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
on the history of economic studies, on the topic:
« MILTON FREEDMAN»
Made by: 2nd year student
groups 19-1 Peeva Veronica
Checked:
Chisinau 2002
Introduction
1. Milton Friedman. A brief description of the biography.
2. Monetaristic recipes for economic recovery
3. Criticism by Milton Friedman of the International Monetary Fund
References
Introduction
Milton Friedman is an American economist, winner of the 1976 Nobel Prize in Economics, awarded "for research in the field of consumption, history and theory of money."
The name of M. Fridman - the Nobel laureate in modern economic theory is usually associated with the leader of the "Chicago School of Monetary" and the main opponent of the Keynesian concept of state regulation of the economy.
M. Friedman in his work is multifaceted and, very importantly, his scientific interests cover the field of methodology of economic science.
1. Milton Friedman
A brief description of the biography.
Milton friedman |
Milton Friedman was born July 31, 1912 in New York in a family of immigrants from Eastern Europe. Shortly after his birth, the family moved to Rahway, New Jersey. His mother worked in a haberdashery store, and his father, as Friedman later recalled, "tried unsuccessfully to achieve results in hopeless trading operations." The family had small and variable incomes and could not get out of need.
At the age of 16, Milton Friedman was accepted to the 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. M. Friedman continued his specialization in economics at the University of Chicago. Having received a master's degree from the University of Chicago in 1933, Friedman transferred for postgraduate internship at Columbia University (New York).
At the end of 1934, he began working as a research assistant at the University of Chicago. In the summer of 1935, M. Friedman took part in a large-scale consumer budget research project for the US National Committee on Natural Resources.
During the Second World War, Friedman participated in the development of tax policy on the instructions of the Ministry of Finance, conducts 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 of economics, remaining in this position to this day.
With the assistance of the NBEI, Friedman begins many years of work on the creation of a monetary theory. His subsequent contribution to the theory and practice of economic science is accompanied by unexpected results, he becomes a fruitful researcher, led by the so-called The "Chicago School" of economists.
In 1950, he worked in Paris as a consultant for the implementation of the Marshall Plan, which provided for the restoration of the economies of Western Europe destroyed by the war. In his book "The Theory of the Consumption Function", published in 1957, M. Friedman formulated and substantiated his theory of "constant consumption income."
In 1951, Friedman was awarded the John Bates Clark Medal of the American Economic Association.
In 1956, under his editorship, a collection of articles “Research in the field of the quantitative theory of money” was published.
In 1963, Friedman published the fundamental work, The Formation of the US Money System, written in collaboration with Anna Schwartz. In this book, he defends the position according to which, in long-term periods, major changes in economic life are associated primarily with the money supply and its movement. “The household is dancing to the tune of the dollar, repeating the dance of the dollar,” says M. Friedman. All the major economic shocks, including the Great Crisis of 1930, are explained by Friedman as a consequence of monetary policy, and not by the instability of a market economy. According to Friedman, the influence of money on economic activity is not an external (exogenous) factor in the economy, but rather, on the contrary, an internal (endogenous) factor. Following the monetarist school, he considers the demand for money one of the most important drivers of the economy. The Friedman monetary concept, in the words of the American economist G. Ellis, led to the "re-opening of money" due to almost everywhere growing, especially in the last period, inflation.
Friedman's views on the importance of state non-interference in economic policy were widely known thanks to his book Capitalism and Freedom (1962) and constant publications in the Newsweek column dedicated to him (since 1966).
In 1967, M. Friedman was elected president of the American Economic Association.
In 1969-1973 he was an economic adviser to US President Richard Nixon. He earned recognition as adviser to President Richard M. Nixon, despite his differences with him on the establishment of tight control of prices and wages in 1971. F.'s views on the importance of state non-interference in social policy were widely known thanks to the constant publication in assigned to him from 1966 in the News-week column of the magazine, and also thanks to the earlier publication of the book Capitalism and Freedom (Capitalism and Freedom, 1962). His popular book, Freedom of Choice (1980), even gave the name to a television headline for his series of conversations on social and economic issues.
