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The Chicago School, Hayek and the Mont Pèlerin Society Craig Freedman Chicago Fundamentalism: Ideology and Methodology in Economics Singapore & Hackensack, NJ: World Scientific Publishing, 2008, 472 pp., $130.95.
Philip Mirowski & Dieter Plewhe (eds.) The Road from Mont Pèlerin: the Making of the Neoliberal Thought Collective Cambridge, Mass: Harvard University Press, 2009, 480 pp., $62.
Reviewed by Evan Jones
Many people have heard of the 'Chicago School of Economics' and would have a superficial awareness of its character. It is reputedly a haven of 'free-market' economics and its best known exponent is the ubiquitous Milton Friedman, who died in 2006. Its critics see it as being at the core of the vast neoliberal ideological and political project that has seen the state re-engineered in the interests of capital over the last three decades. The detractors have been joined by the mainstream economist turned popular columnist Paul Krugman, who recently criticised the Chicago school in an extended article in the New York Times (Krugman, 2009).1
It was never obvious how a school with a semblance of coherence could have evolved out of an Economics Department then comprising bignamed, often 'Right-wing' but idiosyncratic intellectuals (Paul Douglas, Frank Knight, Jacob Viner, Theodore Schultz, etc.). The two books reviewed here give the answer.
The rise of the Chicago school is important in itself but merely one component of a larger project comprising intellectuals/ideologues and vested interests whose efforts were directed to countering those attempting to reform capitalism. A key origin of the intellectual/ideological wing is to be found in the Privatseminar of Ludwig von Mises, then secretary of the Vienna Chamber of Commerce, in the early 1920s. Thus was born the Austrian school of economics, home of a purist advocacy of individualism and the 'free market', its most famous member being Friedrich Hayek. The spark that placed this mentality in the public domain was the publication of Hayek's Road to Serfdom in March 1944. The book was speedily reproduced in Australia in July (Hayek, 1944) and in the US by the University of Chicago Press in September, having previously been rejected by three US publishers (Caldwell, 2008: p. 15).
Hayek travelled to the US in April 1945 to proselytise his book and was introduced to one Harold Luhnow,...