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George Stigler (1911-1991) was unquestionably one of the post-war giants of the economics profession. Along with such compatriots as Milton Friedman, Aaron Director, Gary Becker and others at Chicago, he would manage to radically reshape the contours of the discipline, engineering a virtual counter-revolution against the previous post-war consensus. Stigler essentially pioneered the fields of industrial organisation and regulatory economics while contributing landmark studies to the history of economic thought. George Stigler was awarded a much-deserved Nobel Prize in 1982.
At heart always a shy boy from the provinces, defending himself and his beliefs against the demands of a more wicked and devious world, he remained one of the only truly inscrutable figures in the history of modern economics. A kind, deeply caring family man, he fended off those outside his inner circle by employing a razor sharp, and often cruel, wit, keeping friends, colleagues and especially enemies at an arm’s distance. “… [there was] the student who came to George complaining that he didn’t deserve the ‘F’ he’d received in George’s course. George agreed but explained that ‘F’ was the lowest grade the administration allowed him to give.” Many who had the fortune, or misfortune, of coming within the range of his sharp tongue, even in the seeming context of an innocent encounter, would bear the scars of that contact for years to come. “With a paper like this, [delivering it] under the table, would not be inappropriate.”
This volume is then one of the first to shed light on an entirely enigmatic figure by approaching both the man and his work from very divergent and original perspectives. Whether it succeeds is up to the whims of the reader. Or as George Stigler was wont to say, “Let the chips fall where they may.”

Table of Contents

Frontmatter

The Protestant Father as Economist

Abstract
Every edited volume seems to require an introductory chapter. The purpose achieved by this version is to provide a general overview into the life, times, career, and thoughts of one George Stigler, stalwart of the Chicago School of Economics. George Stigler remains one of the most complex, if not unfathomable individuals, within the economics trade. Though influencing, and at times creating, economics as a modern discipline, going beyond a superficial understanding of his work or his intentions makes for a difficult journey that few care to commence. This paper does attempt to scratch a bit deeper, though with what success remains debatable. However, these pages deliberately eschew the more traditional path of providing previews of the chapters included in this volume. Readers who are determined to make their way through this introduction may achieve a somewhat better understanding of his thoughts and economic stances. However, they will fail to discover George Stigler’s feelings about preferred breakfast cereals, his taste in headgear and whether or not he chose to spit shine shoes.
Craig Freedman

A Biographical Perspective

Frontmatter

Georgie, We Hardly Knew Ye: Personal Reflections on George Stigler

Abstract
Clearly, the title chosen to personify this beginning section of the volume is referring to the old Irish folk song as well as having a bit of fun. Whether anyone had the sheer nerve to ever refer to George Stigler as Georgie is entirely another matter. Perhaps a stretch of the imagination would allow his mother to refer to a five-year-old version as Georgie, but even that would appear doubtful.
Craig Freedman

The Curmudgeon as Teacher: Afternoon Coffee with Mark Blaug

Abstract
Mark Blaug was one of George Stigler’s first Ph.D. students while attending Columbia University. The two composed a well-structured, almost made in heaven (or elsewhere) match. In a sense, there was something almost doppelganger-like between Blaug and Stigler. Both can be described as curmudgeons of the first water, capable of flaying one alive with their sharp tongues anyone brave (or foolish) enough to tread upon uncertain economic territory. In, at times, an animated conversation over coffee, Blaug explores the role of ideology in economics and the particular stance that George Stigler adopted in this regard. Further consideration is given to the History of Economic Thought, a field that both teacher and pupil embraced, though at times almost surreptitiously.
Craig Freedman

Fathers and Sons: A Conversation with Stephen Stigler

Abstract
Stephen Stigler grew up as the son of a famous academic. The experience promised to be less than a particularly felicitous, especially given the academic temptation to employ one’s theoretical leanings as the basis for his or her parental role. Such a home-life would appear to be particularly fraught given George Stigler’s (paterfamilias) nearly categorical imperative urge to reduce all human behaviour to rational self-interest. Yet, George Stigler, according to his son (and others) was a deeply loving family man spending constructive time with his children and if anything being a bit too generous with them. This other (softer) side of George Stigler is revealed in this conversation, as well as Stephen Stigler’s evaluation of his father’s mathematical and statistical abilities. (Stephen Stigler seemingly followed the path pioneered by his father in becoming a Chicago professor of statistics, while in addition harbouring a love for the history of his discipline.)
Craig Freedman

