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Friedman, Milton

Friedman, Milton 1912-2006

CONSUMPTION AND UTILITY

QUANTITY THEORY OF MONEY

NATURAL RATE OF UNEMPLOYMENT

MONEY GROWTH RULE

INFLUENCE AND CRITICAL REACTIONS

BIBLIOGRAPHY

Milton Friedman is best known for his influential contributions to monetary macroeconomics and for his strong advocacy of the role of free markets in solving social problems. The son of poor Jewish immigrants in New York City, Friedman was educated under a scholarship at Rutgers University, where his main influences were Arthur F. Burns and Homer Jones. Upon graduation in 1932 with a joint major in economics and mathematics, he was offered a tuition scholarship in economics at the University of Chicago, where he was a student of Frank Knight and Jacob Viner, among others. After an academic year in Chicago, Friedman received a fellowship to move to Columbia University, where he was taught by Harold Hotelling and Wesley C. Mitchell. In his third year as a graduate student he returned to Chicago as research assistant to Henry Schultz. Apart from an academic year as visiting professor at the University of Wisconsin (19401941), between 1935 and 1945 Friedman worked in Washington, D.C., and New York for the National Resources Institute (19351937), the National Bureau of Economic Research (NBER, 19371940), the Treasury Department (19411943), and the War Research Division of Columbia University (19431945). His Columbia doctoral dissertation was concluded at the NBER by 1940 as part of collaboration with Simon Kuznets on incomes from independent professional practice. However, its publication and Friedmans PhD were delayed until 1945 and 1946, respectively, because of a controversial result about the effect of monopoly powers on physicians income. After a year as associate professor at the University of Minnesota, Friedman joined the faculty at the University of Chicago in 1946, replacing Viner as professor of economic theory. He became full professor in 1948, the same year he rejoined the NBER to carry out (together with Anna Schwartz) study of monetary factors in business cycles, a project that culminated with the Friedman-Schwartz 1982 volume Monetary Trends in the United States and the United Kingdom. Friedman continued to teach at Chicago until 1977, when he took up a position as senior research fellow at the Hoover Institution at Stanford University. In 1951 he received from the American Economic Association the John Bates Clark Medal, and in 1976 was awarded the Nobel Memorial Prize in economics.

CONSUMPTION AND UTILITY

Friedmans early contributions grew out of his statistical research of incomes and consumer expenditures carried out in the 1930s; these include the development in 1937 of a nonparametric significance test for ranked data, and the research that led to his 1945 book with Kuznets. That book introduced the concepts of permanent and transitory income, which would be the focal point of Friedmans 1957 econometric exercise in the Theory of Consumption Function. Friedmans hypothesis that permanent aggregate consumption is a function of permanent (in the sense of long-term expected) income was a solution to Kuznetss empirical findings that, contrary to prevailing Keynesian models at the time, the average propensity to consume does not decline with rising income. The permanent income hypothesis has had a profound impact on empirical work on the consumption function and other fields, despite its implicit treatment of lifetime as infinite, which makes it unsuitable to deal with optimization over the expected life of the economic agent. It was a crucial element of Friedmans overall attack on Keynesian economics because it implied (1) strong criticism of the so-called Keynes-Hansen secular stagnation thesis (which depends on the assumption of a rising saving-income ratio); (2) rejection of Keynesian unemployment equilibrium, on the basis of the introduction of wealth into the consumption function and by that of the positive effect of price reduction on consumers expenditure; and (3) dismissal of the assumption that consumption is a stable function of current income, which undermined the stability of the Keynesian multiplier. Another important contribution by Friedman to the pure theory of statistics and decision-making was his 1948 essay (with Leonard Savage) on the implications of the von Neumann-Morgenstern cardinal utility function for risky choices, which influenced the development of portfolio selection theory. Friedman and Savage showed that choice under uncertainty could be represented by a process of maximizing expected utility, which allowed them to explain the simultaneous practice of gamble and insurance under some assumptions.

