Chicago Economics

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Milton Friedman's school. An example of Lysenkoism: "the manipulation or distortion of the scientific process as a way to reach a predetermined conclusion as dictated by an ideological bias."


Efficient Market Hypothesis (3 links)
A major Chicago Economics hypothesis and precept, produced by Eugene Fama and eventually strongly questioned by him as well. The existence of speculative bubbles refutes all but the weakest forms of the EMH.
Against Friedman: Outline of a Winchian critique of positivist economics [More...]
Rupert Read's paper in progress finds fatal flaws in Milton Friedman's "The methodology of positive economics".
Economic Ideas You Should Forget (book) (1 link)
By discussing problematic theoretical assumptions and drawing on the latest empirical research, 71 authors question specific hypotheses and reject major economic ideas from the “Coase Theorem” to “Say’s Law” and “Bayesianism.”
Economics in Two Lessons: Why Markets Work So Well, and Why They Can Fail So Badly (book)
An excellent academic (but readable) rebuttal to the propaganda in Economics in One Lesson, the fallacies of Economics 101, some Chicago Economics and some Austrian Economics. Very simply, markets do not take into account ALL opportunity costs.
Gary Becker on the Family [More...]
Gary Becker's book "A Treatise on the Family" ludicrously characterizes children as commodities. "If children are commodities, they're the worst commodity imaginable [...]"
How Did Economists Get It So Wrong? [More...]
Paul Krugman explains how the fresh-water economists systematically rejected Keynes and made other errors.
Imperfect Competition, Legitimate at Last [More...]
A short history of monopolistic competition (industrial organization) studies, which has resulted recently in the Nobel prize in economics for Jean Tirole. Chicago Economics takes a drubbing.
Neither Real, nor Business, nor Cycles [More...]
Noah Smith eviscerates RBC (Real Business Cycle Theory) using tools bequeathed by Voltaire, Larry Summers and Simon Wren-Lewis. "Label-the-Residual Economics."
Preventing Economists’ Capture [More...]
Chapter 6 of Preventing Regulatory Capture. The same standard economic incentives that drive regulatory capture should also result in capture of economists by business interests. Economists seem unwilling to admit they have the same problem.
Quotations from Chairman Becker [More...]
Gary Becker's book "A Treatise on the Family" shows a profound ignorance of the actual sociology and history of families. "Becker's book seems to me to be a mess of ideology, sophistry, and special pleading, salted here and there with misrepresentations of fact."
Rational Choice Theory (3 links)
A field of economic theory that is notorious for many pathologies. See also Public Choice Theory, which uses rational choice methodologies.
Real Business Cycle Theory (1 link)
A freshwater, Chicago School theory that had one major success in the '70s predicting/explaining stagflation. No successes since then, left behind by the resurgence of various Keynesian schools.
Revisiting the Revisionist History of Standard Oil [More...]
How John McGee of the Chicago School rewrote the antitrust history of Standard Oil, how the US Supreme Court credulously applied his revisionist history, and how modern economic and legal research has exposed the errors.
Ronald Coase And The Misuse Of Economics [More...]
How the Coase Theorem was misused by right-wingers to do the bidding of big business.
Say's Law (2 links)
The doctrine that shortfalls in overall demand aren’t possible, because money has to be spent on something. Debunked strongly by Keynes, yet still strongly held by many Chicago School economists and others.
Standard Oil, Monopoly and Predatory Pricing (3 links)
For decades libertarians have relied on the egregious revisionist history of Standard Oil by John McGee of the Chicago School to declare predatory pricing and monopoly rare and impractical. This claim has been thoroughly refuted by legal and economic research, both empirical and theoretical. Now it is up to the courts to catch up with academia.
The Three Axioms at the Heart of Neoclassical Economics [More...]
"All in all, the three axioms that form the basis of neoclassical economics cannot be taken seriously."
This is such a big heap of partisan right-wing bullshit that there must be a pony in there somewhere! [More...]
Daniel Davies explains to Brad DeLong that Milton Friedman was a political hack (in addition to being an excellent economist.) "The ideological core of Chicago-style libertarianism has two planks. 1. Vote Republican. 2. That's it."
Why bother with microfoundations? [More...]
Our modern "microfounded" macro models are no more useful than aggregate-only models because the available microfoundations are crap. If you put garbage in, you may or may not get garbage out, but why bother putting the garbage in in the first place?
Yet More Corruption At The University Of Chicago... [More...]
Brad DeLong posts ad-hominem accusations of corruption from Robert Lucas, Eugene Fama and Richard Posner. Sad, really.


[...] lacking the experimental method, economists are not strictly enough compelled to reduce metaphysical concepts to falsifiable terms and cannot compel each other to agree as to what has been falsified. So economics limps along with one foot in untested hypotheses and the other in untestable slogans.
Joan Robinson, "Economic Philosophy" , 1962, pp. 26-28.
There has been a good deal of confused controversy about the question of "value judgments" in the social sciences. Every human being has ideological, moral and political views. To pretend to have none and to be purely objective must necessarily be either self-deception or a device to deceive others. A candid writer will make his preconceptions clear and allow the reader to discount them if he does not accept them. This concerns the professional honour of the scientist.
Joan Robinson, "Freedom and Necessity" p.122.