Free Capitalist Network - Community Archive
Mises Community Archive
An online community for fans of Austrian economics and libertarianism, featuring forums, user blogs, and more.

Chicago School vs Austrian School

rated by 0 users
Answered (Not Verified) This post has 0 verified answers | 12 Replies | 3 Followers

Not Ranked
Male
97 Posts
Points 4,005
C Le Master posted on Tue, Feb 16 2010 3:09 PM

Friedman's Chicago School seems to be relatively Free Market based from the reading I have done, but it recieves constant ridicule on Mises. If it is Free Market, against a central bank, and more, how is it different than the Austrian view on economics and how is it bad? I am just looking for links and answers in common terms so I can have knowledge for the time being, before I go off and read a long book about it. I am curious to the opposing views, and curious how so many "libertarians", or neolibertarians as I like to say, are for the Chicago School's thought on economics. Anyone want to fill me in? Thanks!

  • | Post Points: 95

All Replies

Top 10 Contributor
7,105 Posts
Points 115,240
ForumsAdministrator
Moderator
SystemAdministrator

I suggest this thread

http://mises.org/Community/forums/t/11878.aspx

Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid

Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring

  • | Post Points: 5
Top 50 Contributor
Male
2,651 Posts
Points 51,325
Moderator
Suggested by Conza88

C Le Master:
If it is Free Market

The Chicago school isn't a free market school of economics. For example, "Chicagoans" often favor stringent anti-trust laws.

C Le Master:
against a central bank

All Chicagoans that I know of were in favor of some form of central banking or national monetary authority.

C Le Master:
how is it different than the Austrian view on economics and how is it bad?

They overuse mathematics and have a positivist ideology. Both are recipes for intellectual disaster.

  • | Post Points: 5
Top 500 Contributor
Male
144 Posts
Points 2,230
Josh replied on Tue, Feb 16 2010 6:07 PM

C Le Master:
If it is Free Market, against a central bank, and more, how is it different than the Austrian view on economics and how is it bad?


But, they aren't for a free market. The Chicago Schoolers are in favor of government control of currency. Seeing as a free market in money is one of the foundations of a free market, the Chicago School can't be consider pro free market. And they aren't against the central bank.


Also, Friedman was in favor of a negative-income tax.

  • | Post Points: 5
Top 50 Contributor
Male
2,939 Posts
Points 49,110

C Le Master:
Friedman'

"One of Friedman’s most disastrous deeds was the important role he proudly played, during World War II in the Treasury Department, in foisting upon the suffering American public the system of the withholding tax. Before World War II, when income tax rates were far lower than now, there was no withholding system; everyone paid his annual bill in one lump sum, on March 15. It is obvious that under this system, the Internal Revenue Service could never hope to extract the entire annual sum, at current confiscatory rates, from the mass of the working population. The whole ghastly system would have happily broken down long before this. Only the Friedmanite withholding tax has permitted the government to use every employer as an unpaid tax collector, extracting the tax quietly and silently from each paycheck. In many ways, we have Milton Friedman to thank for the present monster Leviathan State in America." - MNR

Ron Paul is for self-government when compared to the Constitution. He's an anarcho-capitalist. Proof.
  • | Post Points: 20
Not Ranked
Male
97 Posts
Points 4,005

Conza88:

C Le Master:
Friedman'

"One of Friedman’s most disastrous deeds was the important role he proudly played, during World War II in the Treasury Department, in foisting upon the suffering American public the system of the withholding tax. Before World War II, when income tax rates were far lower than now, there was no withholding system; everyone paid his annual bill in one lump sum, on March 15. It is obvious that under this system, the Internal Revenue Service could never hope to extract the entire annual sum, at current confiscatory rates, from the mass of the working population. The whole ghastly system would have happily broken down long before this. Only the Friedmanite withholding tax has permitted the government to use every employer as an unpaid tax collector, extracting the tax quietly and silently from each paycheck. In many ways, we have Milton Friedman to thank for the present monster Leviathan State in America." - MNR

If I am not mistaken, I believe Friedman himself claimed he was a Keynesian before, but later realized how it was wrong.