QUANTITY THEORY OF MONEY

Although monetary theory and policy had attracted Friedmans attention since his discussion of the inflationary gap at the Treasury Department in the early 1940s, it was only after the 1950s that money became the main topic of his research agenda, especially with the start of the Chicago Workshop on Money and Banking, set up by him in 1951. The first product of that workshop was the 1956 volume of Studies in the Quantity Theory of Money, edited by Friedman. The book opened with his restatement of the quantity theory as a proposition about the empirical stability of the demand for real money balances in relation to a few arguments, including income. Friedmans claim that his approach to money demandas the outcome of the agents portfolio decision about how to allocate their wealth among alternative assetswas in tune with the Chicago quantity theory tradition was challenged, however, by Don Patinkin and other commentators. In any event, Friedmans point that the velocity of circulation of money is determined mainly by changes in real income represented an alternative to the prevailing Keynesian income-expenditure mechanism based on the stability of the investment multiplier. It led to Friedmans proposition that substantial changes in prices or nominal incomes are the result of changes in the nominal supply of money. The empirical investigation of that claim was the object of Friedman and Schwartzs Monetary History (1963), the first of their books for the NBER. That book is the most important contribution to the monetarist approach to the business cycle, and it followed the NBER founder Wesley Mitchells practice of extracting cycles and trends from detailed time series. It is also congruent with Friedmans emphasis on testing the empirical implications of theories, worked out in his influential 1953 essay on the methodology of positive economics. Friedman and Schwartz examined individual episodes in U.S. monetary history to establish the determining causal influence of changes in money stock on prices and economic activity.

In particular, they put forward an explanation of the Great Depression (19291933), alternative to the Keynesian one, as the consequence of inept policy responses by the Federal Reserve to the contraction in money supply brought about by bank failures and rising currency/deposit and reserve/deposit ratios.

NATURAL RATE OF UNEMPLOYMENT

Apart from the primacy of exogenous monetary impulses, another main element of Friedmans monetary economics is the stress on the role of expectations in the transmission of monetary changes to nominal and real variables. Although the theme of expectations already could be found in his writings in the 1950s and early 1960s, it was only after his 1967 seminal presidential address to the American Economic Association that the distinction between expected and unexpected values of variables became prominent. Friedman argued that the trade-off between inflation and unemployment measured by the traditional Phillips curve is a temporary phenomenon that disappears in the long run, once inflation becomes anticipated by economic agents (1968). Friedman coined the phrase natural rate of unemployment to express the notion that monetary authorities are only able to keep the current unemployment rate below its long-term equilibrium level if inflation is acceleratingthe natural rate is the rate of unemployment (determined by real factors such as labor mobility, etc.) at which inflation is nonaccelerating and agents expectations about the value of real variables (such as real wages) are fulfilled. In contrast with his other contributions to monetary economics, the natural rate of unemployment hypothesis was not subjected to empirical testing by Friedman, in part because his definition of the concept is not fully operational, as argued by Frank Hahn and others. As it happens, some key elements of Friedmans 1967 address could be found already in David Champernownes 1936 critical reactions to J. M. Keyness General Theory. The real wage rate that workers would demand if they forecast future prices correctly was called the basic real wage by Champernowne, and the corresponding unemployment level was termed the basic unemployment rate, just like Friedmans natural rate. According to Champernowne, the rate of price change will accelerate if actual unemployment differs from its basic value, which will bring it back to its long-run value through the effect of inflation (or deflation) acceleration on the setting of the interest rate by monetary authorities.

