Milton Friedman and his followers are representatives. Economist Milton Friedman: biography, ideas, life path and sayings
MOLDOVAN STATE UNIVERSITY
Department of Economic Sciences
COURSE WORK
by History economic doctrines, on the topic:
« MILTON FREEDMAN»
Completed: 2nd year student,
group 19-1 Peeva Veronika
Checked:
Chisinau 2002
Introduction
1. Milton Friedman. Short description biographies.
2. Monetarist recipes for economic recovery
3. Milton Friedman's criticism of the International Monetary Fund
References
Introduction
Milton Friedman- American economist, winner of the Nobel Prize in Economics in 1976, awarded "for research in the field of consumption, history and theory of money."
The name of M. Friedman - Nobel laureate in modern economic theory associated, as a rule, with the leader of the "Chicago monetary school" and the main opponent of the Keynesian concept state regulation economy.
M. Friedman is multifaceted in his work and, what is very important, his scientific interests also cover the field of methodology of economic science.
1. Milton Friedman.
Brief description of the biography.
Milton Friedman |
Milton Friedman was born on July 31, 1912 in New York to an Eastern European family. Shortly after his birth, the family moved to Rahway, New Jersey. His mother worked in a dry goods store, and his father, as Friedman later recalled, "tried unsuccessfully to achieve results in hopeless trading operations." The family had small and unstable incomes and could not get out of poverty.
At the age of 16, Milton Friedman was admitted to Rutgers University by competitive selection with the right to receive a partial scholarship.
In 1932, he was awarded a bachelor's degree in two disciplines at once - economics and mathematics. M. Friedman continued his specialization in economics at the University of Chicago. After receiving a master's degree from the University of Chicago in 1933, Friedman went on a postgraduate internship at Columbia University (New York).
At the end of 1934, he began working at the University of Chicago as a research assistant. In the summer of 1935, M. Friedman took part in a large-scale consumer budget research project for the National Committee for natural resources USA.
During the Second World War, Friedman participated in the development of tax policy on the instructions of the Ministry of Finance, and conducted research on military statistics.
In 1945-1946 he teaches economics at the University of Minnesota. Then M. Friedman returns to the University of Chicago and becomes an assistant professor in economics, remaining in this position to this day.
With the assistance of the NBEI, Friedman begins many years of work on the creation of monetary theory. His subsequent contribution to the theory and practice of economic science is accompanied by unexpected results, he becomes a fruitful researcher, leads the so-called. "Chicago School" of economists.
In 1950, he worked in Paris as a consultant on the implementation of the "Marshall Plan", which provided for the restoration of the war-ravaged economies of Western Europe. In his book "The Theory of the Consumption Function", published in 1957, M. Friedman formulated and substantiated his theory of "permanent consumption income".
Friedman was awarded the John Bates Clark Medal of the American Economic Association in 1951.
In 1956, under his editorship, a collection of articles "Research in the Quantity Theory of Money" was published.
In 1963, Friedman published the fundamental work "The Formation of monetary system USA". In this book, he defends the position that in long-term periods major changes in economic life are associated primarily with the money supply and its movement. "The economy dances to the tune of the dollar, repeats the dance of the dollar" - so M. shocks, including the Great Crisis of 1930, are explained by Friedman as a consequence of monetary policy, and not the instability of a market economy.According to Friedman, the influence of money on economic activity is not an external (exogenous) factor of the economy, but, most likely, on the contrary, an internal (endogenous) factor Following the monetarist school, he considers the demand for money to be one of the most important drivers of the economy Friedman's monetary concept, in the words of the American economist G. Ellis, led to the "rediscovery of money" due to almost universally growing, especially in the recent period, inflation.
Friedman's views on the importance of non-state intervention in economic policy gained wide popularity thanks to his book "Capitalism and Freedom" (1962) and constant publications in the column reserved for him (since 1966) of the magazine "Newsweek".
In 1967 M. Friedman was elected president of the American Economic Association.
