Two trajectories of democratic capitalism in the post-war Chicago school: Frank Knight versus Aaron Director

robert van horn ; ross b. emmett;

The Chicago school of economics has long emphasised the efficiency of decision
makers in a competitive economic order in comparison to those in a democratic
political order. The purpose of our article is to show that this emphasis emerged
from two different re-conceptualisations of liberal democracy by Chicago economists
during the post-war period The first was Frank H. Knight�s enquiry into
whether rational norms for intelligent democratic action provided the means to
avoid the failures of liberalism that had become so apparent through the upheavals
of the first several decades of the twentieth century. The second came from Aaron
Director, who concluded instead that democratic action was inherently irrational
and disputatious, and that the efficiency of actions undertaken with the context of
the competitive order was to be preferred. Knight argued that an appreciation for
competition must be accompanied by recognition of the equally fundamental roles
of democratic discussion and ethics, whilst Director asserted the fundamental role
of competition in the economic realm and its import for freedom.