MONEY GROWTH RULE

The implications of Friedmans theoretical and empirical monetary studies for the operation of monetary policy were worked out in his 1959 Program for Monetary Stability and in essays collected in 1969. One of his main empirical findings was that monetary changes affect output and prices with a long, variable, and unpredictable lag; this is behind his skepticism of the stabilizing role of discretionary monetary policy. Instead, Friedman arguedcoherently with the Chicago tradition of Henry Simons and othersfor a fixed rule to expand the money supply by a constant and known annual percentage. As Friedman was aware, such a rule could only be implemented with a system of flexible exchange rates, which had been advocated by him since the early 1950s on the grounds that flexible rates would lead to a more efficient process of adjustment of the balance of payments. At first, Friedman suggested that the rate of growth of money supply should aim at the stabilization of the price level (around 4%), but he later claimed that, from a purely economic-welfare perspective, the optimal money stock should grow at such a rate (around 2%) to bring about a rate of deflation equal to the rate of return of real capital. This would mean, in long-run equilibrium, that the private marginal cost of holding real cash balances (the nominal rate of interest) is the same as its social marginal cost (zero), a Pareto optimum situation. Whereas Friedmans notion of an optimum money supply was primarily of theoretical interest, his more general pointthat the main feature of the money growth rule is not the growth rate itself but the adoption of some fixed rate that would produce some known and steady moderate inflation or deflationhas influenced central banks, especially in the monetarist experiments carried out between 1979 and 1982 in the United States and during Margaret Thatchers premiership in the United Kingdom. Those experiments and their results were highly contended, however, as a result of the instability of the demand for money following financial deregulation and the weak link between money growth and inflation in the 1980s. Moreover, the publication of Friedmans last important work on money at about that time (Friedman and Schwartz 1982) raised strong criticism of their empirical analysis of the relation between money, income, and prices in the United Kingdom (Hendry and Ericsson 1991).

INFLUENCE AND CRITICAL REACTIONS

Despite the intense controversies that surrounded Friedmans monetary economics in the 1960s and 1970sespecially the criticism by James Tobin and others that he had not succeeded in specifying the mechanism of transmission from money to output and prices (Gordon 1974)it is true that many of his propositions became by the end of the twentieth century part and parcel of macroeconomic theory and policy, even if they are not always explicitly associated with his name. These include the notion that monetary policy should target nominal quantities (such as inflation) instead of output and employment, as well as the view that it is usually a more potent tool for economic stabilization than fiscal policy. It is worth noting that although Friedmans emphasis on the role of the market and limits to state intervention in the economy, plus his rejection of activist macroeonomic policies, are shared with Austrian economics (theories espoused by, for example, Friedrich von Hayek, Ludwig von Mises, and Murray Rothbard), his relationship with that group of economists has been difficult. Friedmans restatement of the quantity theory of money approach to monetary economics was partly motivated by his perception that, in contrast with the Chicago tradition of Simons, Viner, and others, Austrian economists (called London School by Friedman) are mistaken in their argument that depressions should not be avoided because they are the inevitable result of the prior boom. For their part, the Austrian economists have criticized Friedmans monetary economics for overlooking the role of intertemporal coordination failures and relative price changes in the business-cycle mechanism. They have also rejected Friedmans credential as the leader of free-market economics because, in their view, some of Friedmans proposalssuch as the maintenance of government control over the money supply, state support of education by vouchers redeemable at private schools, guaranteed annual income through a negative income taxindicate that he has intended to make the state more efficient, rather than just to remove it from the economic realm.

BIBLIOGRAPHY

PRIMARY WORKS

Friedman, Milton. 1937. The Use of Ranks to Avoid the Assumption of Normality Implicit in the Analysis of Variance. Journal of the American Statistical Association 32 (December): 675201.

Friedman, Milton. 1953. Essays in Positive Economics. Chicago: University of Chicago Press.

Friedman, Milton. 1957. A Theory of the Consumption Function. Princeton, NJ: Princeton University Press for the National Bureau of Economic Research.

Friedman, Milton. 1959. A Program for Monetary Stability. New York: Fordham University Press.

Friedman, Milton. 1968. The Role of Monetary Policy. American Economic Review 58 (March): 117.

Friedman, Milton. 1969. The Optimum Quantity of Money and Other Essays. Chicago: Aldine.

Friedman, Milton, ed. 1956. Studies in the Quantity Theory of Money. Chicago: University of Chicago Press.

Friedman, Milton, and Rose Friedman. 1980. Free to Choose. New York: Harcourt Brace Jovanovich.

