Refers generally to sub-branch of the “law and economics” movement in legal analysis that strongly favors free market policies, many of whose most prominent members or supporters are or were based at the University of Chicago business and law schools, including Nobel Prize winners Milton Friedman, George Stigler and Ronald Coase, as well as U.S. federal appellate judges Richard Posner and Frank Easterbrook. In Europe “Chicago School” is often inaccurately used to refer to all legal theorists who support “law and economics” type analysis as opposed to just the strongly free market wing of the movement.
One critique of the Chicago School is that many of its arguments and theories advance the proposition that if something is economically irrational, it need not be prohibited because people, being ‘rational actors,’ will not do it. This is described as akin to denying the existence of roulette games in casinos because, as a mathematical certainty, players will ultimately lose to the house (i.e., the casino) – and therefore there should be no players. Casinos still exist, and still have roulette, slot machines and other games of pure-chance arranged to mathematically favour the house, which sufficient ‘punters’ play and lose at, as to be highly profitable to the casino.