When there is no obvious solution to a particular problem, the recommended course was to extend the Neoclassical paradigm by incorporating new concepts into it that would make the subject matter amenable to economic analysis" ("The Chicago School," 2006, the New School) Recessions are short-term pain that can cause long-term gain, provided people 'wait them out' and provided the government has a minimal role in the economy, except to stabilize the monetary supply. The Chicago School is based in a belief that people are rational beings and are very good at working out what is in their best long-term interest, unlike Keynesian theory that proposes that short-term personal decisions like hoarding may seem rational but could actually be irrational in the 'macro' scheme of things. (Klemens, 2003: 2). The Chicago School economists were later accused of economic imperialism in their advice to the World Bank and International Monetary Fund. For example, the IMF's Structural Adjustment Programs (SAPs) were loans to developing nations that required lending nations to cut their budget deficits, shrink the size and involvement of the government in people's daily lives, reduce social welfare programs, and drop trade...

Likewise, the World Bank funded development projects according to Chicago School theories but some projects were deemed environmentally destructive or sociologically destructive because of the Chicago 'the market knows best' imposed paradigm (Klemens, 2003: 5). For example, when making 'rational choices' in the short-term, the long-term heath of the environment often is of little concern to developing nations, even though it may impact human life years in the future.
Works Cited

Blinder, Alan. (1999). "Keynesian Economics." The Concise Encyclopedia of Economics. Retrieved 7 Feb 2007 at http://www.econlib.org/library/Enc/KeynesianEconomics.html

The Chicago School." (2006). The New School: CEPA. Retrieved 7 Feb 2007 at http://cepa.newschool.edu/het/schools/chicago.htm

Klemens, Ben (25 Mar 2003). "A brief guide to the World Bank, IMF, and WTO." Retrieved 7 Feb 2007 at http://ben.klemens.org/bretton_woods.pdf