Economy Tweets- Individual Freedom

The economy, Frank Knight argued, is a very complex and unstable thing. Programs of government intervention are too simplistic and do not take into account the complexities of a market economy – thus making interventionism even more dangerous. Laissez-faire is recommended, he argued, not because it "works" (for it patently does not) but rather because it holds individual freedom as an absolute good and the alternative may be much worse.

As a result, Knight's position is quite the reverse of the Second Chicago School economists of the 1960s, (i.e. Friedman, Stigler and company). The Second Chicago School tended to argue the positivist line that laissez-faire is desirable because it delivers the goods, and not because it is a good in itself. Indeed, throughout his life, Knight explicitly deplored and attacked many of the assumptions that the Second Chicago School held dear: e.g. the denial of the importance of monopolistic competition, the assumption of consumer sovereignty, stable preferences, efficient outcomes of markets, empirical-intuitive reasoning, interdisciplinary imperialism, etc.

All these items are precisely and directly opposed to virtually every important argument and position of Knight's (Emmett 2009). Indeed, the later Chicago School's declared "positivist" methodology was wryly characterized by Knight as "the emotional pronouncement of value judgements condemning emotion and value judgements which seems to [me] a symptom of a defective sense of humor" (Knight, 1940). However, we must grant that Knight's theories of capital (Knight viewed all factors as capital to a greater or lesser degree) and his "public choice" view of political behavior could be said to have persisted in at least some quarters of the modern Chicago School.