the Chicago School is usually taken to refer to economics, it has been
influential, and under the same label, in American legal thinking. In economics
the Chicago School ismonetarist, and close to the ideas of its most famous
European exponent,Hayek, though in the USA it is associated mainly with
the names of Milton Friedman (1912–) and George Stigler (1911–91). The
essence of the economic theory is thatfiscal policyshould not be used to try
to manage demand as a method of economic control. Instead manipulation of
themoney supplyshould be the only economic strategy, and, more impor-
tantly, economic policy should be as non-interventionist as possible. The
Chicago School is basically a modernization of the traditional ‘perfect com-
petition’ model of economics, in which economic equilibrium will automa-
tically arise, over the long term, from the invisible forces of market
competition.
In the legal field, the Chicago School refers to an approach in which several
areas of law, and above all liability (tort) law, requires an economic cost-
efficiency analysis. Thus the damages set by a court for personal injury, to take
one example, should be seen as equivalent to insurance policy costs. Similarly
breach of contract cases should be analysed in terms of rational expectations.
This sort of approach strips civil law of any moral element—damages ought
not to reflect social disapproval of breaking promises or doing injury, but aim
only at restoring the economic balance that existed before the contractual
breach or tort happened. Just as the Chicago School’s economists are seen as
right wing, its judges and lawyers are also usually on the right.
Chilling Effect
Chilling effect is a term originally devised by American constitutional lawyers
to describe the hidden impact a particular law or constitutional doctrine may
have, over and above its evident impact in the courts. In other words, the mere
knowledge that aconstitutional courtmay decide a future case in a certain
way either inhibits people from even trying to do something, or in some other
way restricts how free they feel to act. For example, a recent change in English
constitutional law, by which the courts announced that they would look at
the parliamentary record to help interpret obscure legislation, has been argued
to have a chilling effect on how frank government spokespeople will be in
parliamentary debates, lest a future court hold them to their words.
Chilling effects are at their most powerful during any period of legal
uncertainty. For example, since the newHuman Rights Actcame into force
in October 2000 (May 1999 in Scotland) many British institutions have been
anxiously rewriting internal disciplinary procedures. The Act, as yet, remains
largely uninterpreted by the courts and may turn out to have wide implica-
tions. More generally, the theory of thejudicialization of politicsin some
Chilling Effect