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George Stigler: Enigmatic Price Theorist of the Twentieth Century 1st ed. Edition Craig Freedman full chapter instant download
George Stigler: Enigmatic Price Theorist of the Twentieth Century 1st ed. Edition Craig Freedman full chapter instant download
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George Stigler
Enigmatic Price Theorist of
the Twentieth Century
George Stigler
Enigmatic Price Theorist
of the Twentieth Century
Editor
Craig Freedman
University of New South Wales
Sydney, NSW, Australia
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature
Switzerland AG 2020
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with the Copyright, Designs and Patents Act 1988.
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Cover credit: Stigler papers, Regenstein Library Archives, University of Chicago. London 1947, on their
way to the first Mont Pelerin Society meeting, from left to right: Aaron Director, George Stigler and
Milton Friedman
This Palgrave Macmillan imprint is published by the registered company Springer Nature Limited
The registered company address is: The Campus, 4 Crinan Street, London, N1 9XW, United Kingdom
The Journey—A Reminiscence
Me Came to Chicago,
way back,’53
Worked for Tolley and Gale,
Gregg, Gary and Al
Then for Stigler, in years, 33
They said I was destined to fail
Stigler was, as you know, hard as nails
But under that shell, oh,
Beat a heart of red Jello
And I coasted through on his coat-tails!1
—Claire Friedland
1This previously unpublished poem is by George Stigler’s long time research assistant and indis-
pensable co-worker, Claire Friedland. As the poem points out, she spent 33 years working along-
side Stigler from the early days of his return to Chicago until his death (1958–1991). She writes,
“I was an RA in my student days for in order: George Tolley, D. Gale Johnson, H. Gregg Lewis,
Gary Becker and Arnold [Al] Harberger” (Correspondence with Claire Friedland, October 2017).
Claire Friedland has always proved to be a treasure trove of information, insight and inspiration
in my own search to understand the ever elusive George Stigler. The poem points out a surprising
Japanese contradiction in Stigler’s nature, namely the difference between his tatemae (the outside
appearance he displayed to the world) and his honne (the inside truth which generated an intense
loyalty from his circle of friends). My thanks and appreciation to Claire Friedland for granting
the rights to publish her thoughts.
To my daughters Emily and Nicola who neither know, or care to know,
who George Stigler might be.
Heart on a Sleeve
A student once asked me what was “beneath George Stigler’s hard, sarcas-
tic exterior.” How could I resist answering “A hard, sarcastic interior”? In
reality, it was a question I couldn’t answer at the time; it had been only
10 or 15 years that I’d been doing research for, and with, George. Today
I think I’d respond “Sarcastic? Well, yes. But hard? No, I don’t think so.”
Although I had often said that George was irrationally rational, in certain
areas he was irrationally generous. (Friedland 1993: 780)
One aspect of Stigler, the one more open to inspection, is his career
as an academic gunslinger. Not quite a gun for hire as much as a gun
in the service to a cause, the ideological right-handed quick-draw of
the marketplace. To opponents, perhaps it would not be too far off the
mark to regard him as a figure drawn directly from the classic western
Shane. Specifically the Jack Palance character, attired completely in black
and giving the evil eye to all the quivering and fearful sodbusters. As the
living manifestation of that cinematic creation, George Stigler appeared
to be almost programmed to mercilessly eliminate all opposition by
whatever available means might prove to be effective. Eradication, rather
than engagement, was both his strategy and objective.
But there is also a hidden Stigler, shown by an almost unacknowl-
edged generosity that imbues him with a deeply romantic heart.
Throughout his career he was also something of a Don Quixote fig-
ure in the best sense of that description. Someone who felt compelled
to defend the honour of the marketplace, seeing it as almost his duty
and obligation to embellish its institutional beauty and to ignore its
blemishes. Done not because of any intrinsic dishonesty, but to serve a
higher goal. Stigler is even akin to Fitzgerald’s Jay Gatsby, creating him-
self seemingly out of thin air from his beginnings as a gauche provincial
boy. In neoclassical price theory he discovered his Daisy Buchanan, the
ideal for which he strove. He successfully created the world he wanted
so badly, seeming to capture for himself what had slipped so carelessly
through Jay Gatsby’s fingers. Something of that life as an academic and
romantic adventurer can be glimpsed in the cover photo in this volume.
In it George Stigler and his two co-conspirators (Milton Friedman and
Aaron Director) are caught at the start of an ascent that would change
the shape and face of economics. This picture, taken in 1947 right
before the first Mont Perlerin meeting, shows these three still young
men at the base camp of their careers, in some sense parallel to Edmund
Hillary before his achievement in scaling Mount Everest. There is a
wide-eyed determination in their vision as though ready for whatever
was to come, even though at that moment they had little conception of
where their attempt to refigure economics would eventually take them.