The Way Things Work: The Empirical Bent of Economists—Ronald Coase on George Stigler

Abstract
Ronald Coase and George Stigler share an affection and a great deal of respect for each other. Yet, in Coase’s own words, Stigler definitively failed to comprehend the work, method and objective of his work. Coase continued to see himself as residing firmly within the tradition of Stigler’s teacher, Frank Knight, while Stigler prided himself on his break and ultimate detachment from the Chicago figure who dominated the department between the World Wars. In this conversation, Coase discusses his own work, that of George Stigler and even the infamous Coase Theorem.
Craig Freedman

The Chicago Battler: Sherwin Rosen on George Stigler, Chicago and Economics

Abstract
The word feisty could have been coined to characterise Sherwin Rosen, a Chicago labour economist who won renowned for his work modelling employment, within some professions, as a type of ‘winner-take-all’ tournament. In many ways, that description is perhaps quite applicable to the Chicago department itself, where a fierce, if often friendly, competition raged among faculty members to skate along the cutting edge of research. In this conversation Rosen discusses life at Chicago and particularly the impact that an original thinker like George Stigler had in shaping the contours of the department during its seltzer days.
Craig Freedman

What Price Glory: James Kindahl Airs Some Views on George Stigler

Abstract
Ideologically based convictions insure that all and any evidence, no matter how clearly and persuasively presented, only serves to buttress previously entrenched economic positions. Consequently, empirical research for such determined advocates like George Stigler and Gardiner Means become more of a convenient rhetorical weapon than the basis for determining answers to posed problems. Supposed evidence in such cases comes to serve more as a means to re-inforce and solidify pre-existing, though diametrically opposite, visions of how the world properly operates. Given such pre-established perspective, identical observations cease to clarify or resolve conflicts or controversies given the associated pre-judgments involved. In this conversation with Jim Kindahl, Stigler’s co-author (The Behavior of Industrial Price—1970), readers are enabled to go behind the curtain that often cloaks the animating mechanisms of published work. Such exchanges manage to explore how the sausage of economic research is at times heavily spiced with impregnable ideological beliefs.
Craig Freedman

George Stigler’s Career Moves: The Roles of Contingency, Self-Interest, Ideology, and Intellectual Commitment

Abstract
George Stigler is commonly seen as one of the central figures in the Chicago School of Economics. However, he did not actually take a faculty position at the University of Chicago until the age of 47. This essay will provide a narrative account of George Stigler’s various career transitions from graduate school through his “retirement.” This narrative structure will be employed to bring out what archival material implies about a number of general themes regarding Stigler’s career. Particular attention will be devoted to the 1946 episode in which Chicago failed to make him an offer and the 1957–1958 episode in which W. Allen Wallis successfully induced him to take charge of the Walgreen Foundation and Walgreen Professorship. A first theme considered concerns the role of contingency in Stigler’s academic appointments. A second theme concerns the intellectual diversity of the academic milieus in which Stigler operated, which runs counter to the conventional view of a monolithic Chicago School focused on free markets. A third theme concerns the extent to which Stigler was a partisan or a scientist in his academic endeavors. This aspect entails whether he viewed the economics profession as more swayed by the social environment of its times or whether it made independent scientific and intellectual contributions to social policy. A final theme will concern the extent to which Stigler, as Nik-Khah has suggested, was an empire builder, especially during his tenure as the Walgreen Professor of American Institutions and then in establishing the Center for the Study of the Economy and the State. Brief consideration is also given to the issue of how to reconcile these contrasting, if not conflicting, features of Stigler’s career.
David Mitch

