Today marks the thirteenth anniversary of the death of Milton Friedman. I am using this occasion to bear witness to the influence the Nobel economist had on my intellectual development as it had on the opinions of countless others. (See, for example, the testimony of my co-blogger David Henderson.)
When I was a graduate student at the University of Toronto at the turn of the 1970s, Friedman’s Capitalism and Freedom (University of Chicago Press, 1962) appeared as a suggested reading on our microeconomic theory reading list, after countless required articles. One of my classmates (who has since become a pillar of the Canadian academic establishment, if I am not confusing him with some other classmate) probably echoed the conventional wisdom among students in the Department of Political Economy when he warned me, “Don’t read that, he is a fascist.” I followed his advice, as any good leftist would.
A few years later, though, I bought and read the book with a green cover, which is still on my bookshelves. (I took a picture of it for the featured image of this post as the stock picture supplier we use has nothing for Milton Friedman!) Although I had already become rebellious towards the socialist vulgate, I remember that Capitalism and Freedom was a shock. Friedman had clearly demonstrated to me, and helped me formulate, what should have been obvious to an economist: individual liberty is on the side of capitalism, not of socialism.
READER COMMENTS
Thaomas
Nov 16 2019 at 3:26pm
I was in grad school in the mid 60’s when Friedman was very active professionally: recommending M2 quantity targeting, estimating the permanent income function and outing the Fed for its responsibility for the Great Depression (Monetary History of the US with Anna Schwartz). I think M2 targeting was not given a proper trial, but agree that PL targeting or NGDP targeting will be better. The PI hypothesis has not held up well. MHUS is still quite relevant and the lessons unlearned as the Fed allowed the Great Recession to occur. The negative income tax in the form of the EITC is our most successful welfare program; it needs to be expanded substantially; maybe it can be used to make the tax on net CO2 emissions neutral. Charter schools probably also trace their origin to Friedman.
I found C&F less convincing as Friedman did not seen to see any value to ever trading off some economic efficiency for some income distribution.
Pierre Lemieux
Nov 17 2019 at 12:14am
I would argue that Capitalism and Liberty accepted the efficiency-redistribution trade-off (although it may not have made the trade-off you want) and that it is the older Friedman who became more of a libertarian radical, for good reasons indeed. I made this point in my Regulation review of Ebenstein’s Chicagonomics.
Thaomas
Nov 19 2019 at 8:34am
Good point. I “knew” the old Friedman.
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