Definition Chicago School – A strand of economic theory highlighting the benefits of free-market economics and critical of Keynesian government intervention
The Chicago School of economists originated from the University of Chicago in the 1950s and 1960s. Influential economists such as Milton Friedman and George Stigler helped to define a new reaffirmation of classical / free market economic beliefs.
The Chicago School of economists tend to believe in most or all of the following:
- Rejection of Keynesianism and preference to Monetarism
- Belief in Free Markets and inefficiency of government intervention ‘laissez-faire economics’
- Belief in Free trade
- Rational Expectations ( a development of Friedman’s adaptive expectations hypothesis)
- Belief in Positive economics. i.e. using statistical data to back up their theories.
Note not all professors at the University of Chicago necessarily subscribed to these views, although it is estimated about 70% of economists did.
Legacy of Chicago School
The Chicago belief in free markets and the absence of government regulation influenced world bodies such as the World Bank and IMF. Their free-market stance has often been criticised.