ABOUT THIS BOOK

An essential origin story of modern society’s most influential economic doctrine.

The Chicago School of economic thought has been subject to endless generalizations—and mischaracterizations—in contemporary debate. What is often portrayed as a monolithic obsession with markets is, in fact, a nuanced set of economic theories born from decades of research and debate. The Monetarists is a deeply researched history of the monetary policies—and personalities—that codified the Chicago School of monetary thought from the 1930s through the 1960s. These policies can be characterized broadly as monetarism: the belief that prices and interest rates can be kept stable by controlling the amount of money in circulation.

As economist George S. Tavlas makes clear, these ideas were more than just the legacy of Milton Friedman; they were a tradition in theory brought forth by a crucible of minds and debates throughout campus. Through unprecedented mining of archival material, The Monetarists offers the first complete history of one of the twentieth century’s most formative intellectual periods and places. It promises to elevate our understanding of this doctrine and its origins for generations to come.

AUTHOR BIOGRAPHY

George S. Tavlas is alternate to the governor of the Bank of Greece for the European Central Bank Governing Council and distinguished visiting fellow at the Hoover Institution of Stanford University. His previously held positions include division chief at the International Monetary Fund, senior economist at the US Department of State, and advisor to both the World Bank and the Organization of Economic Cooperation and Development.

REVIEWS

“In this pathbreaking book, George Tavlas lays out the history of the Chicago monetary tradition from the classical economists to Frank Knight, Jacob Viner, Paul Douglas, Henry Simons and Lloyd Mints to Milton Friedman. This book sets the record straight on all the debates that have raged on the subject. It will set the standard for research on the key deep origins of modern monetary policy.”

— Michael Bordo | Rutgers University

“Tavlas provides a fascinating intellectual history of the monetarist tradition at the University of Chicago. It successfully debunks some prior simplistic characterizations and instead offers a deep probe with nuances and complexities along with some common threads of thought. Within this backdrop, Milton Friedman’s contributions to monetary economics are seen to have both emerged from and modified the perspectives of his intellectual predecessors."

— Lars Peter Hansen | recipient of the 2013 Nobel Memorial Prize in Economics | University of Chicago

“Determined scholar George Tavlas unearths the secrets of how the Chicago School molded Milton Friedman’s thinking, bringing free markets and monetarism to prominence in world affairs. His story is a must-read for understanding history.”

— William L. Silber | New York University

“George Tavlas provides a fascinating, fresh, and highly policy-relevant look at the monetary tradition at the University of Chicago over three crucial decades. He uses facts and draws on unpublished sources to challenge well-known economic interpretations, focus on key monetary policy proposals, show that monetarism is dynamic, and demonstrate how Milton Friedman did not invent monetarism, but rather developed it out of a beautiful Chicago tradition.”

— John B. Taylor | Stanford University

"This book presents a fascinating and well-documented discussion of the origins and development of the economics of monetarism and its roots in Chicago economics. Tavlas dissects the tangled history of monetarist ideas and their origins as solutions to policy problems predating even the Great Depression. A rich account of the development of central ideas and the role of many economists in forming monetarist thought, this is an important study of a body of ideas that shaped, and continue to shape, the field of economics."

— James Heckman | recipient of the 2000 Nobel Memorial Prize in Economics | University of Chicago

"[The Monetarists] should be of keenest interest to historians of economic thought and to monetary historians, for whom the careful detail, thorough citations of primary sources, and attention to the work of even the less commonly celebrated Chicagoans, will be most appreciated."

— Journal of Economic Literature

"You may wonder whether reading a book about a 50-year old academic dispute is worth it. Well, the book amply repays the effort. . . .Tavlas's book is interesting and illuminating throughout and warmly recommended."

— Financial World

"This is a magnum opus on the evolution of the monetary economics of the group of economists who were at the University of Chicago from the early to mid-twentieth century. . . . Tavlas has done an outstanding job of sorting out the intricacies of the evolution of monetarism and his book is not only a definitive history of Chicago monetarist thought, it brings out its relevance for contemporary issues."

— Business Economics

"In this superb book, George Tavlas provides a detailed chronological history of the Chicago school of monetary economics from its start in the late 1920s through the work of Milton Friedman in the 1950s and ’60s. . . . George Tavlas has written the definitive history of the Chicago monetarists. He deserves a round of applause from historians of economic thought."

— Hugh Rockoff, Journal of the History of Economic Thought

"This a book for specialists, especially those interested in the development of the monetary theories and policies that have emanated from economists at the University of Chicago since the late 1920s. . . . its clarity of organization and simplicity make it an easy read. . . .Tavlas demonstrates that there was always a distinct Chicago view, though it shifted through time."

— Economic Affairs

"[The Monetarists] is well told and challenges readers to reconsider what they think they know about monetary economics at the University of Chicago, calling into question familiar labels associated with twentieth century economics. George Tavlas teases out complexities in the history of Chicago monetary economics that are obscured by common labels, and upsets tenets of what has been considered settled historical knowledge."

— History of Economic Ideas

TABLE OF CONTENTS

Preface

Acknowledgments

Chapter 1. The Light in the Secret Shrine

Chapter 2. The Group

Chapter 3. Controversies

Chapter 4. The “Chicago Plan”: Doctrinal Aspects

Chapter 5. Into the Academic Wilderness

Chapter 6. The Resistance

Chapter 7. The Counterattack

Chapter 8. The Monetarists

Chapter 9. Summary and Conclusions

Notes

References

Index

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