— Ch. 1 · Chicago School Origins —
Law and economics.
~5 min read · Ch. 1 of 6
Harold Luhnow, the head of the Volker Fund, financed F. A. Hayek in the United States starting in 1946. He shortly thereafter funded Aaron Director's move to the University of Chicago to establish a new center for scholars in law and economics. Robert Maynard Hutchins headed the university as a close collaborator of Luhnow during this period. The faculty included libertarian scholars like Frank Knight, George Stigler, Henry Simons, Ronald Coase, and Jacob Viner. Soon Milton Friedman joined as Director's brother-in-law and Stigler's friend. Robert Fogel, Robert Lucas, Eugene Fama, Richard Posner, and Gary Becker also became part of this intellectual circle. Historians Robert van Horn and Philip Mirowski described this development in their chapter titled "The Rise of the Chicago School of Economics" published within The Road from Mont Pelerin in 2009. Bruce Caldwell added details about Hayek and neoliberalism in his 2011 chapter Building Chicago Economics.
Founding Scholars And Journals
Aaron Director founded The Journal of Law & Economics in 1958 while co-editing it with Nobel laureate Ronald Coase. This publication helped unite the fields of law and economics with far-reaching influence. Ronald Coase and Guido Calabresi independently published two groundbreaking articles in 1960 and 1961. Their works were titled "The Problem of Social Cost" and "Some Thoughts on Risk Distribution and the Law of Torts." These publications are seen as the starting point for the modern school of law and economics. Aaron Director helped found the Committee on a Free Society in 1962. He taught antitrust courses at the law school with Edward Levi who later served as Dean of Chicago's Law School. Levi eventually became President of the University of Chicago and U.S. Attorney General during the Ford administration. Director retired from the University of Chicago Law School in 1965 before relocating to California. He took a position at Stanford University's Hoover Institution where he remained until his death on the 11th of September 2004.