Chicago School

Chicago School

Group of architects and engineers who in the 1890s exploited the twin developments of structural steel framing and the electrified elevator, paving the way for the ubiquitous modern-day skyscraper. Their work earned Chicago a reputation as the “birthplace of modern architecture.” Among the school's members were Louis Sullivan, Daniel Burnham, and John Wellborn Root (1850–91).

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Chicago School

A group of highly influential architects, including Adler and Sullivan, Burnham and Root, William LeBaron Jenney, and their followers in Chicago in the latter part of the 19th century. The School’s central philosophy was that architectural design should be of its time rather than based on the past. This group initially applied its philosophy to both skyscrapers and homes, but its greatest and most lasting influence was in the design of skyscrapers, and its greatest achievements were in structural design. Also see Prairie School.

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Chicago School 

in bourgeois political economy, a school of economic theory founded on liberalism. The ideological and theoretical views of the Chicago school began to take shape in the 1930’s and reached their final form as a fully elaborated doctrine in the 1960’s and 1970’s. The school’s principal representatives are American scholars and economists associated, for the most part, with the University of Chicago and include F. Knight, H. Simons, L. Mints, M. Friedman, J. Viner, P. Cagan, D. Meiselman, R. Selden, and A. Schwartz. The theories and practical recommendations of the Chicago school are reflected most fully in the works of Knight and, especially, Friedman.

Adherents of the Chicago school, who belong to the neoclassical school of contemporary bourgeois political economy, take an anti-Keynesian position on such issues as the forms and methods of government regulation of the capitalist economy, monetary theory, demand, pricing, economic cycles, and employment. The school’s methodology is based on the principles of marginalism, on the subjective and psychological marginal utility theory, and on the apologetic concept of the marginal productivity of factors of production (seePRODUCTIVITY, THEORIES OF).

Economists of the Chicago school, who reject the view of J. M. Keynes that a capitalist economy cannot ensure normal expanded reproduction without the intervention of the bourgeois state, argue that the state has a destabilizing influence on the development of a capitalist economy. Idealizing the natural mechanisms of the market, they maintain that effective management and economic efficiency can be achieved only under a system of private ownership and free enterprise.

The Chicago school uses its defense of the mechanisms of the marketplace and free competition to sharply attack the working class, whose demands for higher wages are regarded as a constraint on the free play of market forces. The school’s theorists do not consider unemployment a major socioeconomic problem of modern capitalism, whose ills, they believe, must be ameliorated through the “automatic” mechanisms of the market and through free competition.

Economists of the Chicago school oppose restrictions on the economic expansion of monopolies and have spoken out against the progressive income tax, taxes on corporations and savings, and government price controls. The Chicago school, which expresses the ideology and interests of the most conservative circles of the monopolistic and middle bourgeoisie, is one of the most ardent defenders of private ownership as the basis of a capitalist society.

For the Chicago school, monetary theory constitutes the central problem in economics. In the 1950’s, Friedman and his supporters began working on a modern variant of the quantity theory of money, a variant that has come to be known as monetarism. According to monetarist theory, money plays a key role in the economic development of capitalist society, and quantitative changes in the money supply generate changes in other economic areas. Like such bourgeois economists as K. Wicksell and I. Fisher, then, the adherents of the Chicago school take a monetary approach to the analysis of economic crises. They reject the notion that such crises are regularly recurring phenomena inherent in capitalism, maintaining that the cyclical development of a capitalist economy results from disruptions in the money supply. According to Friedman, the destructive economic crises of 1929–33 could have been ended in the USA by 1931 if the Federal Reserve System had not resorted to a reduction in the money supply.

An important place in monetarist theory belongs to the notion of a regular income, which presupposes the existence of a constant component of consumer expenditure. A central element in monetarist doctrine is the money demand function, which underlies the conclusion that there is a proportional relation between growth in the money supply and a change in price level. The monetarists believe that inflation occurs when deficit financing based on Keynesian methods of regulating the economy results in an excessive money supply. The monetarists criticize such methods, believing that only the growth of the money supply requires regulation. Friedman asserts that a regular, steady increase in the money supply of 3–5 percent annually will ensure the smooth functioning of a capitalist economy. The implementation of the recommendations of the Chicago school cannot, however, eliminate the cyclical nature of the development of a capitalist economy. Economic cycles stem from the basic contradiction of capitalism—the contradiction between the social nature of production and the private, capitalist form of appropriation.

REFERENCES

Seligman, B. Osnovnye techeniia sovremennoi ekonomicheskoi mysli. Moscow, 1968. Chapter 7, sees. 5 and 7. (Translated from English.)
Burachas, A. I. Teorii sprosa. Moscow, 1970. Chapter 3.
Usoskin, V. M. Teorii deneg. Moscow, 1976. Chapter 3.
Friedman, M. The Optimum Quantity of Money, and Other Essays. Chicago, 1969.
Friedman, M. Money and Economic Development: The Horowitz Lectures of 1972. New York, 1973.

A. A. KHANDRUEV