There can hardly be an economist of the twentieth century who is more intensely revered than Milton Friedman . It is easy to see why. He was author of A Theory of the Consumption Function (1957) and, with Anna Schwartz , A Monetary History of the United States (1963)âeach of which is a better, and more important book than most economists ever write. That is just two books. There are plenty more, and dozens of scholarly articles as well, many of which most economists would be proud to have written. But there is so often seen to be a moral force to his work as well in overturning the postwar âKeynesian â consensus and thereby promoting what came to be called the âmonetaristâ, or sometimes, âFriedmanâs monetaristâ revolution. And then there was Capitalism and Freedom (1962). That was not just a best seller, but also a book widely credited with explaining to millions the benefits of the free market. That was in due course followed by another of the same temperâFree to Choose (1980)âwhich was written with his wife, Rose Friedman , and which became the basis of a television series broadcast in many countries, and certainly a source of enormous fame for Friedman as well as giving publicity to his views.
On the other hand, it must also be true that there is no economist of the twentieth century who is more reviled. Though his standing as an economist of great importance in shaping the development of the subject is not often doubted, the proposition that he shaped it for the better certainly is. For his admirers and supporters he was not just a genius of economics, but also the intellectual powerhouse of the turning of the tide against statism and the suppression of the market, and whilst short, bald, and seemingly inconspicuous, was a hero of the cause of freedom. His detractors see something else. For them, he was a leading figure in the destruction of the postwar social democratic consensus, the principal catalyst of the abandonment of full employment policy, and the leading, one of the most vociferous, and probably the cleverest and most important, and very possibly the most cunning, counsel of rapacious global capitalism, as well as, sometimes, a charlatan. But for the cape, he appears as the Höllenzwangâs perfect Mephistophiel.
It is an extraordinary thing that a figure of such undoubted importance, and such controversial moral standing has never been the subject of a major biography, and certainly no dispassionate one. There is Ebenstein (2007) and Ruger (2013), but they hardly fit the bill. The former is full of praise for Friedman , but really does not give much of an analysis of his ideas; the latter is specifically focussed on Friedman as a proponent of freedom and that is all very well, but it is no way to get at the substance of his work, nor for that matter, more than a part of the substance of the man. Butler (1985a), âMilton Friedman â, is a more serious attempt to present Friedmanâs economics. That, though, is very much a guide to Friedmanâs economic thought as Friedman would like it to be seen. His ideas are presented; sometimes critical lines of thinking are put, and then there follows an account of Friedmanâs response, and a summing up in his favour. Its subtitle could just as well be âan explanation of why he is rightâ as âa guide to his economic thoughtâ. Then there is also Frazer (1988a, b)âtwo very large volumes which really cover only parts of his work and, as Wicker (1990) noted, are full of detail but without nearly enough critical evaluation.
Reviewing Ruger (2013) and Butler (1985b)âa very much abbreviated version of Butler (1985a)âbut also taking the opportunity to make a brief comment on Ebenstein (2007), Nelson (2012, p. 1108) said that there were plenty of pieces authored by Friedman that they did not discuss and in various ways the discussion they did offer was not up to much. The character of his remedy to that is indicated by the online draft of Nelson (book draft), âMilton Friedman and economic debate in the United States , 1932â1972â, with mention of a further book to cover the following 33 years. It appears to be a giant undertakingâsomething like 600,000 words in the first book, excluding the bibliography. That will surely offer an account of Friedmanâs work in that period which will be as full as anyone could want.
In what follows, there is obviously no pretence that I am trying to match Nelson in the pursuit of his goals. I do though share with him, if not for exactly his reasons, the view that there is a great deal of value in attending to a much wider range of Friedmanâs works than is the norm. It would have been possible for me to pick six or eight works and treat them in more detail, and to aim at giving a good picture of Friedmanâs ideas and modes of thought, and perhaps even his influence. But instead I have tried to offer a much wider account of his printed, published work than that.