Friedman, Milton, and Simon Kuznets. 1945. Income from Independent Professional Practice. New York: National Bureau of Economic Research.

Friedman, Milton, and Leonard Savage. 1948. The Utility Analysis of Choices Involving Risk. Journal of Political Economy 56 (August): 279304.

Friedman, Milton, and Anna J. Schwartz. 1963. A Monetary History of the United States, 18671960. Princeton, NJ: Princeton University Press for the National Bureau of Economic Research.

Friedman, Milton, and Anna J. Schwartz. 1982. Monetary Trends in the United States and the United Kingdom. Chicago: University of Chicago Press for the National Bureau of Economic Research.

SECONDARY WORKS

Bellante, Don, and Roger Garrison. 1988. Phillips Curves and Hayekian Triangles: Two Perspectives on Monetary Dynamics. History of Political Economy 20 (2): 207234.

Boianovsky, Mauro. 2005. Some Cambridge Reactions to The General Theory : David Champernowne and Joan Robinson on Full Employment. Cambridge Journal of Economics 29 (1): 7398.

Champernowne, David G. 1936. Unemployment, Basic and Monetary: The Classical Analysis and the Keynesian. Review of Economic Studies 3: 201216.

De Long, Bradford. 2000. The Triumph of Monetarism? Journal of Economic Perspectives 14 (1): 8394.

De Marchi, Neil, and Abraham Hirsch. 1990. Milton Friedman: Economics in Theory and Practice. Brighton, U.K.: Harvester Wheatsheaf.

Gordon, Robert, ed. 1974. Milton Friedmans Monetary Framework: A Debate with His Critics. Chicago: University of Chicago Press.

Hahn, Frank. 1971. Professor Friedmans Views on Money. Economica New Series 38 (February): 6180.

Hammond, J. Daniel. 1996. Theory and Measurement Causality in Milton Friedmans Monetary Economics. Cambridge, U.K.: Cambridge University Press.

Hendry, David F., and Neil Ericsson. 1991. An Econometric Analysis of the U.K. Money Demand in Monetary Trends in the United States and United Kingdom. American Economic Review 81 (March): 838.

Laidler, David. 2005. Milton Friedman and the Evolution of Macroeconomics. Working Paper #2005-11. London, Ontario: University of Western Ontario, Department of Economics, Economic Policy Research Institute.

Patinkin, Don. 1969. The Chicago Tradition, the Quantity Theory, and Friedman. Journal of Money, Credit, and Banking 63: 4670.

Rothbard, Murray. 2002. Milton Friedman Unraveled. Journal of Libertarian Studies 16 (4): 3754.

Silk, Leonard. 1976. Milton Friedman: Prophet of the Old-time Religion. In The Economists, 4185. New York: Avon Books.

Thygesen, Niels. 1977. The Scientific Contributions of Milton Friedman. Scandinavian Journal of Economics 79 (1): 5698.

Wood, John C., and Ronald N. Woods, eds. 1990. Milton FriedmanCritical Assessments. 4 vols. London and New York: Routledge.

Mauro Boianovsky

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Milton Friedman

Milton Friedman

Milton Friedman (born 1912) was the founder and leading proponent of "monetarism," an economic doctrine which considers the supply of money (and changes therein) to be the primary determinant of nominal income and prices in the economy.

Milton Friedman, a native of Brooklyn, New York, was born July 31, 1912. After earning an undergraduate degree from Rutgers University in 1932 and a Master's degree from the University of Chicago the following year, Friedman became a research economist with the National Bureau of Economic Research in New York and later with the U.S. Treasury Tax Research Division. He earned a doctorate in economics from Columbia University in 1946 and after brief spells at Wisconsin and Minnesota universities returned to the University of Chicago to begin a long and distinguished career of teaching and research. After retiring in 1979 Friedman continued an active schedule of research and publishing at the Hoover Institute of Stanford University.

According to the monetarist view which Friedman developed and popularized, the private economy is basically stable unless disturbed by rapid money supply fluctuations or other government actions. Friedman advocated a "constant monetary rule" whereby the nation's money supply would grow by a fixed percentage each year, thereby avoiding overexpansion and inflation.

