Monday, June 28, 2010

James Buchanan On Chicago School Thinking: Old And New

At the Summer Institute on History of Economics held a week ago or so at the University of Richmond, 90-year old Chicago Ph.D. (and Nobelist) James Buchanan gave a talk on the topic in the subject head. One can see it and the question and answer period (1 hour, 16 minutes) here. It is not what most regular readers of this blog would expect out of this old pro-laissez faire workhorse and father of the public choice school.

So, yes, he is for free markets, but in the Old Chicago School (of Frank Knight, Jacob Viner, and Henry Simons), it was known that they only work with the right laws and institutions, whereas the New Chicago School (Lucas et al; he views Friedman, Stigler, and Becker as "intermediates"), thinks that markets always work all the time, no matter what. This is not the case, because "rules and laws are Samuelsonian non-partitionable public goods." Yes, the attitudes of the New Chicago School are partly responsible for the recent crises. And Buchanan now has "radical views," wanting to "break up the big banks" and reimpose the Glass-Steagall Act, among other things.

One other thing that was sort of amusing to watch was how he handled incoherent questions, of which there were several. He would say, "I don't understand your question," and that would be that, and, frankly, I did not understand them either. Left the questioners rather hanging with their gibberish. And for others he would answer "I agree," period, although still others he gave long and insightful replies to. I guess when you are 90, you do not feel like wasting yours and other peoples' time.


Ted said...

That Youtube link isn't working.

Barkley Rosser said...

Sorry about that. Have changed it after looking at it on another link, but not sure if this works either. Hope so.

Fabio Sabatini said...

Now it works. Thank you.

Eubulides said...

How is the war on some drugs a "nonpartitionable public good"? I can give more counterexamples.... :-)

Laissez Fair, yet another term in economic theory suffering from referential failure [think phlogiston] as even a casual perusal of the history of law in the US will attest to.