Did the Chicago School Reject Frank Knight? Assessing Frank Knight's Place in the Chicago Economics Tradition

Two stories currently circulate regarding Frank Knight's relationship to the Chicago School of Economics. The first is a story of tradition, emphasizing the continuity of Chicago economics; the other emphasizes the new beginnings in the post-war period. The second story even implies that the Chicago approach rejected Knight's views. In order to assess these stories, the paper examines the grounds on which Knight's relationship with the Chicago School can be evaluated. The conclusion is that the Chicago School can be said to owe everything, and nothing, to Knight. Without his initiation of teaching price theory and persistence in defending it, there would be no Chicago tradition. Yet the methodological approach and research infrastructure which propelled the Chicago School to a central position in the economics profession owe little or nothing to him. In fact, the two central methodological principles of Chicago economics - Friedman's principle of positive economics, and the Stigler/Becker de gustibus principle - combine to deny the pluralism Knight advocated for social science in a liberal democracy