In 1976, Milton Friedman was awarded the Nobel Prize in Economics "for his achievements in the field of analysis of consumption, the history of monetary circulation and the development of monetary theory, as well as for the practical demonstration of the complexity of the policy of economic stabilization."
In the Nobel lecture, he returned to the topic that had already been touched upon in 1967 when referring to the American Economic Association, to the denial of Keynes's remarks on the stable relationship between the rate of inflation and unemployment. He came to the conclusion that over a long interval, the Phillips curve nevertheless shifts upwards subject to a natural increase in unemployment.
In his opinion, the reason for this phenomenon was the adoption of the growth of unemployment as an increasing parameter instead of interpreting it as a constant numerical constant. For the short-term interval, in his opinion, inflationary monetary and fiscal policies could only temporarily reduce the unemployment rate, as workers and corporations out of habit tend to increase income levels, which ultimately cannot help but increase the price level (and, accordingly, increase unemployment).
Despite the fact that many views of M. Friedman on economic theory and public policy are considered controversial, he, as the English economist John Burton put it, "provided us with the foundation for future research on macroeconomics."
In 1977, M. Friedman left the University of Chicago, where he taught for many years, and began to work as a senior researcher at the Hoover Institute at Stanford University in California.
In 1980, his book Freedom of Choice was published (which became popular), which gave the name to the cycle of his conversations on television on social and economic issues.
In 1981-1984 M. Friedman was the economic adviser to US President Ronald Reagan.
Milton Friedman has been awarded honorary degrees from many American and foreign universities and academies.
M. Friedman in his work is multifaceted and, what is very important, his scientific interests also cover the field of methodology of economic science. For many years, economists have not been without analysis of the Friedman essay “Methodology of Positive Economic Science” in their discussions on this issue (1953), as well as without an essay on a similar topic written by L. Robbins (1932), R. Heilbroner (1991) and M. Alla (1990), or the famous lecture given by P. Samuelson at 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 substantial hypotheses is accepted when it can “explain” factual 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 an economic theory as describing rather than predictive is obvious, turning it into simply masked mathematics. According to M. Friedman, to argue about the diversity and complexity of economic phenomena means to deny the transient nature of knowledge, which contains the meaning of scientific activity, and therefore "any theory necessarily has a transient nature and is subject to change with the progress of knowledge." At the same time, the process of discovering something new in familiar material, concludes the Nobel laureate, should be discussed in psychological rather than logical categories and, studying autobiographies and biographies, stimulate it with the help of aphorisms and examples
2. Milton Friedman:
monetarist recipes
economic recovery.
What is monetarism? What are his postulates, reasons for influence?
Monetary - means monetary (money - money, monetary - monetary). By the definition of Bernard Yves and Collie Jean-Claude, monetarism is a stream of economic thought that assigns money a decisive role in the oscillatory movement of the economy. Monetarism is not only a science of money. The representatives of this school are in the focus of money categories, monetary instruments; however, they are interested not just in the monetary mechanism, the banking system, monetary policy, and currency relations. Monetarists examine these processes to identify the relationship between money supply and output. In their opinion, banks are a leading regulatory tool, with the help or with the direct participation of which changes in the money market are transformed into changes in the market of goods and services.
Send your good work in the knowledge base is simple. Use the form below
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4. Research in the field of consumer function, the hypothesis of constant income
1. Biography of M. Friedman and his economic activity
American economist Milton Friedman was born July 31, 1912 in Brooklyn (New York). When he was a child, his parents Sarah Ethel Friedman and Geno Saul Friedman, immigrants from Eastern Europe, moved to Rahway. His mother worked in a haberdashery store, and his father, as F. later recalled, "tried unsuccessfully to achieve results in hopeless trading operations." The family had small and variable incomes and could not get out of need.
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, F. fell under the influence of two assistants: Arthur F. Burns, who later became director of the US Federal Reserve, and Homer Jones, the future authority on interest rate theory. It is Jones F. who is obliged to write a thesis in economics and receive recommendations for continuing specialization in this field at the University of Chicago.