Voyages on the Seas of History and Economic Thought

Frontmatter

Historical Ambiguity: Reshaping the Snows of Yesteryear

Abstract
History of economic thought may have been George Stigler’s first love, but he turned out to be something of a feckless lover as the years rolled by. (It raises the question of why at crucial moments Stigler obviously didn’t seem to give a feck.) At times, his attitude to the field, which greatly benefited from his efforts, parallels the closed-minded perspective of the mechanically gifted but entirely cantankerous Henry Ford. These moments reveal an academic who considers his passion to be something of a guilty pleasure, like someone catching up on his macramé during an academic conference.
Craig Freedman

George Stigler’s Adam Smith: Successes and Failures

Abstract
George Stigler was a great admirer of Adam Smith as well as a pioneer of writing critical, analytical histories of economics. The paper examines Stigler’s significant contributions to Smith scholarship as well as Stigler’s use of Adam Smith’s analytical insights in his (Stigler’s own work). The paper argues that while Stigler’s assessment of Smith’s analytical achievements in economics is largely a success, his blindness to Smith’s moral philosophy causes him to misrepresent self-interest as the “bedrock” of the Wealth of Nations. Rather, I argue that justice is more fundamental than self-interest, and hence the true “bedrock” of the book. The separation of moral philosophy from economics is Stigler’s most significant failure.
Jeffrey T. Young

George Stigler as a Reader of Adam Smith

Abstract
We consider George Stigler as a reader of Adam Smith by examining Stigler’s theory of how complicated texts ought to be edited. The editor, in his account, ought to help readers appreciate what is distant from their understanding, to appreciate what the author knows but the reader does not. Stigler drew attention to Smith’s failure to apply self-interested considerations to his theory of policy. We ask whether this apparent gap was Smith’s fault or a misunderstanding of Smith caused by lack of editorial guidance. Smith believed people come to be persuaded of what is in their interests, but that was not apparent from the texts Stigler used.
David M. Levy, Sandra J. Peart

Stigler on Ricardo

Abstract
This paper attempts to scrutinize George Stigler’s interpretation of Ricardo’s theory. Like many other marginalists, he assesses Ricardo’s contribution in terms of marginalist theory. This confirms Piero Sraffa’s observation that by the end of the nineteenth century the analytical structure, content and genuine significance of the classical theory had been “submerged and forgotten”. However, Stigler’s textual acuteness allows him to discover irritating elements of Ricardo’s analysis that resist the marginalist interpretation. His irritation can only have been increased by Sraffa’s exposition of Ricardo’s surplus-based theory of profits in volume I of the Ricardo edition. This contradicted a marginal productivity theory of profits. Stigler while praising Sraffa’s edition beyond all measure, refrains however from discussing his interpretation. Things do not change after Sraffa in 1960 publishes a logically consistent formulation of the classical theory of value and distribution. Sraffa’s interpretation challenged Stigler’s ideological position, which the latter, however, did not feel the need, or the possibility, to defend.
Heinz D. Kurz

George Stigler: Marshall’s Loyal but Faithless Follower

Abstract
George Stigler judged Alfred Marshall to be almost incomparably superior to his immediate predecessors and contemporaries. However, despite being a loyal defender of Marshall’s intellectual heritage, Stigler epitomised the faithless follower of Marshall’s tradition. His fervent defence of traditional price theory and industrial organisation clearly embraced a methodological approach that was fundamentally opposed to that advocated by Marshall. Stigler’s influential assessments and commentaries involved a distortion of Marshall’s perspective on key issues such as the nature of competition, the role of economies of scale, and the dynamic or evolutionary dimensions of market structures. For Marshall to be a hero to Stigler, some significant elements of Marshall’s economics had to be recreated in such a way as to concur with his own vision of what constituted positive developments in economic analysis.
Neil Hart

Shattering Hope and Building Empire: Economics the Imperial Science at Chicago, George Stigler and Aaron Director

