Milton Friedman's Contribution
Milton Friedman died today at the age of 94. His passing is a milestone. Friedman stood out as a leading figure in the fight for limited government and personal freedom in the mid twentieth century.
Of course, libertarianism has in some ways developed beyond the writings of Friedman. Today many libertarians advocate privatization beyond what Friedman envisioned. Yet Friedman stood against numerous efforts to expand government, and drew attention to the moral and practical arguments for liberty. He often acknowledged the great contribution of Mises and the Austrian School even as he disagreed with many important issues of method, money, and more--yet even here he caused us to strengthen our arguments. Friedman's intellectual accomplishments were most impressive. He led the movement against Keynesian economics for decades. His arguments against Keynesian economics changed professional opinion for the better. The permanent income hypothesis reintroduced the idea of time preference into economics. Friedman argued that people consider lifetime or permanent income, rather than current income, when deciding upon current consumption. Friedman also argued that 'long and variable lags' would confound Keynesian efforts to fine tune the economy. Friedman also convinced most economists that faulty monetary policy was at least partially responsible for the initial phase of the Great Depression. While Friedman advocated limiting the discretionary powers of Federal Reserve authorities, he also saw that free banking (as advocated by Austrian economist Larry White) could work even better. Last but not least, Friedman overturned the faulty idea ideas of static expectations and the 'Philips Curve' trade off between output and unemployment.
Friedman also worked to re-popularize price theory in economics. Friedman entered the economics profession at the time when Keynesian macroeconomics had attained a dominant position. Friedman insisted upon the microeconomic approach. Friedman's price theory class at the University of Chicago has a legendary reputation. I was once told that after Friedman taught this class the first time, all UC grad students who had taken this class previously were required (by Frank Knight) to retake this class with Friedman.
Friedman's influence extended beyond the economics profession. Friedman's books Capitalism and Freedom and Free to Choose reached a broad audience. While there is no method of measuring the influence of books exactly, these books surely did much to sway public opinion.
Milton Friedman led a remarkable life. Early in life he saw capitalism come under grave threats, both by Keynesian interventionism and Marxism. Latter in life he witnessed the retreat of Keynesians and the collapse of Bolshevik Marxism. Of course, many people lived to see these events, but unlike most Friedman played a major role in countering these threats to capitalism and freedom. While others will continue to defend capitalism and advance the cause of individual liberty, few will do it as effectively as Milton Friedman.