The journey George Stigler would ultimately complete would trans-
form him into an appropriate subject for detailed and almost forensic
Heart on a Sleeve xi
But in any case I really feel that he is one of the most interesting and in
some sense, most enigmatic characters in our profession in this last cen-
tury. (Conversation with Arnold Harberger, August 1997)
Since any potential reader is faced in this case with a rather voluminous
edition, my perceived responsibility, at least as far as I can ascertain, is
to write something of a non-preface-preface. Or as that original thinker
Owl (resident of the 100 Acre Wood) sharply perceived, a response
that is more of a contradiction than either an introduction or definite
statement. Here I am relieved of a great deal of responsibility by know-
ing that only the obsessive or the hopelessly compulsive bother to pay
any serious attention to a preface no matter how it might be labeled.
Accordingly, I feel as though I have been granted free range to doo-
dle along a bit without needing to meet any subscribed objectives or
conventions.
In which case, let me confess that neither here, nor in what passes as
an introduction, will you find anything like a discussion of the individ-
ual contributions to this volume. My residual faith is that those opening
the book can read and judge for themselves. If not, if in fact anything
xiii
xiv By Way of a Contradiction
like a breezy tour through the book is required, perhaps potential read-
ers would find more rewarding alternatives elsewhere.
The book, after an introduction that attempts to set the stage, com-
mences with a series of conversations conducted back in 1997 with a
number of individuals who knew George Stigler to varying degrees.
While interesting in themselves, they not only provide contemporary
judgments of Stigler’s extensive contributions to the discipline but
also sketch a portrait of the man himself. Doing so is perhaps of par-
ticular importance when it comes to understanding Stigler. He was a
skilled writer who took pains with the language he employed. He also
had a caustic wit which would inevitably bubble up in all his writings.
Therefore, even what he would classify as his scientific tracts need to
be read with care and placed in context with all his other writings and
thoughts. Mistaking him for some generic writer can assist in confus-
ing a more prosaic reader from gaining any deeper understanding of his
work.
Lastly, inclusion into this volume is not any reflection of my own
views. These simply are of small importance. Contributions were chosen
for their interest and insight. The chapters should make you think and
reconsider your own positions. Moreover, George Stigler during his life-
time greatly helped to shape modern economics. The issues he grappled
with are still very much alive today. The hope then is that this volume
will assist those economists who take their work seriously, without at
the same time overinflating their own efforts.
There are a few required acknowledgments, a list that will be deliber-
ately incomplete. Like film credits, such acknowledgments have grown
into something resembling a field of kudzu over the last couple of dec-
ades. Everyone is included in the fear of omitting and offending some-
one, even though they might only be peripherally attached to a given
project. But I do want to acknowledge those who were gracious enough
to talk to me about George Stigler either formally or informally. Such
include, Milton and Rose Friedman, Aaron Director, Armen Alchian,
Harold Demsetz, Claire Friedland, Stephen Stigler, Sam Peltzman,
Ronald Coase, Lester Telser, Gary Becker, James Kindahl, Paul
Samuelson, Robert Solow and Paul Sweezy, many of whom, unfortu-
nately, are no longer with us. Mistakes, errors and points of contention
By Way of a Contradiction xv
I have now spent some decades trying to puzzle out the ever deepen-
ing enigma that was George Stigler. Because of the nature of the man,
increasingly the truth remains that I thought I understood more about
him two decades ago than I do today. This sad fact has become increas-
ingly true, especially on my more befuddled mornings. He remains
the perfect embodiment of the dichotomy on which the Japanese have
bestowed the labels honne and tatemae. The problem remains that the
tatemae, the outside show that is on display, is often only a very treach-
erous reflection of the honne, the unvoiced or expressed core essence
of a person. More than most, George Stigler remains a puzzle, whose
composed and revealed bits refuse to form a coherent whole. The
problem then remains that since a more interpretative judgement is
required when weighing up and gluing down all the available existing
evidence, the final result inevitably becomes more arguable. The unfor-
tunate allure when faced with such a high degree of complexity, is to
try to force all the ragged jigsaw pieces into forming a simple, conjoin-
ing picture. Part of the problem in doing so is that Stigler, like many
men of his generation, was not given to deep introspection.1 He could
not reveal that which remained hidden to him as well. Like the strong,
xvii
xviii The Lonely Heart: An Attempt in Search of a Preface
Notes
1. Perhaps Japanese style honne is difficult to discover in the case of Stigler
simply because it is covered by so many protective layers that even he
was loathe to disturb. In his own way he shares one Lear-like feature,
without hardly qualifying as either a tragic or foolish figure. As Regan
evaluates her father, it is more the inability or unwillingness to engage in
self-examination, rather than the infirmity of old age, that leads Lear to
make deplorable decisions. ‘Tis the infirmity of his age; yet he hath ever
but slenderly known himself ’ (Act 1, Scene 1: line 294—King Lear).
