capitalism

492 Stigler, George J. (1911–1991)
other industries. They point out that private systems of arbitration,
justice, and defense already exist and that history is
replete with examples of these private institutions before the
rise of the modern national state. In summary, their ideal,
regardless of whether it is reachable, is a contractual society
based on voluntarism.
See also Anarchism; Anarcho-Capitalism; Hobbes, Thomas;
Minimal State; Nozick, Robert
Further Readings
PDA
Friedman, David. The Machinery of Freedom: Guide to a Radical
Capitalism. La Salle, IL: Open Court, 1989.
Hampton, Jean. Hobbes and the Social Contract Tradition.
Cambridge and New York: Cambridge University Press, 1988.
Hayek, Friedrich August von. The Road to Serfdom. Chicago:
University of Chicago Press, 1994.
Higgs, Robert. Crisis and Leviathan: Critical Episodes in the
Growth of American Government. New York: Oxford University
Press, 1987.
Mises, Ludwig von. Omnipotent Government: The Rise of the Total
State and Total War. New Rochelle, NY: Arlington House, 1969.
Nozick, Robert. Anarchy, State, and Utopia. New York: Basic
Books, 1974.
Oppenheimer, Franz. The State. New York: Free Life Editions, 1975.
Rand, Ayn. Capitalism, the Unknown Ideal. New York: New
American Library, 1966.
Rothbard, Murray N. For a New Liberty: The Libertarian Manifesto.
Lanham, MD: University Press of America, 1978.
Schmidtz, David. “Justifying the State.” Ethics 101 (October 1990):
89–102.
STIGLER, GEORGE J.
(1911–1991)
George J. Stigler was one of the central figures of the
Chicago School of Economics. He was awarded the Nobel
Prize in 1982 for “his seminal studies of industrial structures,
functioning of markets and causes and effects of public
regulation.”
Stigler was born and raised near Seattle. He earned his
undergraduate degree from the University of Washington
and then moved to Northwestern University, where he
received his MBA. In 1933, he enrolled in a PhD program
in economics at the University of Chicago and studied
under the three scholars most closely identified with what
some have called the “first” Chicago School of Economics:
Henry Simons, Jacob Viner, and Frank Knight. Stigler
wrote his dissertation on the history of economic thought
under Knight and was awarded his doctoral degree in 1938.
He also was influenced by Viner’s neoclassical approach to
microeconomic questions, an approach that Stigler would
use profitably throughout his career. At Chicago, Stigler
became lifelong friends with two fellow graduate students,
Milton Friedman and W. Allen Wallis.
Stigler’s first teaching position was at Iowa State. He
moved from there to Minnesota and then Brown, before
settling at Columbia from 1947 to 1958. In 1958, Stigler
returned to Chicago, where he rejoined his old friends
Friedman and Wallis and where he would spend the rest of
his life.
Stigler’s belief in the power of markets to solve social
problems—and the often negative consequences of government
intervention—can be seen in two of his earliest publications.
In 1945, he examined the effects of the minimum
wage in a paper published in the American Economic
Review, arguing that it does little to alleviate poverty and
distorts the allocation of resources. The following year, in
Roofs or Ceilings? The Current Housing Problem, Stigler
and Friedman critiqued the policy of rent control, arguing
that it led to shortages in the housing supply and higher
prices for most consumers. The pamphlet was published by
the newly founded Foundation for Economic Education,
which would become one of the libertarian movement’s
most venerable institutions. In 1947, Stigler traveled to
Europe with Friedman and Aaron Director, Friedman’s
brother-in-law and one of the early leaders in the economic
study of the law, to attend the inaugural meeting of the
Mont Pelerin Society. Stigler would serve as president of
the society from 1976 to 1978.
After Stigler returned to Chicago for good in 1958, he
and Friedman became the almost universally acknowledged
leaders of what has been called the “second”
Chicago School of Economics, which also would count
Gary Becker, Robert Lucas, Ronald Coase, Harold
Demsetz, Arnold Harberger, Sherwin Rosen, and Sam
Peltzman, among others, as its members. Many of these
economists would hold positions in multiple departments in
the university, including the Law School, the Graduate
School of Business, and the Department of Sociology. In
addition, within the Graduate School of Business, a distinguished
group of financial economists, including Merton
Miller, James Lorie, and Eugene Fama, made their mark on
the profession. It also is true that the Chicago School of
Economics extended beyond the physical domain of the
university. Economists trained at Chicago or sympathetic to
the Chicago tradition would help to shape the direction of
the economics departments at the University of Rochester
(where Wallis would eventually become president), the
University of California at Los Angeles, and the University
of Minnesota.
Stigler’s contributions to economic theory were
numerous and wide ranging. His textbook on price theory,
built on the insights he had learned from Viner, would
help define the way Chicago School economists tackled