Blamed the "Fed" for Depression

Friedman's positions consistently put him at odds with the Federal Reserve System (often called the "Fed"), the central bank legislated by Congress in 1913 to create and control the nation's money supply. In his monumental A Monetary History of the United States, 1867-1960 (with Anna J. Schwartz, 1963) Friedman provided a startling analysis of the Great Depression (1929-1933), arguing that the Fed deserved considerable blame for allowing a dramatic fall in the money supply during this period. The traditional Keynesian view is that the Fed played an insignificant role and was powerless to stem the economic slide.

Although Friedman resisted offers to take government jobs himself, his ideas achieved considerable success in altering government policies. This was reflected, for example, in the historic setting of monetary growth targets by the Federal Reserve Board in 1979, a practice which Friedman had long advocated.

Friedman was also a staunch defender of the free enterprise system and a proponent of individual responsibility and action. In Capitalism and Freedom (1962) he outlined his concept of the proper role of government in a free society. These views were popularized through a regular Newsweek column starting in 1966 and through books such as There Is No Such Thing As A Free Lunch. His ideas were brought vividly home to the American public through an award-winning ten-part television series in 1980 entitled Free to Choose (co-authored with his wife, Rose Friedman).

Prolific Writer

As a scholar Friedman was prolific. Among his other well-known books are Essays in Positive Economics (1953), which included famous papers on the methodology of economics; Studies in the Quantity Theory of Money (1956), which revitalized the classic quantity theory of money as a foundation for monetarism; A Theory of the Consumption Function (1957), which provided a novel explanation for consumption decisions based on lifetime rather than current income; and Monetary Trends in the United States and the United Kingdom (co-authored with Anna J. Schwartz, 1982).

Friedman's articles in professional journals consistently challenged orthodox views and presented new ways of understanding economic data and events. In "The Role of Monetary Policy" in American Economic Review (1968) Friedman invented the now famous "long run natural rate of unemployment." This article provided strong arguments for refuting the simple Phillips Curve hypothesis that less unemployment could be achieved at the cost of higher inflation. The Phillips Curve analysis had been used by policy-makers to justify expansionary fiscal spending. Friedman's analysis, however, showed that attempts to lower the rate of unemployment below the "natural" level would cause only temporary reductions in unemployment and in the long run produce higher inflation along with higher unemployment.

In subsequent writings Friedman elaborated his views on these issues (A Theoretical Framework for Monetary Analysis, 1971, and "Nobel Lecture: Inflation and Unemployment," in Journal of Political Economy, 1977). Friedman's explanation for "stagflation," the existence of stagnant demand and high unemployment simultaneous with inflation, proved to be more convincing than orthodox Keynesian theories and provided tremendous impetus for defections from the Keynesian camp.

Nobel Prize Winner

Friedman's achievements were recognized early in his career. In 1951 he was awarded the John Bates Clark Medal of the American Economic Association, and in 1962 he was awarded the Paul Snowden Russell Distinguished Service Chair at the University of Chicago. In 1976 Friedman won his greatest honor, the Nobel Prize in Economics. Throughout his career Friedman earned numerous other awards and honorary doctorates from colleges and universities throughout the world.

In addition to his prolific writing, Friedman found time to be president of the American Economic Association (1967), vice-president of the Western Economic Association (1982-1983), and president of the Mont Pelerin Society (1970-1972). He was on the board of editors of the American Economic Review (1951-1953) and of Econometrica (1957-1969) and a member of the advisory board of the Journal of Money, Credit, and Banking (1968 into the mid-1980s).

In 1992 a reviewer breathlessly summarized the accomplishments of Friedman's book Money Mischief: Episodes in Monetary History, suggesting the economist has the rare ability to communicate his message to the non-academic. "Friedman compares inflation to alcoholism; blames the rise of Chinese communism, in large part, on an inadequately controlled money supply; defines and describes MV=PT in four brief paragraphs; tells how three Scottish chemists ruined William Jennings Bryan's political career through their pioneering work with gold; and relates many other anecdotes befitting the book's subtitle, Episodes in Monetary History."

