An interesting discussion going on at http://delong.typepad.com/sdj/2008/08/more-milton-fri.html It fails, I think, to distinguish between the four arguments that might be made against the establishment of the University of Chicago's Milton Friedman Institute:
The MFI will produce not good intellectual work but instead propaganda for a powerful and exploitative interest group--think of the Heritage Foundation, or Stanford's Hoover Institution. This is my objection to the MFI.
Even if the MFI follows the academic norms of scholarly discourse, such an organization is inherently an enemy of humanity: the questions that define the disciplines of classical, neoclassical, and liberal economics have answers that are oppressive, hence these disciplines should not be allowed to expand or even tolerated but repressed and suppressed. This is, I think, Herbert Marcuse's "Repressive Tolerance" risen, Dracula-like, from its coffin.
It's fine for the economists to get more slots, but only if everybody else gets more slots too. Freezing the relative sizes of disciplines is the prime objective. This is, I think, the objection of Professors Hussein Agrama, Muzaffar Alam, Yali Amit, Clifford Ando, Leora Auslander, Ralph Austen, Lauren Berlant, Michael Bourdaghs, et al..
The MFI is illegitimate for the same reasons that George Soros's Open Society Institute is illegitimate and that the Friedrich Engels Institute of Political Science that funded Karl Marx's work on Capital was illegitimate. This is, I think, Marshall Sahlins's objection.
As I understand it, the answer to (1) is that the University of Chicago is aware of the dangers, and will not establish a MFI with the freedom from norms of intellectual excellence and from academic procedural quallity checks found at Heritage and Hoover--but if it were to allow such a carve-out that would, I think, be a decisive argument that the MFI was a bad idea. I am confident that UC understands what has gone wrong with Hoover and Heritage, and guards against repeating those mistakes.
As I understand it, (3) is beneath contempt and unworthy of notice and discussion.
These leaves (2) and (4). What struck me as interesting about Marshall Sahlins is that I expected him to make the Marcuse argument (2), but instead he made (4)--expressly said that the Friedrich Engels Institute of Political Science was as illegitimate as the MFI would be, and that the arguments against the MFI were equally strong arguments against Soros's OSI. I understand (2), but I think that it is wrong. However, I genuinely do not understand (4).
 "In the interests of equity and balance, many of us feel that the University ought to reconsider contributing to the proposed Milton Friedman Institute, which will inevitably be a powerful magnet for scholars and donors who share a specific set of interests.... Still others believe that, given the influx of private contributions to the MFI, the University now has the opportunity to provide roughly equivalent resources for critical scholarly work that seeks out alternatives to recent economic, social, and political developments. Virtually all of us are distressed by the position the University has taken and by the process through which decisions have been made..."