In 1969-1973 he was an adviser to economic issues US President Richard Nixon. He earned recognition as an adviser to President Richard M. Nixon, despite his differences with him on the issue of imposing tight price controls and wages in 1971. F.'s views on the importance of non-intervention of the state in social policy became widely known due to the constant publications in the column assigned to him since 1966. and freedom” (“Capitalism and Freedom”, 1962). His popular book "Free to Choose" (1980) even gave the name to the television screensaver of his series of talks on social and economic issues.
In 1976, Milton Friedman was awarded the Nobel Prize in Economics "for his achievements in the field of consumption analysis, history monetary circulation and the development of monetary theory, as well as the practical demonstration of the complexity of economic stabilization policies."
In the Nobel lecture, he returned to a topic raised back in 1967 when addressing the American Economic Association - to the rejection of Keynes's remark about the stable relationship between the rate of inflation and unemployment. He came to the conclusion that in the long run, the Phillips curve still shifts upward, subject to a natural increase in unemployment.
In his opinion, the reason for this phenomenon was the acceptance of the growth of unemployment as an increasing parameter, instead of interpreting it as a constant numerical constant. For the short term, in his opinion, inflationary monetary and fiscal policy could only temporarily reduce the unemployment rate, since workers and corporations habitually seek to increase income levels, which ultimately cannot but contribute to an increase in the price level (and, accordingly, an increase in unemployment).
Despite the fact that many of M. Friedman's views on economic theory and public policy are considered controversial, he, as the English economist John Barton put it, "provided us with the foundation for future research in macroeconomics."
In 1977, M. Friedman left the University of Chicago, where he taught for many years, and began working as a senior researcher at the Hoover Institution at Stanford University in California.
In 1980, his (and popular) book, Freedom of Choice, was published and gave its name to a series of television talks he conducted on social and economic issues.
In 1981-1984 M. Friedman was an economic adviser to US President Ronald Reagan.
Milton Friedman has received honorary degrees from many American and foreign universities and academies.
M. Friedman is multifaceted in his work and, what is very important, his scientific interests also cover the field of methodology of economic science. Indeed, for many years, in their discussions on this problem, economists have not done without analyzing Friedman's essay "Methodology of Positive Economic Science" (1953), as well as without essays on a similar topic written by L. Robbins (1932), R. Heilbroner (1991) and M. Alle (1990), or the famous lecture delivered by P. Samuelson at the ceremony of awarding him the Nobel Prize in Economics (1970 ), and etc.
However, it is precisely from M. Friedman's positivist methodological essay that one can draw extraordinary judgments that economic theory as a set of meaningful hypotheses is accepted when it can "explain" the actual data, only from which it follows whether it is "correct" or "erroneous" and whether it will be "accepted" or "rejected"; that, in turn, facts can never "prove a hypothesis," since they can only establish its fallacy. At the same time, his solidarity with those scientists who consider it unacceptable to present economic theory as describing, not predictive, is obvious, turning it into just mathematics in disguise. According to M. Friedman, to assert diversity and complexity economic phenomena, - means to deny the transitory nature of knowledge, which contains the meaning of scientific activity, and therefore "any theory necessarily has a transitory character and is subject to change with the progress of knowledge." At the same time, the process of discovering something new in familiar material, the Nobel laureate concludes, should be discussed in psychological, not logical categories, and, studying autobiographies and biographies, stimulate it with the help of aphorisms and examples.
2. Milton Friedman:
monetarist recipes
recovery of the economy.
What is monetarism? What are its postulates, causes of influence?
Monetary - means monetary (money - money, monetary - monetary). As defined by Bernard Yves and Collie Jean-Claude, monetarism is a current economic thought which gives money a decisive role in the oscillatory movement of the economy. Monetarism is a science not only about money. The focus of the representatives of this school are monetary categories, monetary instruments; however, they are interested not only in the monetary mechanism, banking system, monetary policy, currency relations. Monetarists look at these processes to reveal the relationship between money supply and output. In their opinion, banks are the leading instrument of regulation, with the help or with the direct participation of which changes in money market are transformed into changes in the market of goods and services.