2. In a fundamental sense he acted in an economically efficient, albeit,
expedient fashion. He never wasted words arguing unless he determined
the objective was worth the opportunity cost of the effort. In most cases
he would attack opponents only when he deemed the issue to be of suffi-
cient import. Having stirred the pot, he would move on, never to return.
Otherwise he would not deign to take note of opposing views.
He was a very strange person to sum up because his methods were not those of any-
one else. I think he was quite unique. If you put a point to him, he liked to answer
it with a joke. Then if you pressed him, he produced some fact or other. You pressed
again, he’d give you his answer. But he was sort of an economist even in argument.
He used the easiest way. (Conversation with Ronald Coase, October 1997)
3. Certainly trying to appreciate the different levels of his arguments is not
for the very literal minded. He chooses his words and descriptions care-
fully. When he mockingly speaks of ‘Lord Keynes’, the title is not given as
a sign of respect for class differences or honorifics. Looking at his words
without taking into account the ever present bite is analogous to being an
art critic while lacking any appreciation for, or knowledge of, chiaroscuro
in painting. His reasoning is often more montage than straight line plod-
ding that perhaps forms the norm for many other economists.
I think he was one of the most difficult people to explain because I mean, there is
no one like him. I’ve described how in an argument he jumps around. He puts in
a bit of theory, a bit of statistics, a reference to the earlier economists. It’s like no
one else’s form of argument that you can recall. (Conversation with Ronald Coase,
October 1997)
Reference
Friedland, Claire (1993) “On Stigler and Stiglerisms”. Journal of Political
Economy, 101(5): 780–783.
Acknowledgements
xxi
xxii Acknowledgements
in the general vicinity of the writer during the composition and prior
research that generates any given piece of work. Recognition is spread so
widely and thinly that the few people who provided essential assistance
get lost in the legion of acknowledged names. This defensive stance of
covering all bases has exploded the closing cinematic credits from a
few concise minutes at the end of a film to something closer to a ten to
fifteen-minute marathon that induces only masochists to sit through. So
I will dutifully restrict my thanks to those that did provide that level of
essential support.
Given this raised barrier, I am obliged to thank all the valiant con-
tributors to this volume who took the time and put in the effort to
insure a successful result. They are all listed on the contents page and
their names need not be repeated. I should also like to thank sincerely
and deeply all those who were willing to sit down and speak with me
some two decades ago. Some of those conversations are included in this
volume, but a complete list is more than appropriate. I list in chrono-
logical order, namely from first spoken to till last:
• Milton Friedman
• Rose Friedman
• Aaron Director
• Harold Demsetz
• Arnold Harberger
• Armen Alchian
• Claire Friedland
• Sam Peltzman
• Stephen Stigler
• Sherwin Rosen
• Ronald Coase
• Gary Becker
• Lester Telser
• Paul Samuelson
• Robert Solow
• James Kindahl
• Paul Sweezy
• Mark Blaug
Acknowledgements xxiii
Unfortunately, many on this list are no longer with us. Quite nat-
urally I need to acknowledge George Joseph Stigler. Without him,
this volume would have made no sense whatsoever. Lastly, I have to
deeply thank the ghost of John D. Rockefeller without whose gener-
osity the University of Chicago would have failed to exist, making a
Chicago School of economics a mere figment of someone’s disturbed
imagination.
Reference
Routh, Guy. (1975). The Origin of Economic Ideas. London: Macmillan.
Contents
A Biographical Perspective
Lapin ilmanala.
Mutta jos suvi onkin Utsjoella lyhyt, niin ovat kevät ja syksy sitäkin
lyhyemmät. Kevät saapuu myöhään, syksy varhain, ja saa melkein
sanoa, että suvi ja talvi astuvat toisensa jäljissä. Kyllä jo huhtikuussa
sattuu lauhkeampia ilmoja, mutta vasta toukokuussa purot juoksevat
pitkin tunturien rinteitä ja valavat vetensä vielä jäätyneisiin järviin ja
jokiin. Silloin saapuvat laululinnutkin ja pidetään kevään tulleen
laaksoihin, vaikka vielä on täysi talvi ylemmillä paikoilla. Tapahtuu
myös, että pieni Mantojärvi, jonka rannalla Utsjoen pappila sijaitsee,
pysyy jäässä aina heinäkuun alkuun saakka.