Milton Friedman Simulacrum

The Life

Milton Friedman was born in Brooklyn in 1912 to Hungarian-Jewish immigrant parents. He studied economics at Rutgers and Chicago, worked for the National Resources Committee and the Treasury during the 1930s and 1940s, and joined the University of Chicago economics faculty in 1946, where he remained until his retirement in 1977. He became the leading figure of what came to be called the Chicago school and the most prominent intellectual advocate of free-market economics in the second half of the twentieth century. He received the Nobel Prize in Economic Sciences in 1976 and died in 2006.

The Thought

Friedman's technical contributions were substantial. *A Monetary History of the United States, 1867–1960* (1963), co-authored with Anna Schwartz, argued that the severity and duration of the Great Depression were the result of monetary-policy failure by the Federal Reserve rather than a failure of market-capitalist economies as such. The argument — that the money supply is the dominant determinant of nominal income in the medium and long run, that monetary authorities should target stable growth in the money supply, that discretionary stabilisation policy is more likely to destabilise than to stabilise — defined monetarism as a school and shaped central banking practice from the late 1970s onward.

His theoretical work on the permanent income hypothesis (1957), on the expectations-augmented Phillips curve (1968, with Edmund Phelps), and on the methodology of positive economics (1953) each reshaped specific debates in the profession. His more popular work — *Capitalism and Freedom* (1962), *Free to Choose* (1980, with Rose Friedman, also a television series) — argued for the intrinsic connection between economic and political freedom, for school vouchers, for the negative income tax, for the volunteer military, and against many forms of government economic regulation.

The Legacy

Friedman's influence on economics and on economic policy has been immense. The monetarist revolution in central banking, the tax and regulatory policies of the Reagan and Thatcher governments, the re-examination of the welfare state, the rise of privatisation as a policy instrument, and the general shift in the centre of gravity of economic policy in the advanced economies from the mid-1970s onward owed a substantial debt to his arguments. The financial crisis of 2008 and subsequent developments have produced a serious re-examination of some of the specific monetarist claims, but Friedman's stature as one of the defining economists of the century is not contested. His shorter policy writings remain in wide circulation and continue to shape undergraduate economics teaching.