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4. Research in the field of consumer function, the constant income hypothesis
1. Biography of M. Friedman and his economic activity
American economist Milton Friedman was born on July 31, 1912 in Brooklyn (New York). When he was still a child, his parents Sarah Ethel Friedman and Geno Saul Friedman, both Eastern Europeans, moved to Rahway. His mother worked in a haberdashery, and his father, as F. later recalled, "tried unsuccessfully to achieve results in hopeless trading operations." The family had small and unstable incomes and could not get out of poverty.
At the age of 16, F. by competitive selection was admitted to Rutgers University with the right to receive a partial scholarship. In 1932, he was awarded a bachelor's degree in two disciplines at once - economics and mathematics. While studying at the University of F. came under the influence of two assistants: Arthur F. Burns, who later became director of the US Federal Reserve, and Homer Jones, the future authority in the field of theory interest rate. It was Jones F. obliged to write a thesis in economics and receive a recommendation to continue specialization in this area at the University of Chicago.
After receiving a master's degree from the University of Chicago in 1933, F. moved for a postgraduate internship at Columbia University (New York). Collaboration F. with the US National Bureau of Economic Research (NBEI) began in 1937, when he began working as an assistant to Simon Kuznets. consumer income economist
In 1940, they completed the writing of a joint scientific work "Income from independent private practice." This work later formed the basis of the dissertation, for which F. in 1946. was awarded a doctorate in economics from Columbia University.
Despite the fact that many of his views on economic theory and public policy remain controversial, he, as the English economist John Barton put it, "provided us with a foundation for future research in macroeconomics."
In 1950, Mr.. F. as a consultant on the implementation of the "Marshall Plan", developed by George, C. Marshall and providing for the restoration of the war-ravaged economies of Western Europe, arrives in Paris, where he becomes an active advocate of the idea of floating exchange rates. He predicts that the fixed exchange rates introduced by the Bretton Woods Agreement will eventually fail, which happened in the early 1970s.
Starting to work with S. Kuznets, working closely with economists Dorothy Brady, Margaret Reid and Rose Director, F. formulated and found practical confirmation of his hypothesis of "constant consumption income". In his book "The Theory of the Consumption Function", published in 1957, F. proved that the concept of John Keynes, linking current consumption with current income, will inevitably lead to an erroneous course. Instead, F. put forward a theory according to which the consumer does not build their consumer calculations, with the exception of temporary, on the current income, relying on the expected or permanent income.
Exploring a wide range of practical consumption data, F. found that the results did not differ from his theory of permanent income. The conclusion about constant income played an important role in causing a reasonable reformulation of the quantity theory of money. In subsequent works, F. will show that changes in money demand throughout the history of America have always been determined by changes in the sphere of permanent income.
On November 16, 2006, Milton Friedman died in San Francisco, California from a heart attack at the age of 94.
2. Professional position of an economist, criticism of his views
Friedman recommends completely abandoning consistent monetary policy, which still leads to cyclical fluctuations and adhere to the tactics of constantly increasing money supply. In A Monetary History of the United States (1963), Friedman and Anna Schwartz analyzed the role of money in economic cycles particularly during the Great Depression. Subsequently, Friedman and Schwartz co-authored the monumental studies Monetary Statistics of the United States (1970) and Monetary Trends in the United States and the United Kingdom (1982).
Friedman's views (as well as those of the Chicago School of Economics in general) are sharply criticized by Marxists (including Western ones), leftists, anti-globalists, especially Naomi Klein, who considers him guilty of negative phenomena in the Chilean economy during the Pinochet dictatorship and in Russia during the Yeltsin presidency. . In their opinion, a completely free market leads to the impoverishment of the vast majority of people, the unprecedented enrichment of large corporations; the withdrawal of the education system from the control of the state leads to the transformation of the school into a business, in which a full-fledged education becomes inaccessible to many citizens, a similar situation is observed in medicine.