Having received a master's degree at the University of Chicago in 1933, F. transferred for postgraduate internship at Columbia University (New York). Collaboration F. with the US Bureau of Economic Research (NBER) began in 1937, when he began to work as an assistant to Simon Kuznets. economist consumer income
In 1940 they completed the writing of a joint scientific work, "Income from Independent Private Practice." This work subsequently formed the basis of the dissertation, for which F. in 1946 was awarded a doctorate in economics at Columbia University.
Despite the fact that many of his views on economic theory and public policy remain controversial, he, as the English economist John Burton put it, "provided us with the foundation for future research on macroeconomics."
In 1950, F., as a consultant on the implementation of the "Marshall Plan", developed by George, C. Marshall and providing for the restoration of the economies of Western Europe destroyed by the war, arrives in Paris, where he becomes an active advocate of the idea of \u200b\u200bfloating exchange rates. He predicts that the fixed exchange rates introduced by the Bretton Woods agreement will ultimately fail, which happened in the early 70s.
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 "Theory of the function of consumption", 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 his consumer calculations, with the exception of temporary ones, on current income, relying on expected or constant income.
Investigating an extensive range of practical consumption data, F. found that the results did not differ from his theory of fixed income. The conclusion about fixed income played an important role, causing a justified change in the formulation of the quantitative theory of money. In subsequent works, F. will show that changes in monetary demand throughout the history of America have always been determined by changes in the sphere of fixed income.
On November 16, 2006, Milton Friedman died in San Francisco, California, of a heart attack at the age of 94.
2. Professional position of an economist, criticism of his views
Friedman recommends completely abandoning a consistent monetary policy that still leads to cyclical fluctuations and adhere to the tactics of constantly increasing the money supply. In Monetary History of the United States (1963), Friedman and Anna Schwartz analyzed the role of money in economic cycles, in particular during the Great Depression. Later, 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).
The views of Friedman (as well as the Chicago School of Economics in general) are sharply criticized by Marxists (including Western), leftists, anti-globalists, especially Naomi Klein, who considers him guilty of negative phenomena in the economy of Chile during the Pinochet dictatorship and in Russia during the presidency of Yeltsin . In their opinion, a completely free market leads to the impoverishment of the vast majority of people, an unprecedented enrichment of large corporations; withdrawal from the state control of the education system leads to the transformation of the school into a business in which full-fledged education becomes inaccessible to many citizens, a similar situation is observed in medicine.
3. Friedman's considerations on aggregate utility
Friedman believed that aggregate utility increases as cash income increases. One of the curious, though not the main conclusions is the following: income growth, which improves the position of a given economic unit, but does not take it outside its class, reflects diminishing marginal utility, while income growth, as a result of which this unit goes over into a new class, reflects increasing marginal utility. Thus, the desire to get a new job, the income from which can provide a higher position in society, reflects a higher utility. But Friedman then changes the course of his argument, arguing that people with low incomes will avoid additional risk, because with diminishing marginal utility, in order to induce action, it is necessary to pay a bonus. On the other hand, middle-income groups, according to Friedman, are very prone to risky actions. All this shows how the shape of the utility curve is able to reflect a change in the economic situation. But this is equivalent to saying that the fittest survive.
The meaning of the concept of utility in Friedman emerged more clearly when he tried to connect it with the problem of income distribution. He made an attempt to bridge the gap between functional and personal distribution of income. The first, of course, should be deduced from the action of the market mechanism and the assessment of cost factors, while personal distribution depends on luck, chance, natural abilities, inheritance, that is, on virtually everything except the uneven distribution of wealth. Fridman tries not to notice the last circumstance. The main factor of his model is the risk and reaction to it in various people. A society (or part of it), which disapproves of the psychology of risk, will prefer lottery insurance and progressive taxation to regressive taxes. It will tend to resort more to the redistribution mechanism, so that income will be distributed more evenly.
