Frank Hyneman Knight was a famous American economist of the 20th century. Born in the State of Illinois, Frank graduated from Michigan College in the year 1911. During the 1920s till the 1940s Frank, in collaboration with Jacob Viner, served as the President of the Economics department in the University of Chicago. It is said that the efforts put by the Frank and Viner played an essential role in raising the status of the economics department of the university to the level where it can easily be compared to the standards of business teaching faculties in universities like Harvard and London School of Economics in United Kingdom.
The major areas of discussion that have been dealt by the topic include an introduction to the beginning years of life of Frank Knight which includes the places from where he received his early and higher education. Moreover the later parts of the essay deal with the multitude influences of Knight at various levels and fields whether they are sociological or economical platforms.
The peculiar temperament of the economist of simultaneously opposing and objecting the salient features of different ideologies and school of thoughts has also been limelighted in the discussion. Along with this another area which has been dealt in the entire discussion is the perspective of Knight on the ideology of capitalism and the loopholes and criticism he found or had about each of the other kinds of school of thought.
Lastly, the topic deals with the different contributions of Knight to the development of the Economics Department and faculty in the University of Chicago some of which has also been discussed in the earlier section of the topic but in the concluding session it deals with the legacy of Knight and his teachings as they are prevalent and exercised in the University of Chicago today.
Services and Major Works
The contribution made by Frank in the field of economics is unprecedented and cannot be made by any other economics contemporaries. Some of his works are still taught and disseminated at large in many prominent universities and business institutes that serve as a harbinger to some of the pioneering works that have been performed in the fields of economics. One of the most revolutionary and instrumental works performed by Frank during his lifetime was clarifying the distinction and difference between the terms risk and uncertainty in his theory of Risk and Uncertainty that emerged on the mainstream of financial arena in the year 1921.
With the help of outlining this difference between risk that is commonly known or referred to as the randomness in the options or alternatives available of which the probability is known or can be calculated. On the other hand the situation of uncertainty arrives when the probability of the random number of choices available is unknown or is difficult to calculate accurately.
The difference outlined by Frank is so profound and has such significant importance in the field of economics and business that it was on the basis of these two terminologies that the foundation of the law of variable proportions was laid down that serves an extremely pivotal role in the production sector of any commercial business.
While being staunchly Neoclassical in his approach, the peculiar economic ideas of Frank was a direct adoption of his professor named Herbert J. Davenport in Cornell University. Herbert who was himself a staunch advocate of the American Psychological School incorporated and abided by the ideas of people like Jevons and Wicksteed who have always been firm and rigid supporters and the pioneers of the Marginalist Theory.
The behavior of Frank has been described as peculiar as he like his professor Davenport while being stern on the economic approaches and strategies adopted or conformed by other school of thoughts also adopted and exercised some of them at the same time. Some of the examples that can be stated in for a careful assessment and analysis of the professional economic peculiarity that was instinctive of Frank’s behavior included that of Walrasians from where he self-admittingly adopted the theory of theoretical rigor and the idea of analyzing the situation of the market in multiple ways, but at the same time assailed them of lacking proper mathematical tendency.
Likewise the theory of alternative cost that was modified by Frank was actually the original product and outcome of Austrian brain work which was in the first place adopted by Frank, despite of the fact that he always expressed gratitude on the availability of such ideas that landed at his disposal, he did not wanted to show his overwhelming dependency of devising a theory on these school of thoughts and therefore used the method of criticizing them at the same time like he did to the Austrians by making their theory of capital a target of criticism.
Apart from these prominent examples similar kind of behavior was demonstrated by Knight with the Marshall school of thought from where he adopted the literary tone but also attacked the long-standing reputation of their theories on lack of rigor and real theory of cost. From the Richardians the idea of social structure and its interactive processes was influenced but the foundation of their objectivist theory was rattled simultaneously.
From the Marxist school of thought he adopted many of his ideas based on the ethical and moral criticism that were raised on the doctrine of the capitalist market ideology, but yes not violating any of his previous treatments to different school of thoughts he did not spare the Marxist school of thought also and strongly criticized and even expressed his detestation for the labor of theory that was in actuality an outcome of the efforts invested by the advocates of the Institutionalist school of thought from where he adopted the idea of social behavior and evolution but opposed their approach and perspectives on the pursuance of conventional and traditional methods and procedures.
The magazine known and entitled as Journal of Political Economy use to be one of the major and fundamental sources in the vicinity of Knight that use to provide him a readily constructed platform to voice his opinions, perceptions and perspectives on various economic, socio-economic or eco-political issues.