3. Friedman's reasoning about total utility
Friedman believed that total utility increases as money income increases. One interesting, though not the main, conclusion is that an increase in income that improves the position of a given economic unit, but does not push it out of its class, reflects diminishing marginal utility, while an increase in income, as a result of which this unit moves into a new class reflects increasing marginal utility. So, the desire to get new job, the income from which can provide a higher position in society, reflects a higher utility. But Friedman then reverses the argument by arguing that people with low income will avoid additional risk, because with diminishing marginal utility, a premium must be paid to induce action. On the other hand, middle-income groups, according to Friedman, are highly risk-averse. All this shows how the shape of the utility curve can reflect a change in economic position. But this is tantamount to saying that the fittest survive.
Friedman's concept of utility became clearer when he tried to connect it with the problem of income distribution. He attempted to bridge the gap between functional and personal income distribution. The former, of course, must be derived from the operation of the market mechanism and the evaluation of cost factors, while personal distribution is dependent on luck, chance, natural ability, inheritance, that is, in fact, everything but the uneven distribution of wealth. Friedman tries not to notice the last circumstance. The main factor in his model is the risk and the response to it in different people. A society (or part of it) that disapproves of the psychology of risk will prefer insurance over lotteries and progressive taxation over regressive taxes. It will tend to be more redistributive, so that income will be more evenly distributed.
4. Research in the field of consumer function, the theory of permanent income
Friedman's research on the consumer function deserves more attention. The consumer function - the central idea of modern economic theory, used by Keynes, means such a relationship between income and consumption, when the latter, although it grows as income grows, but at a slower pace. Friedman entered into this rather interesting discussion with his new concept, the constant income hypothesis, the origins of which can be traced to Fisher and especially to Knight. Friedman argues that the ability to predict the course of consumption using an income-based consumption function is limited because, in his opinion, real investment do not have a multiplier effect on real consumption. The latter is determined by its own long-term trend. There is a tendency, says Friedman, that an economic unit tends to a certain level of consumption for some time, for which it regulates its current income by giving or receiving loans. In a sense, the income of any economic unit is related to the amount of capital.
Both consumption and income consist of two parts, one is constant and the other is variable. The permanent income which the individual hopes to receive for a long time depends largely on his foresight; its value is influenced by the environment, the type of activity and the size of capital property. The variable elements of income consist of unexpected increases and deductions. Friedman admits that it is rather difficult to determine the size of the constant component by direct observation, but he nevertheless believes that some conclusions can be drawn if certain assumptions are made regarding the ratio of the constant and variable parts. This ratio should depend on the rate of interest, the ratio of income to wealth, and consumer tastes. But since there is no relationship between the variable parts of consumption and income, total consumption depends solely on constant income. This means that the consumer stays true to their spending plans over time, whether or not income deviates from planned spending.
The value of F.'s theory of constant income is difficult to overestimate.
Much of the subsequent study of aggregate consumption confirms this theory, and the developed methodology for determining and estimating future incomes has been of great interest to macroeconomists everywhere. Moreover, the most important advances in econometrics during the 1960s and 1970s were achieved thanks to F.'s statistical methods, which he used specifically to assess permanent income.
5. "Money rule" by M. Friedman
According to Milton Friedman, the main problem of monetary policy is to ensure the correspondence between the demand for money and its supply. A stable demand for money is the main prerequisite for price stability, the stability of aggregate payment demand, and hence ensuring the stability of the system as a whole. From this follows his recommendation: the increase in money in circulation should correspond to the increase in the gross national product (GNP). This is the so-called Friedman money rule.
Friedman considered it necessary to increase the money supply at a constant pace: "a constant expected rate of growth of the money supply is more essential than knowing the exact value of this rate."
In practice, in the field of monetary policy, Western countries do not literally follow the “rule” indicated above, but usually annually set a “fork”, around which the money supply should fluctuate.