I could have gone further in enquiring into the facts of Friedmanâs life, or an even wider range of his works and correspondence. The collection of his papers and various sorts of recordings at the Hoover Institution is huge; its online listing of his published works omits almost nothing. And its links to the text of, or information about how to acquire, most of those works is extraordinarily close to being complete. Full investigation of all that would be a very substantial undertaking. No doubt it would be rewarding in its way, but rather than pursue that, I have tried to identify principal themes arising mainly from his publications, but from a wide range of them.
One reason for seeking that breadth is that some of the lesser-noted works are little gems, well deserving greater noteâFriedman (1951a) on the impact of unionization on wages is one; Friedman (1969a) on the optimum quantity of money, concerning the idea that the price level should be made to fall, is probably not as well-known as it deserves to be, and there are plenty more. Another is that it serves to correct the common misperception about Friedman that his monetary economics was, if not quite the only story, very much the dominant one. Far from itâan appreciation of his importance as well as his brilliance really comes from seeing the range of issues about which he wrote, and how much there was that was nothing to do with money.
There is a further point, and perhaps a more important one which is parallel to a view that motivated much of Forder (2014). There, the thought was that if one wants to know what the great mass of economists thought, at a certain time, it was just as well to read plenty that the great mass of economists wrote, rather than just the three or four things that continued to be cited much later by those whose interests were anyway not historical. The presumption that one sees best Friedmanâs lines of thinking from a certain time by attending only to the works that continue to be cited much later raises the same issue. As I hope will become apparent, there has been much said about which works of Friedman were his most original that entirely lacks historical foundation. So if one focusses attention on those which are commonly said to be his most important, then the result must be a misrepresentation of his importance, as well as a reinforcing of that erroneous picture.
As things turn out, this wider attention brings a significant further benefit in revealing patterns of various sorts in his work. One is his habit of repeating certain messages, and rather simple ones at that. In some cases, the curiosity is just that he never sees the need to improve a story, or even change it in the light of developments. In others, there is interest in the way that later appreciations have seen such depth of thought in what is in fact just a rehash of things he had been saying in lesser-noted sources for years. There are also, though, those cases where he did change what he said, and there, against the background of repetition, there can be a special interest in them. There are other kinds of pattern too which are rarely notedâperhaps in some cases have never been noted in printâbut which do throw light on developments in his thinking, and are suggestive also about his motivations. These patterns explain much of the organization of the book.
Part 2 concerns most of his economics up to and including Friedman (1957a). In this period, one notable characteristic of his work is its variety. Although Friedman (1956a)âhis ârestatementâ of the Quantity Theory of Moneyâjust falls within it, there is otherwise relatively little of lasting importance on money. There is that little, and certainly work for Friedman and Schwartz (1963a) was underway. But as regards his publications, his work on money appears merely as one theme amongst several. It is in 1956 that this changes. Then, except for his book on consumption the following year, and work following up on it over the next few years, and a few oddities like Akerlof et al. (2002), almost all his academic writing concerned monetary economics. His monetary economics from the period starting with Friedman (1956a) is therefore the subject of Part 3.
Since his first paper was in 1935, the same year as Knight (1935), a collection of essays Friedman co-edited, the period in which he was publishing up to 1957 is just more than 20 years; and as it happens, a period about as long after that date saw almost all the rest of his serious research. Friedman and Schwartz (1982) is the only major work that falls a few years later, though most of the intellectual input to that was much earlier, before its publication was delayed. Otherwise, there is really only a thin scattering of publications after, say, 1980. Roughly speaking, then, his career as an academic economist divides into twoâin the first half he is very much a generalist, in the second, very much a monetary economist. It frustrates my picture that Friedman (1956a) and Friedman (1957a) come in the wrong order, but their chassĂ©-croisĂ© marks the change in his orientation as far as his publications are concerned.
