8 De Mortuis Nil Nisi Bonum — Milton Friedman 1912–2006 214 1. Bliss was It to be Young 217 2. Reshaping Economics 224 2.1. Permanent income hypothesis 226 2.2. Quantity theory of money 227 2.3. Natural rate of unemployment 230 2.4. Positive economics 231 3. Death of a Salesman 233 4. Old Economists Never Die, They Only Slowly Fade Away 236 References 237 Chapter 9 Entre Nous — A Review of the Friedman–Stigler Correspondence 240 References 244 Chapter 10 Not for Love Nor Money: Milton Friedman’s Counter-Revolution 246 1. The Economist as Polemist — Using an Unpredictable Past 253 1.1. John Maynard Keynes — economist as provocateur 255 1.2. Milton Friedman — The silence of the lambs 258 2. Knocking on Heaven’s Door — Loyalties, Betrayals and Obfuscation 269 3. The Editor Edited 287 References 293 Part II. Method or Madness — Why Methodology Matters 296 Chapter 11 Why Economists Can’t Read 298 1. The Tailors of Laputa — Journals and the Canonical Form 300 2. Ariadne’s Thread — Journal Articles as the Source of Reputation 308 3. The Beat of a Butterfly’s Wings: The Importance of Critical Reading 318 3.1. Friends and foes 318 3.2. Textual analysis 320 3.2.1. The ability to follow only certain lines of reasoning 320 3.2.2. Reading with prior expectations 323 3.2.3. Deliberate misreading for rhetorical ends 325 3.2.4. Reading with the intent to destroy 328 4. Hypocrite Lecteur 331 References 333 Chapter 12 Shunning the Frumious Bandersnatch: An Unacknowledged Assumption of Coase’s Theorem 336 1. Coase’s Theorem 337 2. Nivana Economics — The Problem of Benchmarks 344 3. Acknowledging the Unacknowledged — Symmetrical Choices, Asymmetrical Results 348 4. Letting a Little Asymmetry into Coase’s Theorem: Consequences and Prescriptions 354 References 357 Chapter 13 Animal Spirits in His Soup: A Look at the Methodology and Rhetoric of The General Theory 360 1. Introduction 360 2. Rhetorical Strategies, Conventional Actions 367 3. Say’s Law Does Not a Conventional Account Make 373 4. Investment Spending — The Conventions of Business 377 5. Methodology — The Importance of Conventional Behaviour 384 6. Conclusion 388 Acknowledgment 390 References 390 Chapter 14 In Defence of Footnotes — A Clarification of a Misunderstanding of Keynes’s Definition of Money 394 1. Keynes’s Definition of Money 394 2. The Perpetuation of Misunderstanding by Tradition 398 References 399 Chapter 15 Economic Convictions and Prior Beliefs: Akerlof Wrestles with the Ghost of John Maynard Keynes 400 1. A Major in the Brave Army of Heretics 402 2. Banquo’s Bloody Ghost 406 3. The Thought Police 413 4. Revolution and Reform 415 References 417 Chapter 16 When Truth is Not Beauty, Nor Beauty Truth: A Review of Econ Art — Divorcing Art from Science in Modern Economics 420 References 428 Chapter 17 Court Jesters, House Gadflies and Economic Critics 430 1. Colander’s Second Voyage 435 2. Positive, Normative or Artistically Bent — The Madness in Method 438 3. David Colander’s Brave New World 453 References 457 Index 460 Freedman (Macquarie U., Australia) collects 17 new and previously published essays pivoting generally around the notion that the reason so much of economics is so poorly written is that economists are unable to read, and that no improvement in the discipline can be expected until that problem is resolved. The first section is historical, looking at economics in the context of the Cold War, and in particular the figures of George Stigler and Milton Friedman. The second section explores some matters of methodology. The topics include shunning the Frumious Bandersnatch, a clarification of a misunderstanding of Keynes' definition of money, and divorcing art from science in modern economics. Annotation 2009 Book News, Inc., Portland, OR (booknews.com) Examines the problem of ideology through the reflection cast by the architects of the Chicago counter-revolution, George Stigler and Milton Friedman. This volume demonstrates the legacy of the ideological fires, namely a profession where the methodology of careless reading and zero-sum exchanges have persisted and come to dominate.