The tradition in twentieth-century economics associated with the University of Chicago, emphasizeng price theory as the universal analytical tool, monetary policy as the central macroeconomic lever, competitive markets as a robust default, and empirical testing as the arbiter of theory.
Its defining figures worked outward from a common method. Milton Friedman rebuilt macroeconomics around money, arguing with Anna Schwartz in A Monetary History of the United States (1963) that the Depression was a failure of the Federal Reserve rather than of markets, and reviving the quantity theory against the Keynesian consensus. George Stigler applied price theory to information and to regulation, developing the capture thesis that regulators come to serve the industries they oversee. Gary Becker extended economic reasoning into crime, discrimination, marriage and fertility. Ronald Coase reframed externalities around transaction costs and, with Posner, founded law and economics.
It shares classical liberal commitments with the Austrian school but almost nothing methodologically: where Austrians reject formal modeling and aggregate data, Chicago made econometric testing definitive. That difference produced real disagreements about business cycles, monetary rules and whether equilibrium analysis captures anything real.
Its policy influence in the 1970s and 1980s was enormous, shaping monetarism, deregulation and market-oriented reform across the Western world, and its association with the Pinochet-era Chilean reforms remains the most contested episode in its history. The financial crisis of 2008 damaged the efficient-markets strand badly, and the modern department is substantially more empirical and less doctrinally unified than the school's reputation suggests — behavioral economics, which cuts against several Chicago priors, is now itself partly a Chicago product.