In both periods there are further patterns. In the variety of work in the earlier period, one can often see continuous lines of thought between one item and another and between one topic area and another. That is also not a very surprising finding, of course, though it is the sort of point rarely made about Friedman . Slightly more weighty, perhaps, is that across much of this work there is also an identifiable methodological unityânot all aspects of it cover all his work, and the exceptions are interesting too, but the pattern is there. His famous essay, The methodology of positive economics, Friedman (1953b), falls in this period and although I shall say that essay is grossly over-rated, I shall also argue that a discernible methodological motivation is visible in his work. That comes properly to light only by attending to a wide range of it, but then is clearly visible and his distinctive methodology can be appreciated.
In his work on money two large booksâFriedman and Schwartz (1963a) and Friedman and Schwartz (1970) âand particularly the first, dominate the picture. But amongst the rest of this work, there are again distinct themes. There is one around the Quantity Theory, one around rules, on which Friedman (1960a) was particularly important; then one on the explanations of ongoing inflation âthe explanation, the way Friedman looked at it, that is, of why as a matter of political economy it was that the money supply was allowed to grow too fast. The vast bulk of his work again falls into clearer, and more revealing, patterns than is usually noticed.
In Part 4, I consider a range of his popular writing. The two principal booksâFriedman (1962a) and Friedman and Friedman (1980), Capitalism and Freedom, and Free to Chooseâare sometimes said to be about âpoliticsâ or the character of âfreedomâ. That is definitely a misdescription of the second, but as concerns the first, so I argue, Friedmanâs supposed analysis of the idea of freedom is far too juvenile to be taken seriously. The development of his statement of itâas one again learns from investigating much less-often read worksâdoes throw some light on his intellectual temperament, perhaps the more so when it is put alongside other instances of his telling a similar story over a succession of years. But as regards the content of it, his story about the nature of freedom is not of interest. The rest of the argument of these books, and their reception, however, certainly is of interest. His Newsweek columns, which I consider between the two books, very much repay reading, and they must be important because, since there were so many of them, they are in fact a significant aspect of his engagement with the public, particularly in the United States . Then there are other matters he considered, and others he did not consider, which deserve a little attention, before finally, I consider some of his publicly aimed responses to the inflation problem in the mid-1970s.
Before all that, though, in Part 1, I give attention to aspects of Friedmanâs biography. As elsewhere, my starting point is what he wrote. For the purposes of Part 1, much the most important source is Friedman and Friedman (1998a)âthe joint autobiography he wrote with his wife, Rose. It, of course, provides an outline of his life. My selective summary of it, along with a few other details I have thought it worth adding, provide the biographical background to the discussion of his work in the rest of this book. But more importantlyâmore interestingly too, I hope, I suggest that his book throws up some particular points of interest about the working of his mind, and to some extent his motivations. These matters and points following from them are therefore explored in the later chapters of Part 1.
In all this, it is Friedman and his thinking which are the centre of attention. I consider his ideas, and the arguments he puts, and I try to consider the context of the times in which he puts them. I also consider contemporary responses to them since they are certainly part of the picture of Friedmanâs intellectual world, and in any case, his counter-responses are often part of the story, and where there are none, that may be interesting too. Something I have tended not to do is pursue very far the question of how the arguments Friedman started ended upâthat is to say, the question of what professional consensus eventually emerged about the issues he was addressing. Although it seems to fascinate many, much of the time there would be an artificiality about that question anyway, since the relevant debates have been remoulded by later hands, and arguments over the answers to those remoulded questions are not truly arguments about the historical Milton Friedman at all. But in any case, such things would take me into territory different from that of describing and considering the arguments he made. So on the big questions of whether the velocity of money is a stable function of a small number of variables, whether the supply of money is independent of demand, fixed exchange rates are better than floating , or what the value of the marginal propensity to consume might be, with or without credit constraints, I am offering neither a very firm opinion, nor a digest of the latest literature. I have likewise not gone extensively into later historical co...