4. Research in the field of consumer function, the theory of constant income
Friedman's research on consumer function deserves more attention. Keynes' function - the central idea of \u200b\u200bmodern economic theory used by Keynes - means such a relationship between income and consumption, when the latter, although growing as income grows, but at a slower pace. Friedman joined in this rather interesting discussion with his new concept - the constant income hypothesis, the origins of which can be traced back to Fisher and especially Knight. Friedman argues that the ability to anticipate consumption using an income-based consumer function is limited because, in his opinion, real investment does not have a multiplier effect on real consumption. The latter is determined by its own long-term trend. There is a trend, says Friedman, according to which an economic unit tends to a certain level of consumption for some time, for which it regulates its current income by providing or obtaining loans. In a sense, the income of an economic unit is related to the size of capital.
Both consumption and income consist of two parts, one constant, and the other variable. The constant income that the individual hopes to receive for a long time, largely depends on his foresight; its size is influenced by the environment, occupation and size of capital ownership. Variable elements of income consist of unexpected increases and deductions. Friedman admits that it is rather difficult to establish the dimensions of the constant component by direct observation, but he nevertheless believes that some conclusions can be formulated if certain assumptions are made regarding the ratio of the constant and variable parts. This ratio should depend on the interest rate, the ratio of income to wealth and consumer tastes. But since there is no connection between the variable parts of consumption and income, total consumption depends solely on fixed income. This means that the consumer remains true to his plans for spending money over time, regardless of whether the income deviates from the planned expenses.
The value of F.'s theory of fixed income is difficult to overestimate.
Most of the subsequent studies of aggregate consumption confirm this theory, and the developed methodology for determining and evaluating future projected incomes has everywhere aroused keen interest among macroeconomists. Moreover, the most important achievements in econometrics during the 60s and 70s. were achieved thanks to the statistical methods of F., which he used precisely for the assessment of fixed income.
5. "The money rule" M. Friedman
According to Milton Friedman, the main problem of monetary policy is to ensure consistency between the demand for money and their supply. Stable demand for money is the main prerequisite for price stability, the stability of aggregate payment demand, and, therefore, ensuring the stability of the system as a whole. From this follows his recommendation: an increase in money in circulation should correspond to an increase in gross national product (GNP). This is what Friedman's so-called monetary rule consists of.
Friedman considered it necessary to increase the money supply at a constant pace: "a constant expected growth rate of the money supply is a more significant point than knowing the exact magnitude of this pace."
In practice, in the field of monetary policy, Western countries do not follow the literally “rule” stated above, but usually establish a “plug” around which the money supply should fluctuate.
Milton Friedman was an American economist, theorist. His name is mainly associated with the monetarist doctrine, which brought him great popularity and influenced the revision of monetary policy pursued by central banks in the 70-80s, mainly in the United States.
The main achievements of Friedman in the field of money theory, one way or another, are connected with an analysis of the theory of J. M. Keynes and his followers, based on the insignificant effect of money on general expenses, consumption and prices. Friedman presented criticism of these provisions in the article “Relative Stability of Money Velocity and the Multiplier of Investments in the USA” (1897 - 1958). It shows that nominal consumer spending is determined more by the money supply than by individual items of the state budget. Based on the determining role of money in relation to prices and incomes, Friedman argued that changes in the growth rate of nominal incomes are mainly due to changes in money supply growth. An article by Friedman and D. Meiselman marked the beginning of a polemic with Keynesians over monetary and fiscal policies unfolding in the 60s and 70s. 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. - SPb .: SPb. -Orchestra, 1994 .-- Part IV, ch. 14-17.
3. Kostyuk V.N. History of Economic Thought: A Training Manual. - M.: Center, 1997. -Theme 15.
4. McConnell K.R., Bru S.L. Economics: Principles, problems and politics. - M .: Republic, 1992. - T. 1, ch. 18.
5. Solodkov V.M. Milton Friedman's Economic Theory // 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): Lecture course. - M .: BEK, 1996. - Ch. 10.