Milton Friedman was an American economist and theorist. His name is associated mainly with the monetarist doctrine, which brought him great popularity and influenced the revision in the 70-80s of the monetary policy pursued by central banks, mainly in the United States.
The main achievements of Friedman in the field of the theory of money, one way or another, are connected with the analysis of the theory of J. M. Keynes and his followers, based on the position of the insignificant influence of money on general expenses, consumption and prices. Friedman criticized these provisions in the article "The Relative Stability of the Velocity of Money and the Investment Multiplier in the United States" (1897 - 1958) It shows that nominal consumer spending is determined more by the money supply than by individual items. state budget. Based on the determining role of money in relation to prices and incomes, Friedman argued that changes in the intensity of growth in nominal incomes are mainly due to changes in the growth of the money supply. Friedman's and D. Meiselman's article marked the beginning of a debate with the Keynesians on monetary and fiscal policy that unfolded in the 1960s and 1970s. and the result of which was a certain revision of monetary policy in the United States.
List of sources used
1. Bunkina M.K. Monetarism. - M.: JSC "DIS", 1994.;
2. Dolan E.D. Money, banking and monetary policy. - St. Petersburg: St. Petersburg. - Orchestra, 1994. - Part IV, ch. 14-17.
3. Kostyuk V.N. History of Economic Thought: Tutorial. - M.: Center, 1997. - Topic 15.
4. McConnell K.R., Brew S.L. Economics: Principles, problems and politics. - M.: Respublika, 1992. - T. 1, ch. eighteen.
5. Solodkov V.M. Economic theory of Milton Friedman // USA: economics, politics, ideology. 1992. No. 6.
6. Friedman M. Quantitative theory of money. - M.: Elf press, 1996.
7. Friedman M. Quantitative theory of money. - M.: Thought, 1989. - Ch. 4.
8. Bartenev S.A. Economic Theories and Schools (History and Modernity): A Course of Lectures. - M.: BEK, 1996. - Ch. 10.
9. Usoskin V.M. " money world» Milton Friendman. - M.: Thought, 1989. - Ch. 2, 3.
10. Livshits A.Ya. Introduction to market economy. - M .: MP TPO "Square", 1991. - Lectures 7, 8.
11. Seligman B. Main currents of modern economic thought. - M.: Progress, 1968. - Ch. VII.
12. © The H.W. Wilson Company, 1987. Nobel Laureates: Encyclopedia: Per. from English - M.: Progress, 1992.
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Milton Friedman (July 31, 1912 - November 16, 2006) was an American economist, public figure, Nobel Prize winner in economic sciences.
Among scholars, he is best known for his theoretical and empirical research, especially on consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policies. The world community has followed his reaffirmation of a political philosophy that insists on minimizing the role of government in favor of the private sector. As a leader of the Chicago School of Economics, based at the University of Chicago, he had a wide influence on scientific research in all specialties.
Numerous monographs, books, scientific articles, reports, magazine columns, television programs, videos and lectures by Friedman cover a wide range of topics on microeconomics, macroeconomics, the history of economics, as well as public policy. The Economist called him "the most influential economist of the second half of the 20th century."
Friedman's methodological innovations have been widely recognized by economists, but his policies have been recognized as highly controversial. It was dismissed by most economists in the 1960s, but it has since gained increasing international influence (especially in the US and UK) and has gained widespread acceptance among many economists in the 21st century.
Milton Friedman's ideas were widely used, especially during the 1980s. His opinions on monetary policy, taxation, privatization and deregulation have helped politicians and governments around the world, especially the Augusto Pinochet administration in Chile, Margaret Thatcher in the UK, Ronald Reagan in the USA, Brian Mulroney in Canada, and after 1989 in many countries of Eastern Europe. Europe.
Milton Friedman is the author of The Quantity Theory of Money, Reflections on Monetary History, The Case for Free Trade, Economic Freedom, Human Freedom, Political Freedom, Capitalism and Freedom, Social Security.