Held Strong Views

When Friedman would speak on, for instance, the woes of the U.S. education system, his free-market and anti-union views were readily apparent. "Why is it that our educational system is turning out youngsters who cannot read, write, or figure? The answer—simple but nonetheless correct—is that our current school system is a monopoly that is being run primarily by the teachers' unions: the National Education Association and the American Federation of Teachers. They are among the strongest trade unions in the country and among the most powerful lobbying groups.

"The people who run the unions aren't bad people; they're good people—just like all the rest of us. But their interests and the interests of a good school system are not the same."

Friedman was equally outspoken on the legalization of drugs. When an interviewer asked what good would come of it, the economist said, "I see America with half the number of prisons, half the number of prisoners, then thousand fewer homicides a year, inner cities in which there's a chance for these poor people to live without being afraid for their lives, citizens who might be respectable who are now addicts not being subject to becoming criminals in order to get their drug, being able to get drugs for which they're sure of the quality. You know, the same thing happened under prohibition of alcohol as is happening now (with drugs)."

Milton Friedman will be remembered as one of the most gifted economists of the 20th century. His iconoclasm often made him a controversial figure, yet unfolding events showed him to be ahead of his time, such as in resisting the spread of federal government power and in being a "watchdog" of the monetary authority. He excelled as an orator and debater. His popular writings in Newsweek and elsewhere provided succinct and novel solutions for economic ills which would allow the free market to work, such as the "negative income tax," an all-volunteer army, and floating exchange rates. While economists continue to debate the relevance of "monetarism" for policy decisions, there is little question that Friedman left the profession with and valuable new insights on economic behavior.

Further Reading

Additional information on Friedman can be found in L. Silk, The Economists (1976); Karl Brunner (editor), Milton Friedman in Our Time (1979); R. Sobel (author of four articles for this publication; see contributor list), The Worldly Economists (1980); Jr. Shackleton and G. Locksley (editors), Twelve Contemporary Economists (1981); and Mark Blaug, Great Economists Since Keynes (1985).

The opposing, in large part, Keynesian economics was developed by John Maynard Keynes in The General Theory of Employment, Interest, and Money (1936). See also Hirsch, Abraham, Milton Friedman: Economics in Theory and Practice, Harvester Wheatsheaf, 1990. □

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Friedman, Milton

FRIEDMAN, MILTON


Born July 31, 1912, in Brooklyn, New York, Milton Friedman (1912) was raised in Brooklyn and Rahway, New Jersey. He was educated at Rutgers University, where he received his Bachelor's in Economics in 1932. In 1933, he received a Masters of Arts from the University of Chicago, where he worked as a research assistant for two years. Friedman then took a series of positions in government service which shaped his economic theories.

Friedman worked from 1935 to 1943 as an economist for the National Resources Committee, the National Bureau of Economic Research, and the Department of the Treasury. For the 19401941 school year, he took a break from his government jobs in Washington, D.C., to serve as visiting professor of economics at the University of Wisconsin. In 1943 he resumed his work on a doctorate degree at Columbia University, where he received his degree in 1946. He spent one year on the faculty of the University of Minnesota before joining the University of Chicago as associate professor of economics. Friedman became a full professor at the school in 1948.

Milton Friedman began writing shortly after completing his first two degrees, publishing many articles and books. Through his writing, Friedman became an advocate of the monetarist school of economics. In this economic theory, the business cycle is influenced more by the supply of money and interest rates than the fiscal policy of the government. As such, Friedman was opposed to the prevailing thoughts of his day, which were guided by the theories of John Maynard Keynes (18831946), the British economist who championed the role of government expenditures and taxes in influencing economic cycles.

Friedman married Rose D. Friedman, also an economist, who collaborated on some of his works. He was on the editorial boards of the American Economic Review from 1951 to 1953 and the Econometrica from 1957 to 1968. He was named the Paul Snowden Russell Distinguished Service Professor at the University of Chicago in 1962. In 1967 he began a ten year run as a regular columnist in Newsweek magazine. In 1976 Friedman was awarded the Nobel Prize for Economics.