9. Usoskin V.M. "Money World" by Milton Frndman. - M.: Thought, 1989. - Ch. 2, 3.
10. Livshits A.Ya. Introduction to a market economy. - M .: MP TPO "Square", 1991. -Lectures 7, 8.
11. Seligman B. The 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 (07/31/1912 - 11/16/2006) - American economist, public figure, Nobel laureate in the field of economic sciences.
Among scientists, he is best known for his theoretical and empirical studies, especially for the analysis of consumption, monetary history and theory, as well as for his demonstration of the complexity of stabilization policies. The world community has followed his affirmation of a political philosophy that insists on minimizing the role of government in favor of the private sector. As the leader of the Chicago School of Economics, based at the University of Chicago, he had a wide influence on research in all specialties.
Numerous monographs, books, scientific articles, reports, journal columns, television programs, videos, and Friedman's lectures cover a wide range of topics on microeconomics, macroeconomics, economic history, and public policy issues. The Economist called him “the most influential economist of the second half of the 20th century.”
Friedman's methodological innovations were widely recognized by economists, but his policies were found to be highly controversial. Most economists rejected it in the 1960s, but since then it has had increasing international influence (especially in the USA and Great Britain), and in the 21st century it has been widely recognized among many economists.
Milton Friedman's ideas were widely used especially during the 1980s. His views 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 United States, Brian Mulroney in Canada and after 1989 in many countries of the East Of Europe.
Milton Friedman is the author of the books Quantitative Theory of Money, Reflections on Currency History, The Case of Free Trade, Economic Freedom, Human Freedom, Political Freedom, Capitalism and Freedom, and Social Security.
Books (4)
Capitalism and freedom
The book of the Nobel Prize winner in economics in 1976 and one of the most famous economists of the post-war era, “Capitalism and Freedom” by Milton Friedman, is one of the most significant political and economic works of the 20th century.
The ideas expressed in it limit the state’s interference in the economy and the relationship of economic and political freedom, a flexible exchange rate and a flat income tax scale, the privatization of education and the social security system, the creation of a contract army and many others became the foundation for most of the liberal reforms carried out in recent decades in different countries of the world.
Quantitative Theory of Money
The term “quantitative theory of money” is associated more with a certain general concept than with a clearly formulated theory.
About freedom
The collection includes fragments of 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 of the history of classical liberalism as a doctrine and political movement.
The book is taken from the site http://www.inliberty.ru
Freedom to choose
The book “Freedom to Choose” by one of the most influential modern economists Milton Friedman and his wife Rose Friedman is one of the most famous works of liberal thought in the second half of the 20th century. Defending the values \u200b\u200bof 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 state systems of social security, education, financial regulation, licensing of various goods and activities, etc.
The book is taken from the site http://www.inliberty.ru
103 years ago, an American economist and supporter of classical liberalism was born.
Milton Friedman was born July 31, 1912 in Brooklyn in a family of Jewish immigrants from Beregovo (Transcarpathia) - his parents moved to New York shortly before Milton’s birth. His father, Jeno Saul Friedman, and his mother, Sarah Ethel (nee Landau), had a direct, albeit modest, relationship to the economy - they traded in groceries.
The future Nobel laureate in economics, a talented young man, Milton Friedman graduated from Rutgers University (1932) and the University of Chicago (1934) and devoted himself to scientific activity. In his work, he studied the economic processes taking place in the United States, and came to the conclusion that it is better for both the States and other countries to abandon a consistent monetary policy in favor of tactics of constantly increasing the money supply. Friedman also proved the undesirability of government intervention in the economy, actively opposed compulsory military service and was skeptical about the introduction of the euro as a single European currency.
Much has been said about Milton Friedman - primarily by other economists - and far from always agreed with his opinion. But, as George Schulz, 62nd US Treasury Secretary, said, “Everyone loves arguing with Milton, especially when he's not around.”