Books (4)
Capitalism and freedom
The 1976 Nobel Prize winner in economics and one of the most famous economists of the post-war era, Milton Friedman's Capitalism and Freedom, is one of the most significant political economic works of the 20th century.
The ideas expressed in it of limiting state intervention in the economy and the relationship of economic and political freedom, flexible exchange rate and flat scale income tax, the denationalization of education and the social security system, the creation of a contract army, and many others have become the foundation for most of the liberal reforms carried out in recent decades in the most different countries ah world.
Quantity Theory of Money
The term "quantity theory of money" is associated with a general concept rather than a well-defined theory.
About freedom
The collection includes excerpts from the works of two outstanding economists of the 20th century, Nobel Prize winners in economics, convincingly showing that political freedom cannot exist without private property and economic freedom.
Hayek's article "Liberalism" is the best summary history of classical liberalism as a doctrine and political movement.
The book is taken from the site http://www.inliberty.ru
Freedom to choose
One of the most influential contemporary economists, Milton Friedman and his wife Rose Friedman, Freedom to Choose is one of the best-known works of liberal thought in the second half of the 20th century. Defending the values of individual, economic and political freedom, the authors provide convincing evidence of the inefficiency of the bureaucracy and the redundancy of its interference in the life of society on the example of government systems social security, education, financial regulation, licensing of various goods and activities, etc.
The book is taken from the site http://www.inliberty.ru
American economist and supporter of classical liberalism was born 103 years ago.
Milton Friedman was born on July 31, 1912 in Brooklyn in a family of Jewish emigrants from Beregovo (Transcarpathia) - his parents moved to New York shortly before Milton was born. His father, Enyo Saul Friedman, and mother, Sarah Ethel (née Landau), had a direct, albeit modest, connection to the economy - they sold groceries.
The future Nobel laureate in economics, a talented young man Milton Friedman graduated from Rutgers (1932) and Chicago (1934) universities and devoted himself to scientific work. In his work, he explored economic processes that took place in the United States and concluded that it would be better for both the States and other countries to abandon a consistent monetary policy in favor of the tactics of constantly increasing the money supply. Friedman also proved the undesirability of state intervention in the economy, actively opposed compulsory military service, and was skeptical about the introduction of the euro as a single European currency.
A lot has been said about Milton Friedman - primarily by other economists - and not always agreed with his opinion. But, as the 62nd U.S. Treasury Secretary George Shultz said, "everyone loves to argue with Milton, especially when he's not around."
The editors of JewishNews.com.ua collected 10 key facts from the life of Milton Friedman:
1. In 1951, Milton Friedman received the John Bates Clark Medal, which is awarded to economists under 40 for unique contributions to their field. In economics, this award can be compared with the Nobel Prize in its prestige.
2. In his book "Capitalism and Freedom" (1962), dr. Friedman calls for a reduction in the role of government In human life. His idea was that the freedom of the individual is indivisible, and government regulation of economic activity inevitably leads to the violation of personal and political freedoms of a person.
3. The views of Friedman, who advocated limiting the influence of government on the personal freedom of an individual, turned him into a real symbol of the struggle for the contract army and the abolition of compulsory military service.
4. Friedman visited Chile in 1975 during the dictatorial rule of Augusto Pinochet - there the scientist gave several lectures on economics. He did not support the Pinochet regime, and the market openness Friedman promoted not only helped improve economic situation in Chile, but also contributed to the softening of the dictator's regime and his subsequent removal by a democratic government in 1990.
5. Milton Friedman received Nobel Prize in Economics 1976"for his achievements in the analysis of consumption, the history of money circulation and the development of monetary theory, and for his practical demonstration of the complexity of economic stabilization policies."
6. In 1988, Friedman received two awards - National Science Medal And Presidential Medal of Freedom.
7. Dr. Friedman is known for resurrecting public interest in quantitative theory of money (monetarism). Together with Anna Schwartz, he wrote A Monetary History of the United States (1963), which ended with the conclusion that fluctuations in the money supply lead to economic fluctuations (the Great Depression served as proof of this).
