Milton Friedman

Milton Friedman (1912-2006) was an American economist and statistician who received the 1976 Nobel Memorial Prize in Economic Sciences for his research on consumption analysis, monetary history and theory and the complexity of stabilization policy¹. With George Stigler, Friedman was among the intellectual leaders of the Chicago school of economics, a neoclassical school of economic thought associated with the work of the faculty at the University of Chicago that rejected Keynesianism in favor of monetarism until the mid-1970s, when it turned to new classical macroeconomics heavily based on the concept of rational expectations². Several students and young professors that were recruited or mentored by Friedman at Chicago went on to become leading economists; they include Gary Becker, Robert Fogel and Robert Lucas Jr³.

Friedman's challenges to what he called "naive Keynesian theory"⁴ began with his interpretation of consumption, which tracks how consumers spend. He introduced a theory which would later become part of mainstream economics and among the first to propagate the theory of consumption smoothing⁵. During the 1960s, he became the main advocate opposing Keynesian government policies⁶, and described his approach (along with mainstream economics) as using "Keynesian language and apparatus" yet rejecting its initial conclusions². He theorized that there existed a natural rate of unemployment and argued that unemployment below this rate would cause inflation to accelerate⁷. He argued that the Phillips curve was in the long run vertical at the "natural rate" and predicted what would come to be known as stagflation. Friedman promoted a macroeconomic viewpoint known as monetarism and argued that a steady, small expansion of the money supply was the preferred policy, as compared to rapid, and unexpected changes. His ideas concerning monetary policy, taxation, privatization and deregulation influenced government policies, especially during the 1980s. His monetary theory influenced the Federal Reserve's monetary policy in response to the global financial crisis of 2007-2008⁸.

After retiring from the University of Chicago in 1977, and becoming Emeritus professor in economics in 1983, Friedman served as an advisor to Republican U.S. president Ronald Reagan and Conservative British prime minister Margaret Thatcher⁹. His political philosophy extolled the virtues of a free market economic system with minimal government intervention in social matters. He once stated that his role in eliminating conscription in the United States was his "most important accomplishment"¹⁰. In his 1962 book Capitalism and Freedom, Friedman advocated policies such as a volunteer military, freely floating exchange rates, abolition of medical licenses, a negative income tax, school vouchers¹¹ and opposition to the war on drugs and support for drug liberalization policies. His support for school choice led him to found the Friedman Foundation for Educational Choice, later renamed EdChoice.

Friedman's works cover a broad range of economic topics and public policy issues. His books and essays have had global influence, including in former communist states¹². A 2011 survey of economists commissioned by the Econ Journal Watch ranked Friedman as the second-most popular economist of the 20th century, following only John Maynard Keynes¹³. Upon his death, The Economist described him as "the most influential economist of the second half of the 20th century ... possibly of all of it"¹⁴.

This article is derived from the English Wikipedia article "Milton Friedman" as of 28 May 2024, which is released under the Creative Commons Attribution-Share-Alike License 3.0.