The editors of JewishNews.com.ua collected 10 basic facts from the life of Milton Friedman:
1. In 1951, Milton Friedman got the John Bates Clark medal, which is awarded to economists under 40 for their unique contribution to their field. In economics, this award in its prestige can be compared with the Nobel Prize.
2. In his book Capitalism and Freedom (1962), dr. Friedman calls for shrinking the role of governmentin human life. His idea was that the individual’s freedom is indivisible, and government regulation of economic activity inevitably leads to a violation of individual and political freedoms.
3. The views of Friedman, who advocated limiting the influence of the government on the personal freedom of man, turned him into a real symbol of the struggle for the contract army and the abolition of universal military service.
4. Friedman visited Chile in 1975 during the dictatorial rule of Augusto Pinochet - where the scientist gave several lectures on economics. He did not support the Pinochet regime, and the market openness policy promoted by Friedman not only helped improve the economic situation in Chile, but also contributed to the softening of the regime of the dictator and the subsequent removal of his democratic government in 1990.
5. Milton Friedman received 1976 Nobel Prize in Economics "For achievements in the field of consumption analysis, the history of monetary circulation and the development of monetary theory, as well as for a practical demonstration of the complexity of the policy of economic stabilization."
6. In 1988, Friedman received two awards - National Science Medaland Presidential Medal of Freedom.
7. Dr. Friedman is known for reviving public interest in quantitative theory of money (monetarism). Together with Anna Schwartz, he wrote the book The Monetary History of the United States (1963), at the end of which it was concluded that fluctuations in the money supply lead to economic fluctuations (the Great Depression was evidence 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 best seller in the non-fiction category.
9. Milton Friedman was president of the American Association of Economists, Association of Western Economics, Mon Pelerin Society of Economists, and a member of the American Philosophical Society and the US National Academy of Sciences.
10. Milton Friedman was named secondafter John Maynard Keynes “The most influential economist of the second half of the 20th century ... if not the whole of the 20th century”.
Ideas, which were initially considered overly radical and even extravagant, gradually became mainstream not only in science, but partly in economic practice.
July 31 marks the 105th anniversary of Milton Friedman, the great economist, winner of the 1976 Nobel Prize, who is usually called the "most influential economist of the second half of the 20th century."
This non-obvious anniversary allows us to recall that Fridman, in addition to the scientist, had another hypostasis, important today. This is the role of a public intellectual - an economist who speaks with society.
Against the stream
Let me remind you that the 1930-1960s were a time when most academic economists in the United States and 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: the Stalinist Soviet Union, Mussolinieva Italy, Hitlerite Germany built their economic policies on the principles of active state participation in the economy and seemed to prove that classical liberalism had died. In Great Britain, the Laborites saw their ideal in the USSR and nationalized many industries, including railways, even in the USA 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 only by a handful of intellectuals. Economists who opposed government intervention felt like outcasts. Friedrich von Hayek (in 1974 and he will receive the Nobel Prize) wrote that during these years "there were very few people who are not socialists."
Capitalism and freedom
In 1962, Friedman publishes the book Capitalism and Freedom, which was compiled from his earlier lectures. She explained, firstly, why economic freedom is needed and it is necessary to reduce the role of the state in the economy, and secondly, how economic and political freedom are related. This book was called the desktop Ronald Reagan and Margaret Thatcher and many still consider it to be one of the most important economic and political works of the 20th century.
In this book, Friedman launched a large-scale program to reduce the role of the state in the economy: he called for the abolition of customs duties and export restrictions governing the functions of the State Trade Commission and the Federal Communications Commission, subsidies to agricultural producers, social insurance, state housing, military service, all professional licensing systems, as well as eliminating progressive taxation (“Being a liberal,” he wrote, “I do not find any excuses for the system we have a progressive tax "), privatize health care and to give up public pension systems, replacing them with private pension funds. And, of course, Friedman was an opponent of state funding and any state support for higher education institutions.