This magazine or journal is also significant while discussing the economic services and contributions of Knight as it was through this platform that he got involved in various kinds of penned and written debates with other famous and learned economists of his time.
From the year 1933 till 1937 he was involved in diverse debates with highly qualified economists such as Hayek and Mises on the different kinds of issue surrounding the capital theory through the platform provided by the journal. In addition to this debates were also penned on welfare theory in which Frank was at loggerhead with Pigou in the year 1924, with Hutchinson on the Keynesian and positive methodology theory in the year 1940. Economic experts and economic historians regard this quality of Knight as the most intriguing and interesting one which manifested the flawless consolidation of various instincts in his temperamental makeover.
His disposition contained features from all diverse spectrums of the economic theory in the most unblemished way possible. People close to Knight often attribute this quality of his nature to the immense and flawless control he had over all social sciences such as sociology and economics as a result of which he was able to develop a counter argument to each of the argument that was presented in front of him by a learned individual from either of these disciplines.
It was also because of this potential present in him that coerced people to develop a special paradoxical perception about him that Knight despite of being an advocate of all schools of thought and their respective ideologies is also an equally strong combatant to all of them. (Dorothy 1992)
Knight was a strong proponent of Schumpeter in many ways, but as according to his temperament he expressed his admiration for him in a very concealed and convoluted way always. A clear vindication of Knight’s admiration and advocacy of Schumpeter was first revealed in his famous work published in the year 1923 which was entitled as the Ethics of Competition.
In his work Knight for the very first time applies a rather straight forward approach in expressing his opinion about the capitalist economic system. He said that the system of capitalism does not possess the tendency to produce what people desire or want, but on the contrary the system creates the wants which are produced by it. (Ransom 2009)
Furthermore, he also expressed that the market always possess the potential of moving towards developing a monopolistic approach and that the economists that talk about the efficiency of markets were actually misguiding people because the output in such cases does have impose any direct sanguine benefit for the people or society.
Frank has always been at loggerheads with the ethical implications and the way economists and government corporations manipulate it to impose different kind of implications on the people. He was always a supporter of the reality that economy is an extremely sophisticated entity and that government intervention schemes for bailouts and stimulus packages are too simple in nature to even comprehend the complexity and complicated nature of this entire subject.
But despite of this he was also in support of a laissez-fair system in which the industry is completely insulated from all kinds of government influences and restrictions in the form of tariff imposition or monopolistic formations.
That being said he also use to say that the system of laissez-fair is advisable not because it works, but because that other alternatives at disposal if promulgated will produce much lethal and disastrous economic results in times of a downturn or a recession. If the approach of Knight especially on the system of laissez-fair is analyzed closely it will be realized that the perceptions of Knight on this has always been very different in fact poles apart from his other colleagues especially that of the Second Chicago School.
This school of thought that includes prominent names like Friedman and Stigler have always debated in the favor of the laissez fair system by advocating and praising the system by saying that the system is recommended because it is able to deliver the goods and services that people desire, has created a number of employment opportunities for people at all places from all facets of life and most importantly has provided an ordinary middle class person from a mediocre background to enjoy the benefits and amenities of an entrepreneur by making correct use of his capital by investing it at a correct place and extract maximum benefits as a result of this which will ultimately prove helpful for him to uplift his standard of living. (Emmet and Knight 1999)
However Knight has never been a hard core loyal of the system and he use to deliberately attack and argue the perceptions of his colleagues especially on the issues of denial of the implication of monopolistic opposition, the fake assumption of providing supreme sovereignty to consumers and other areas such as stable preferences and empirical-intuitive reasoning. (Bradley 2009)
Despite of all the countering and opposing opinions that Knight had in feedback to his Second School Chicago colleagues, Knight still remains an integral part of the economy of the country due to its extraordinary contributions.
Even though much of his legacy has been erased or concealed due to his differences on capitalism but his public choice view of determining political behavior still remains an active area of discussion and education in the University of Chicago. (Emmet 2009)
Despite of the unprecedented efforts that Knight contributed in the field of economics and especially American economics in providing it a unique and distinguished dimension and direction, it seems highly unfortunate to see that the economist could not acquire sufficient followers to construct his own school of thought or economic ideology that he himself looked upon as the idyllic doctrine for the financial progress and prosperity of a country.
Researchers on Knight and his works do find similarity of people like Kenneth E. Boulding, Martin Brofenbrenner and George Stigler in his works but could not carve out a reason as to why he failed to lay down the foundation of his own Knightian school of thought or ideology.