Senator Barry Goldwater (1909) used Friedman as an economic policy advisor in his unsuccessful 1964 presidential campaign. President Richard Nixon (19691974) sought Friedman's advice frequently. But perhaps Friedman's greatest influence with presidential politics occurred during the administration of President Ronald Reagan (19811989), when monetary policy and "supply side" economics gained influence with Washington policymakers. Friedman retired from his position at the University of Chicago in 1979 to become a senior research fellow at a conservative think tank, the Hoover Institution, at Stanford, California.

Friedman's published works include Capitalism and Freedom, written in 1962 with his wife. This book advocates a "negative" income tax or guaranteed income to replace welfare, which Friedman accused of destroying traditional values of individualism and work. In addition, Friedman published A Monetary History of the United States, 18671960 (1963), and Monetary Trends of the United States and the United Kingdom (1981). Other works include The Great Contraction, with A. J. Schwartz (1965), The Balance of Payments with R. V. Roosa (1967), Dollars and Deficits (1968), The Optimum Quantity of Money and Other Essays (1969), Bright Promises, Dismal Performance: An Economist's Protest (1983), and Money Mischief: Episodes in Monetary History in (1992).

See also: Keynesian Economic Theory, Monetary Theory

FURTHER READING

Frazer, William. The Friedman System. New York: Praeger, 1997.

Friedman, Milton. Bright Promises, Dismal Performance: An Economist's Protest. New York: Harcourt Brace Jovanovich, 1983.

. Money Mischief: Episodes in Monetary History. New York: Harcourt Brace Jovanovich, 1992.

Garraty, John A. and Jerome L. Sternstein, eds. Encyclopedia of American Biography. New York: Harper Collins, 1995, s.v. "Friedman, Milton."

Van Doren, Charles, ed. Webster's American Biographies. Springfield: Merriam-Webster Inc., 1984, s.v. "Friedman, Milton."

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Friedman, Milton

Milton Friedman (frēd´mən), 1912–2006, American economist, b. New York City, Ph.D. Columbia, 1946. Friedman was influential in helping to revive the monetarist school of economic thought (see monetarism). He was a staff member at the National Bureau of Economic Research (1937–46, 1948–81) and an economics professor at the Univ. of Chicago (1946–82). Much of Friedman's early work is notable for its arguments against government economic controls. His writings dismissed Keynesian theories on consumption, price theory, inflation, distribution, and the money supply (see Keynes, John Maynard). His most famous empirical work is A Monetary History of the United States, 1867–1960, coauthored with Anna J. Schwartz (1963). The book charts the relationship between general price levels and economic cycles and the government's manipulation of the money supply. Friedman also predicted that the spending associated with government programs would interact with the "natural rate of unemployment" to result in the stagflation of the 1970s. Friedman was a prolific author; his other works included Capitalism and Freedom (1964, rev. ed. 1981), Politics and Tyranny (1985), and Monetarist Economics (1991). With his wife, Rose (1910?–2009), a Univ. of Chicago–educated free-market economist, he wrote Free to Choose (1981), The Tyranny of the Status Quo (1984), and the dual memoir Two Lucky People (1998). In 1976 he won the Nobel Memorial Prize in Economic Sciences. He was an adviser to the Reagan administration in the 1980s, and also was a columnist for Newsweek (1966–84) and a frequent television commentator.

See biography by A. Hirsch and N. De Marchi (1990).

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Friedman, Milton

Friedman, Milton (1912– ) US economist. An influential member of the Chicago School of Economics, he supported monetarism as the best means of controlling the economy. His works include: A Monetary History of the United States 1867–1960 (1963), written with Anna Schwartz and a key book in monetary economics; A Theory of the Consumption Function (1957); Essays in Positive Economics (1953); and Capitalism and Freedom (1962). He received the 1976 Nobel Prize in economic science.

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