Abstract
The forays of the Chicago School of Economics into law, political science, and sociology have attracted no shortage of attention. The secondary literature on these forays focuses on the published work of members of the Chicago School, and is purblind to the examination of archival materials. This chapter uses archival research about two pillars of the Chicago School, George Stigler and Aaron Director, and offers a novel account of the history of economics imperialism. What becomes evident is that the diverse activities collectively labeled “economics imperialism” (educating judges in Chicago law and economics to better use economic analysis in a decision, undermining the ideal of the state governed by democratic consensus purportedly held by the professoriate, and inventing a certain kind of cost–benefit analysis for evaluating regulatory bodies) were devised for the same political goal: the ascendancy of Chicago neoliberalism.
Edward Nik-Khah, Robert Van Horn

George Stigler, the First Apostle of the “Coase Theorem”

Abstract
George Stigler coined the name “the Coase theorem” to refer to the idea proposed by Ronald Coase in “The Problem of Social Cost” (Coase in Journal of Law and Economics 3:1–44, 1960) of a negotiated solution to externalities. But the name contained two errors: it was not a theorem, and it was not Coase’s message, which insisted rather on the role of transaction costs. In microeconomics, the unidentified object named “the Coase theorem”, however, became central. Stigler, initially unconvinced by Coase’s criticism of the Pigovian analysis of externalities (Coase in Journal of Law and Economics 2:1–40, 1959), was converted in one night according to his 1988 autobiography. He stated the “Coase theorem” in the third edition of his Theory of Price, but made it rest only on examples. This chapter examines the meaning of his “Coase theorem”, both from an analytical perspective and as regards its theoretical implications.
Elodie Bertrand

Roads Not Taken: The Coase Conundrum

Abstract
Ronald Coase was ‘at’, rather than ‘of’ Chicago. This statement goes a long way toward explaining how the methodological aim and approach of Ronald Coase differed sharply from that of Chicago. As he, himself, clearly claimed, he was a direct throwback to the Classical Liberalism that defined and formed the characteristic feature of the work of Frank Knight. By exploring and analyzing this distinctive difference, such questions as Coase’s response to the ‘Coase Theorem’ becomes clarified, as does the intent of much of his work. Though generally in line with such leading Chicagoans as George Stigler and Milton Friedman in terms of policy, Coase remained firmly at odds with these figures in his approach to economics and his rejection of what he termed ‘blackboard economics’.
Craig Freedman

George J. Stigler’s Relationship to the Virginia School of Political Economy

Abstract
Our paper contrasts George J. Stigler’s credentials to the Chicago School of Economics and his relationship to the Virginia School of Political Economy. Stigler’s Chicago School refers to work of Stigler, Gary Becker, and Sam Peltzman. Virginia School refers to the Virginia School of Political Economy associated with the work of James M. Buchanan, Gordon Tullock, and Ronald H. Coase. We draw out similarities and highlight differences between the two schools, although their core shares methodological individualism and Smith’s invisible hand. Stigler is a neoclassical economist, while Buchanan, an Austrian, founded Constitutional Political Economy and co-founded Public Choice, both sub-disciplines as part of the broader enterprise known as the “Virginia School.” Buchanan’s co-founder of Public Choice, Tullock may be more aptly described as homo economicus. Although at Chicago for much of his career, Coase was a major contributor to the Charlottesville epoch of the Virginia School (1957–1968) and leading figure in the New Institutional School.
Gordon L. Brady, Francesco Forte

The Pervasive Lightness of the Chicago Price Theory

Frontmatter

The Dulcinea Complex: Defending the Unobtainable

Abstract
Don Quixote worshipped his Dulcinea. Jay Gatsby attempted to escape his past to claim his Daisy Buchanan. For George Stigler, Chicago Price Theory played a highly similar role. Like Gatsby or Quixote, Stigler attempted to transform himself from the gauche provincial boy into a transformative figure in economics. Like the fictional characters, he was driven by an almost romantic idealism.
Craig Freedman

Between Old and New: George Stigler’s Chicago Price Theory

Abstract
The epigram in Alfred Marshall’s Principles of Economics, a keystone text for Chicago price theory, is natura non facit saltum—nature does not move in jumps. This chapter applies Marshall’s adage to the development of George J. Stigler’s understanding and practice of price theory. We begin with Stigler’s earliest writings when he was a graduate student, proceeding through his career to the point when, as a mature scholar Stigler wrote reflections on the place of his ideas in the changing landscape of neoclassical economics. The chapter identifies threads that run throughout Stigler’s work from beginning to end, along with other threads that change their twist over the course of his career. The chapter demonstrates the importance of history and biography to understanding of economic ideas.
J. Daniel Hammond