Friedman defended the ideas of free trade, any import tariffs (duties) and quotas, in his opinion, are 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 borders of the country should be completely open to immigrants, but on one condition: the state should not provide them any assistance; the Food and Drug Administration, in his opinion, also needed to be abolished. He demanded (as, incidentally, another future Nobel laureate - George Stigler) to repeal laws establishing a minimum level of wages. Friedman wrote that the regulation of the minimum wage is well-intentioned, but leads to the opposite results, which will suffer primarily from those who care about this regulation is caused. Including because such regulation causes an increase in unemployment.
And all this in 1962! As Engus Bergin writes in this book, The Great Revolution of Ideas, “it was breathtaking from the daring of these proposals.”
By the way, Friedman was able to participate directly in the process of canceling the compulsory military draft in the United States: he was a member of the advisory commission created by Richard Nixon, which prepared the cancellation of the draft in 1973.
All these ideas provoked a rather negative reaction of the then, largely left-wing, American intellectual elite. Friedman himself later recalled: "When this book first saw the light, the views expressed in it so diverged from the mainstream of the then thought that reviews of it did not appear in any of the major periodicals."
Under such conditions, some economists become discouraged, while others go into “pure” science and avoid public discussions. 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 to convey his opinion to the general public. If you think that certain popular opinions are wrong, you don’t need to complain about the “lack of education of the masses,” as some scientists like to do (even if this is often the case). No need to “sprinkle ash 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 this is precisely the strategy of Friedman that bore fruit.
Since 1966, he begins to lead a regular column in Newsweek magazine, in which he comments on current events in the context of his views (and leads this column until 1984). He is involved in the creation of the 10-episode documentary “Freedom to Choose,” each of which is dedicated to various economic issues and debunking popular misconceptions. Subsequently, a book of the same name grew from this cycle, co-authored by his wife Rose Friedman. The book has become a bestseller and has been translated into 14 languages.
Friedman was convinced that even those ideas that are unpopular today can gain recognition and become a source of revolutionary changes in society.
Respectful Heretic
Despite active journalistic and propaganda activities, Friedman continued his academic work. His theoretical works, including a major study, The Monetary History of the United States (1867-1960) (co-authored by Anna Schwartz), created him a reputation as an outstanding scientist and economist.
In the early 1960s, Friedman made several important economic forecasts that turned out to be correct, which attracted the attention of the public. The growth of Friedman's authority was facilitated by a discussion between him and 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 were unable to do this, the “Keynesian revolution” was replaced by the “monetarist counter-revolution”.
Under these conditions, Friedman acquired a unique intellectual status when someone successfully called him a "respectable heretic." On the one hand, Friedman did not look like a freak and a madman, but was an academic researcher quite recognized in science, but on the other, he actively attacked many of the usual positions of this science. And this also had a positive effect on the speed of dissemination of his ideas.
Friedman's polemic strategy was that he tried not to dispute the values \u200b\u200bof his opponents, but to emphasize that the methods proposed by his opponents would not lead to the desired results. He seemed to be telling them: “I want that you, I have the same goals, we are together here, but let's see what methods are best to achieve this,” and then he proved, using empirical data, including what his, Friedman's, the opponent must accept the proposals as the most effective in order to achieve their common goals. Fridman until his death (and he lived 94 years and died in 2006) actively published articles on economic topics. His last column in The Wall Street 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 Engus Bergin points out: “We are now living in an era when economists have become the most influential philosophers ... And this state of things is primarily due to Milton Friedman.” Even Friedman's main opponents, such as John Gelbraith and Paul Samuelson, admitted that he was right.
Thus, ideas that were initially 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 scale of income tax to flat in the 1960s was exotic, and in the 1990-2000s, more than two dozen countries, including Russia, realized this idea.
It is not necessary to think that only left-wing populism can have public support, that the ideas of classical liberalism will never receive support from a mass audience. The revolutionary changes in economic science, 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 who demands economic freedom, demonopolization and privatization, tax cuts and decrease in the role of the state.
Friedman's scientific work allows 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 "interfere with the passage of citizens." If you want change, you don’t need to think that it will happen by itself. It is necessary to prepare these changes.