8. Friedman's book "Freedom to Choose", co-authored with his wife Rosa, was created on the basis of a series of 10 of his TV shows and became 1980 bestseller in the non-fiction category.
9. Milton Friedman was President of the American Association of Economists, Association of Western Economics, the Mont Pelerin Society of Economists, and a member of the American Philosophical Society and the US National Academy of Sciences.
10. Milton Friedman was named second after John Maynard Keynes "The most influential economist of the second half of the 20th century ... if not the entire 20th century".
Ideas that at first were considered excessively radical and even extravagant gradually became mainstream not only in science, but partly in economic practice as well.
July 31 marks the 105th birthday of Milton Friedman, the great economist, Nobel Prize winner in 1976, who is usually called "the most influential economist of the second half of the 20th century."
This non-obvious anniversary allows us to remember that Fridman, in addition to being a scientist, had another role that is important today. This is the role of a public intellectual - an economist who talks to the public.
Against the stream
Let me remind you that the 1930s-1960s were a time when most academic economists both in the United States and in Europe sympathized with one or another trend of a statist nature - from socialism to Keynesianism. And in economic life, it seemed that the ideas of state regulation were winning on all fronts: Stalin's Soviet Union, Mussolini's Italy, Hitler's Germany built their economic policy on the principles of active participation of the state in the economy and seemed to prove that classical liberalism was dead. In Great Britain, the Laborites already saw their ideal in the USSR and nationalized many industries, including railways, even in the United States, the ideas of active state intervention in economic life gradually became more and more popular.
At this time, the ideas of classical European liberalism were shared by only a handful of intellectuals. Economists who opposed government intervention felt like outcasts. Friedrich von Hayek (who would also receive the Nobel Prize in 1974) wrote that during these years "very few people remained who were not socialists."
Capitalism and freedom
In 1962, Friedman published the book "Capitalism and Freedom", which was compiled from his previously delivered lectures. She explained, firstly, why economic freedom is needed and why it is necessary to reduce the role of the state in the economy, and secondly, how economic and political freedoms are interconnected. This book was called the desktop book by Ronald Reagan and Margaret Thatcher and is still considered by many to be one of the most important economic and political works of the 20th century.
In this book, Friedman launched a massive program to reduce the role of the state in the economy: he called for the abolition of customs duties and export restrictions that regulate the functions of the Interstate Commerce Commission and the Federal Communications Commission, subsidies to agricultural producers, social insurance, public housing, conscription, all professional licensing systems, and to abolish progressive taxation (“As a liberal,” he wrote, “I see no justification for a system progressive taxation”), privatize health care and abandon state pension systems, replacing them with private pension funds. And, of course, Friedman was opposed to government funding and any state support institutions of higher education.
Friedman defended the ideas of free trade, any import tariffs (duties) and quotas are, in his opinion, an absolute evil. In a letter to presidential candidate Barry Goldwater, Friedman wrote, "The strategic goal for us libertarians is free international trade."
Friedman believed that the country's borders should be completely open to immigrants, but on one condition: the state should not provide them with any assistance; the Food and Drug Administration, in his opinion, should also have been abolished. He demanded (as, by the way, another future Nobel laureate - George Stigler) to repeal the laws establishing the minimum wage. Friedman wrote that regulation of the minimum wage is done with good intentions, but leads to the opposite results, from which those concerned about whom this regulation is caused in the first place will suffer. Including because such regulation causes an increase in unemployment.
And all this in 1962! As Angus Bergin writes about this in his book The Great Revolution of Ideas, “the audacity of these proposals was breathtaking.”
By the way, Friedman managed to participate directly in the process of abolishing compulsory military conscription in the United States: he was a member of the advisory commission created by Richard Nixon, which prepared the abolition of conscription in 1973.
All of these ideas provoked a rather negative reaction from the then largely left-wing American intellectual elite. Friedman himself later recalled: "When this book first saw the light, the views expressed in it were so at odds with the mainstream of thought at that time that no reviews of it appeared in any of the major periodicals."