George Stigler: Knowledge, Preferences, and (Self-Interested) Choices

Abstract
In a 1961 paper titled The Economics of Information, George Stigler introduced the costs of search, thereby allowing the problem of information to enter the arguments of the utility function. In so doing Stigler employed what he thought were the three assets of any successful new economic theory, namely: generality, manageability, and congruence with reality. The search for greater generality and greater congruence with reality of the many facets of economic behavior also lies at the base of the challenging De Gustibus non est disputandum paper (1977) written by Stigler with his colleague Gary Becker. The latter paper represents a major effort to expand the reach of the maximization of utility principle into domains that were before excluded from economic analysis and regarded as either beyond the scope of economic theory or an instance of its failure. I shall argue here that, though the rhetorical strength of the new approach should not be undervalued, it says more for the flexibility and generality of the theoretical apparatus of the rational economic choice it purports to defend than it does for the richer understanding of human choice and action that it claims to have achieved. Stigler’s view of knowledge will be compared with the alternative view of Frank Knight, earlier doyen of Chicago Economics for whom the problem of knowledge was preeminently a problem of understanding and discovery, and a process of creating new values.
Marina Bianchi

Textual and Scientific Exegesis: George Stigler and Method in Economic Science

Abstract
This chapter reconsiders Stigler’s 1965 distinction between textual and scientific exegesis, and explores its importance in the study and writing of the history of economic thought, as well as in the doing and writing of economic theory. After introducing the distinction, and its reception in Chicago and elsewhere, the chapter counters it (i) by laying out Pocock’s views on the reading of history as the identification and unscrambling of various language games that may conceivably be in play; and (ii) by elaborating Stigler’s own views of the role of mathematics in the theorizing of economic phenomena, as he exposed them in his 1949 LSE lectures. We read these texts through the lens provided by Carl Schmitt in his 1932 articulation of the friend/enemy dichotomy, and his characterization of the “enemy” as the defining character of the “political.” This chapter then reads Stigler as a Schmittian, and develops a critique of his views using his exegetical distinction as its particular point of departure, one that its authors hope will feed into questions concerning the teaching and curricular design of economic theory.
M. Ali Khan, Edward E. Schlee

Stigler on the Science of Economics: A Tale of Two Knights

Abstract
Our focus in this chapter will be on the methodological role that Stigler played in validating what he regarded as the science of economics that he had inherited from his own teacher, Frank Knight, and how this affected his understanding not only of economic theory but also public policy. Stigler’s understanding of economic science, viewed from a Knightian perspective, illustrates the evolution of economic science in twentieth-century neoclassical economics in two respects. First, it illustrates what was deemphasized and what was later carried forward from Knight by the generation of Chicago economists following WWII. Second, it highlights how Stigler’s understanding of Knight contributed and detracted from the mainline of economic science and its public policy relevance.
Peter J. Boettke, Rosolino A. Candela

James Buchanan and George Stigler: Divergent Legacies from Frank Knight

Abstract
I have been asked to compare James Buchanan’s body of work with that of George Stigler for a symposium on Stigler’s contributions to economics. I run my exposition through Frank Knight, who exerted strong though different forms of influence over both Stigler and Buchanan. Stigler’s oeuvre is largely an extension and refinement of Knight’s theory of perfect competition set forth in Risk, Uncertainty, and Profit, including Stigler’s effort to incorporate politics into the theory of perfect competition. In contrast, Buchanan tried to bridge the gap between Knight’s formulations of perfect and imperfect competition, while also emphasizing differences between markets and politics. Buchanan also tried to incorporate some of Knight’s repeated tergiversations about economic theory in relation to reality into his work, in contrast to Stigler’s comparative contentment with the state of economic theory.
Richard E. Wagner

Backmatter

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