Milton Friedman, who has died aged 94, was the last of the great economists to combine possession of a household name with the highest professional credentials. In this respect he was often compared to John Maynard Keynes, whose work he always respected, even though he to some extent supplanted it.
Moreover, in contrast to many leading economists, Friedman maintained a continuity between his Nobel-Prize winning academic contributions and his current journalism. The columns he contributed to Newsweek every third week between 1966 and 1984 were a model of how to use economic analysis to illuminate events
Both his admirers and his detractors have pointed out that his world view was essentially simple: a passionate belief in personal freedom combined with a conviction that free markets were the best way of co-ordinating the activities of dispersed individuals to their mutual enrichment. Where he shone was in his ability to derive interesting and unexpected consequences from simple ideas. As I knew from my postbag, part of his appeal lay in his willingness to come out with home truths which had occurred to many other people who had not dared to utter them. Friedman would then go on, however, to defend these maxims against the massed forces of economic correctness; and in the course of those defences he, almost unintentionally, added to knowledge.
hose who wanted to write him off as a right-wing Republican were disabused by the variety of radical causes he championed. I was not impressed in my own student years by the claims to a belief in personal freedom of the pro-market British economists whom I first encountered. It was not until I came across Friedman, and learned that he had spent more time in lobbying against the US “draft” than on any other policy issue, that I began to take seriously the wider philosophic protestations of the pro-market economists.
Friedman's iconoclasm endured. He regarded the anti-drugs laws as virtually a government subsidy for organised crime. Even in the financial sphere, he espoused causes such as indexed contracts and taxes as a way of mitigating the harm done by inflation which did not endear him to natural conservatives.
But there was no self-conscious balancing of the political ticket in these positions. He adopted them by following the argument wherever it led. Unlike his fellow exponent of free market capitalism, Friedrich Hayek, he had no great patience for hidden truths that might be embedded in inherited attitudes, rules and prejudices.
There was indeed nothing of the Herr Professor about Friedman. A small voluble figure, he preferred the spoken to the written word, and he took to television as a duck to water. He came to add a good many subtleties to the book Free to Choose, which he wrote with his wife Rose, which were not in the broadcast version. But there is no systematic treatise except some written-up lecture notes outlining Friedmanite economics or even Friedmanite monetary theory.
Those who were won over by his unexpected charm sometimes underestimated his resolve. He would not give a millimetre where his convictions were at stake. Although an unassuming and essentially democratic personality, he was human enough to be aware of, and enjoy, his reputation in the last decades of his life.
His professed attitude to the political process was that of the critical Public Choice theorists. The latter believe that legislators follow their self-interest in a highly defective political marketplace in which geographical and industrially-concentrated special interest groups gain at the general expense. But Friedman's ingrained belief in the power of reason and persuasion always got the better of any such theoretical misgivings. Although he occasionally professed gloom about the future of freedom, such forebodings were best left to the central Europeans whom he met at the Mont Pelerin Society. Friedman himself was an optimistic American to his fingertips.
Early Years
His own career was an archetypical American success story. He was born in New York in 1912 to poor immigrant parents and his father died when he was 15. He nevertheless studied at Rutgers and Chicago. In the 1930s he was on the staff of various research organisations and began an association with the National Bureau of Economic Research, which lasted until 1981 and which sponsored some of his most important work.
In 1938 he married Rose Director, herself an economist who was the co-author of some of his more general books. The closeness of his family life was an important clue to the man. His family circle included his wife's brother, Aaron Director, an economist who published little but whose wisdom was much cherished in the Friedman circle. His son David, in an attempt to avoid following in his father's footsteps, became at first a physicist, but eventually found the lure of socio-economic arguments too difficult to resist. His father was highly tolerant of David's excursions into anarchocapitalism preferring deviations in that direction to lapses towards the conventional left.
During World War Two Friedman not only worked for the US Treasury on tax, but had a spell in the statistical war research group at Columbia. He became professor of economics at Chicago in 1946, where he remained until his retirement. Friedman's own earliest work was in mathematical statistics, where he helped to pioneer some methods, for instance in sampling, which are still in use.
His first work of wider appeal was a study with Simon Kuznets, published in 1945, of income from independent professional practice. The authors found that state control of entry into the medical profession kept up the level of fees to the detriment of patients. These findings never ceased to get under the skin of the profession.
Friedman's next book, Essays in Positive Economics, published in 1953, contained a famous essay on method. While many other economists were embarrassed by the over-simplified view of human nature in much economic theory, he was characteristically non-apologetic. The fruitfulness of a theory, in both the physical and the social sciences, he declared, depended on the success of the predictions which could be made with it and not on the descriptive realism of the assumptions. One of his famous examples was the proposition that the leaves of a tree spread themselves to maximise the area of sunlight falling upon them. The value of the theory depended on whether the layout of the leaves corresponded to this prediction and not on whether the tree made any such conscious effort.
This essay generated a still-running controversy which has consumed many acres of forest. But Friedman, having issued his manifesto, left others to argue about it and was more concerned to apply it in practice. Similarly, in his later expositions of the case for capitalism, he stated his own values, and cited corroborative evidence, but resisted the temptation to argue about theories of freedom, justice, the state and so on.
Friedman's methods came as a breath of fresh air to many of the academic defenders of market capitalism who had previously felt themselves to be beleaguered armchair thinkers in contrast to the econometricians and other quantitative researchers who claimed to be the wave of the future and wanted to use their methods for planning and intervention. Here at last was somebody who could hold his own with the most advanced of whiz kids and was quicker on his feet than most of them, but who was on the side of the market indeed with far fewer reservations and qualifications than most of its other supporters.
Despite the unfashionable nature of his policy views, Friedman spoke the same language as the post-war Keynesians, fitted equations to time series and provided a new field for economists in the investigation of “demand for money” functions. Indeed, his contribution was essential. For if age-old verities about the relations between money and prices, or the futility of nations trying to spend themselves into full employment were to be rehabilitated, it had to be in modern statistical dress.