Some economists in such conditions become discouraged, others go into "pure" science and avoid discussions with the public. But Friedman's strategy was different.
Friedman believed that an economist, like any other scientist, should not be locked in an ivory tower. That he is obliged to speak in the media, give public lectures, give interviews and in other ways convey his opinion to the general public. If you believe that certain popular beliefs are wrong, there is no need to complain about the "ignorance of the masses", as some scientists like to do (even if this is often the case). There is no need to “sprinkle ashes on your head” and go into “internal emigration”. You need to go and explain your position, go and talk with those who disagree with you.
And it was Friedman's strategy that paid off.
From 1966, he began to write a regular column in Newsweek magazine, in which he commented on current events in the context of his views (and continued this column until 1984). He participates in the creation of the 10-episode documentary "Freedom to Choose", each episode of which is dedicated to different economic problems and debunking popular misconceptions. Subsequently, a book with the same title, written by him in collaboration with his wife Rose Friedman, grew out of this cycle. The book became a bestseller and has been translated into 14 languages.
Friedman was convinced that even those ideas that are unpopular today can win recognition and become a source of revolutionary change in society.
respectable heretic
Despite his active journalistic and propaganda activities, Friedman continued his academic work. His theoretical writings, including the capital study " Money history United States (1867-1960)" (co-authored with Anna Schwartz), established his reputation as an outstanding academic economist.
In the early 1960s, Friedman made several important economic predictions that turned out to be correct, bringing him to the public's attention. The growth of Friedman's authority was facilitated by the discussion between him and the Keynesians about the Phillips curve, which reflects the interdependence of inflation and unemployment. When it turned out that the monetarists quite accurately predicted and theoretically explained the phenomenon of stagflation (simultaneous growth and inflation and unemployment), and the Keynesians could not do it, the "Keynesian revolution" was replaced by the "monetarist counter-revolution".
Under these conditions, Friedman acquired a unique intellectual status when someone aptly called him a "respectable heretic." On the one hand, Friedman did not look like a freak and madman, but was a fully recognized academic researcher in science, but on the other hand, he actively attacked many of the usual provisions of this science. And this also had a positive effect on the speed of dissemination of his ideas.
Friedman's polemical strategy was that he tried not to challenge the values of opponents, but to emphasize that the methods proposed by opponents would not lead to the desired results. He seemed to tell them: “I want what you want, I have the same goals, here we are together, but let's see what methods are best to achieve this,” and then he proved, including empirical data, what exactly his, Friedman's, proposals should be accepted by the opponent as the most effective for achieving their common goals. Friedman until his death (and he lived for 94 years and died in 2006) actively published articles on economic topics. His last column in The wall street The Journal came out the day after his death.
As a result of this activity, the worldview of American (and then European) society began to change. As Angus Bergin points out: “We are now living in an era in which economists have become the most influential philosophers ... And we owe this state of affairs primarily to Milton Friedman.” Even Friedman's main opponents, such as John Galbraith and Paul Samuelson, admitted he was right.
Thus, ideas that were at first considered overly radical and even sometimes extravagant gradually became mainstream not only in science, but also partly in economic practice. For example, the transition from a progressive income tax to a flat one in the 1960s was exotic, and in the 1990s-2000s, more than two dozen countries, including Russia, implemented this idea.
One should not think that only left-wing populism can have public support, that the ideas of classical liberalism will never gain support from a mass audience. Revolutionary changes in economics, and then in the economies of different countries, which began in the 1970s, lead to the fact that it is the broad masses who become the actor that makes demand for economic freedoms, for demonopolization and privatization, for tax cuts and for reducing the role of the state.
Friedman's scientific work allows us to draw one optimistic conclusion: society is not doomed to stagnation and stagnation if there are people who consider it their duty to "rock the boat" and "obstruct the passage of citizens." If you want change, you don't have to think that it will happen by itself. We need to prepare for these changes.