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Aaron Director Dies at 102; Helped Fuse Economics, Law

By Adam Bernstein
Washington Post Staff Writer
Tuesday, September 14, 2004; Page B04

Aaron Director, 102, the celebrated free-market economist who helped unite the fields of law and economics and mentored several generations of scholars, died Sept. 11 at his home in Los Altos Hills, Calif. No cause of death was reported.

Mr. Director, who published sparingly, was perhaps best known for his influence on his students and colleagues at the University of Chicago Law School, including the jurists Robert H. Bork and Richard A. Posner. He also founded in 1958 the Journal of Law & Economics, which he co-edited with Nobel laureate Ronald H. Coase.

Aaron Director mentored several generations of scholars.

After a restless and often radically leftist youth, Mr. Director joined the Chicago law faculty in 1946. He became part of a clique known as the "Chicago School" of economists, which included Nobel laureate Milton Friedman, his brother-in-law. The Chicago School reached a peak of influence during the Reagan administration.

In analyzing antitrust law -- his specialty -- Mr. Director took a grim view of government control and blessed market forces. He wrote that New Deal policies harmed consumers more than helped them and spent his career trying to explain perceived monopolies from a corporation's perspective.

Mr. Director was so adamant in his beliefs that he wrote to his sister, Rose, shortly before her marriage to Friedman in 1938, "Tell him I shall not hold his very strong New Deal leanings -- authoritarian to use an abusive term -- against him."

Later Friedman, who became an icon of conservative economic thought, jokingly introduced Mr. Director as "my radical brother-in-law."

Mr. Director was born in 1901 in what is now Ukraine. His father worked in a family-owned flour mill, and when the business floundered, he took his family to Portland, Ore., where other relatives had settled, and opened a retail store.

In high school, Mr. Director edited the school yearbook and planned on becoming a newspaper editor. On a scholarship, he and classmate Mark Rothko, the painter, went to Yale University. With Rothko, he published a weekly newspaper, the Saturday Evening Pest, which promised to explore issues of dire consequence. It added: "If vested interests or respectable people do not put an end to us, nought shall escape us."

Mr. Director finished Yale in three years and worked his way around the world as a day laborer in coal mines and textile mills. He took a cattle boat to England.

He returned to Oregon to teach labor history at Portland Labor College before enrolling for graduate work at the University of Chicago. There, he studied under Paul H. Douglas, the future U.S. senator with whom he wrote "The Problem of Unemployment" (1931).

Douglas, issuing faint praise, called his assistant a "keen fellow" who was "thoroughly competent on the whole."

His most influential teacher at Chicago was Jacob Viner, who soon prevailed on Mr. Director to dispense with his socialist beliefs and focus on price theory.

He continued his apprenticeship in academia and government, including several stints in Washington. He worked with Viner on a study of the Bank of England, which exposed him to the leading British thinkers of the day. At night he honed a reputation as a polished raconteur.

Although his writing output was slim, it was significant. He wrote a review of Friedrich A. Hayek's "The Road to Serfdom," which had a British publisher but had been turned down for publication in America. Mr. Director urged the University of Chicago to publish what would become a landmark paean to free markets by a future Nobel laureate. The book sold more than 200,000 copies and precipitated Mr. Director's own long-held wish to join the faculty at his alma mater.

Along with his friend Chicago economist Henry Simons, he became a key and early proponent of bringing economic thought to legal questions, particularly antitrust matters.

At a panel discussion at the University of Chicago in 1950, he argued a stringently pro-business line to reduce taxes on large corporations and eliminate tariff protections.

"There is room neither for subsidies to individual economic activities or for price fixing of particular products," he said. "Monopolistic determination of wages is in no sense different from monopolistic fixing of enterprises. If they are not to be trusted with governing industry, neither are unions."

In a published item, he also noted that intellectuals, who were opposed to free markets in goods and services, advocated a free market of ideas. He reasoned that libertarians on free speech issues should also foster the free market.

In the 1950s, Mr. Director taught an immensely popular course with Edward H. Levi, the Chicago law school dean who later became U.S. attorney general. Levi taught the class four days a week with extensive legal reasoning only to have Mr. Director dismiss the teachings as "nonsense."

Bork once said: "One of the pleasures of [the course] was to watch Ed agonizing as these cases that he had always believed in were systematically turned into incoherent statements."

Mr. Director held informal gatherings to discuss product-tying arrangements, resale price maintenance, predatory pricing and vertical arrangement between manufacturers and distributors.

He had his students review old U.S. Supreme Court cases that appeared on the surface to be monopolies, pure violations of antitrust law. Mr. Director liked to give non-monopoly explanations for such behavior.

Mr. Director retired from Chicago in 1965 and worked at Stanford University Law School and the Hoover Institution. He eventually returned to Chicago to teach an antitrust course with Posner, who said in a statement yesterday that Mr. Director "played a fundamental role in reorienting antitrust policy along free-market lines."

Survivors include his sister.

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