Also, "....he argued the central government could not micromanage the economy. ....Though opposed to the existence of the Federal Reserve, Friedman argued that, given that it does exist, a steady expansion of the money supply was the only wise policy, and he warned against efforts by a treasury or central bank to do otherwise."

This gave me the impression that Chicago school followers were against a central bank if Friedman himself was. Any thoughts?

  • | Post Points: 20
Top 500 Contributor
Male
144 Posts
Points 2,230
Josh replied on Tue, Feb 16 2010 10:04 PM

C Le Master:
This gave me the impression that Chicago school followers were against a central bank if Friedman himself was. Any thoughts?


There is a critical article written by Rothbard about Friedman somewhere, I'll see if I can find it.

And I could've swore that Friedman supported central banking (I think I heard him say it in one of his videos on Gold).

 

  • | Post Points: 5
Top 500 Contributor
Male
144 Posts
Points 2,230
Top 100 Contributor
814 Posts
Points 16,290

The Chicago school doesn't vary a whole hell of a lot from the Keynesian school as the biggest drain on an economy is the inflation imposed upon society by a central bank.  Many Chicago school adherents even suggest a 33% NST.  An example of a Chicagoan, I'd say was Reagan.  All he did was cut taxes to record lows (except inflation), which isn't nearly enough to make an economy free or prosperous. 

  • | Post Points: 5
Not Ranked
Male
97 Posts
Points 4,005

Josh :

Thanks for the link Josh. And while I am talking to you, I would like to apologize for that whole thing on Al Qaeda. I did draw an assumption with little knowledge. I thought you were arguing out of ignorance but that last post you had responding to "Myla" was very insightful and it seems you know more about it than I even do, although I disagree. Regardless, sorry about that whole thing.

 

 

  • | Post Points: 20
Top 500 Contributor
Male
144 Posts
Points 2,230
Josh replied on Wed, Feb 17 2010 2:26 PM

No problem man, I'm sorry if I crossed any line with you.

  • | Post Points: 5
Top 150 Contributor
Male
696 Posts
Points 12,900

C Le Master:

Friedman's Chicago School seems to be relatively Free Market based from the reading I have done, but it recieves constant ridicule on Mises. If it is Free Market, against a central bank, and more, how is it different than the Austrian view on economics and how is it bad? I am just looking for links and answers in common terms so I can have knowledge for the time being, before I go off and read a long book about it. I am curious to the opposing views, and curious how so many "libertarians", or neolibertarians as I like to say, are for the Chicago School's thought on economics. Anyone want to fill me in? Thanks!

 

 

Well I'm still pretty much a beginner but I know a few major differences.

Chicago economists tend to believe in market failure, perfect competition,perfect knowledge,the idea utility can be compared, a positivist methodology and public goods.

They aren't as opposed to central banking as the austrians and in this area are close to keynesians or monetarists.

they often tend to be less radical libertarians than Austrians.

Milton Friedman for example believed in school vouchers instead of an end to state schooling, a negative income tax(essentially a modified welfare system) and argued for closing of tax loops.He was quite inconsistent.

"Neo-libertarians"

that term usually refers to libertarians who are not consistent with NAP or who support war etc.

 

 

I don't really want to comment or read anything here.I have near zero in common with many of you.I may return periodically when there's something you need to know.

Near Mutualist/Libertarian Socialist.

 

  • | Post Points: 5
Top 150 Contributor
Male
696 Posts
Points 12,900

Oh and a few other things....

There's alot of Rothbard audio recordings on his discussion chicago vs austrians.

Also look out for Block vs friedman a series of letter enchangements.No surprises,Block wins!

there's also a audio called the political economy of the chicago school: jacobin(which is close to socialist) or libertarian?  -see here http://mises.org/media/1404

 

I don't really want to comment or read anything here.I have near zero in common with many of you.I may return periodically when there's something you need to know.

Near Mutualist/Libertarian Socialist.

 

  • | Post Points: 5
Page 1 of 1 (13 items) | RSS