Introduction: Milton Friedman’s Impact on Modern Capitalism
Milton Friedman (1912-2006) was a Nobel Prize-winning American economist renowned for his influential advocacy of free-market capitalism and monetarism. His economic theories, which challenged the dominant Keynesian economics of the 1950s and 1960s, significantly influenced modern capitalism as we know it today.
Born to immigrant parents in Brooklyn, New York, Friedman’s formative years were marked by financial instability and hardship. His father died during his senior year in high school, forcing him to work various jobs alongside his studies at Rutgers University, where he earned a degree in mathematics and economics in 1932. His academic prowess led him to the University of Chicago, where he completed his Ph.D. in economics under the guidance of renowned economist, Henry A. Wallace Harrison.
Early in his career, Friedman made groundbreaking contributions to economic theory with publications on consumption analysis and economic history at the U.S. Treasury Department and Rutgers University. These works laid the foundation for his future research focusing on free-market capitalism and monetarism.
Friedman’s academic tenure at the University of Chicago marked a significant period in his career. During this time, he became one of the most influential figures in the Chicago School of Economics, which championed free markets and rational expectations in economics. He also established the influential Workshop on Money and Banking that enabled monetary studies to evolve into an empirical and theoretical research field.
In 1976, Friedman was awarded the Nobel Memorial Prize in Economic Sciences for his significant contributions to economic theory and monetary history. His ideas influenced monetarist theory by advocating control of the money supply as a primary tool for economic management.
Friedman’s challenge to Keynesian economics began with his advocacy of monetarism, which emphasized the importance of monetary policy over fiscal policy in managing economies. At the time, Keynesian economics, which focused on government intervention through fiscal policies, was dominant. However, Friedman’s argument for free markets and limited government intervention eventually led to a shift in economic thought away from Keynesian economics towards monetarism.
Throughout his career, Friedman published numerous influential works that expanded upon these ideas, including “A Theory of the Consumption Function” and his advocacy against stagflation—a condition characterized by stagnant economic growth and high inflation. His theories influenced the policies of prominent political figures like Ronald Reagan and Margaret Thatcher in the late 20th century.
Friedman’s early years were marked by significant adversity, which influenced his later advocacy for free markets as a means to secure individual freedom and economic stability. His education and professional development, including his time at the U.S. Treasury Department and Rutgers University, provided essential groundwork for his influential publications on consumption analysis and monetary history.
In retirement, Friedman served as a Senior Research Fellow at the Hoover Institution of Stanford University, further solidifying his impact on economic thought and policy. His theories continue to shape modern capitalism as we know it today, with influences evident in contemporary debates on fiscal policy, government intervention, and monetary management.
Early Career: Consumption Analysis and Economic Theory
Born in 1912, Milton Friedman’s career as an economist began during a period where monetary policy was overshadowed by fiscal policy. The Keynesian economic perspective dominated the discourse on macroeconomics, which posited that government spending and tax policies were vital to manage economic fluctuations. However, Friedman championed a different approach: monetarism, which emphasized the importance of monetary policy over fiscal policy in stabilizing the economy (Friedman, 1968).
During his time at the U.S. Treasury and Rutgers University, Friedman made significant contributions to economic theory through his research on consumption analysis. One of his most notable works during this period was his study on the modern economy, which was published in the Journal of Political Economy (Friedman & Savage, 1948). The paper introduced the concept of permanent income and laid the foundation for his later work on monetary policy.
In this early stage of Friedman’s career, he developed the theory of consumption function that challenged Keynesian views on consumer behavior. The traditional Keynesian perspective suggested that consumers spent based on current income, leading to fluctuations in spending in response to economic conditions. However, Friedman believed that consumers made rational decisions and adjusted their spending based on their permanent income, not temporary fluctuations (Friedman, 1957). This theory became a cornerstone of monetarist economics.
At the heart of Friedman’s consumption function was the idea of a stable relationship between consumption and permanent income. He proposed that consumers adjust their spending to maintain a constant level of saving relative to their permanent income. Therefore, changes in current income would not significantly impact consumption if consumers expected those changes to be temporary. Conversely, any change in permanent income would result in a proportional change in consumption (Friedman, 1957).
The significance of Friedman’s permanent income hypothesis was that it provided a theoretical framework for understanding consumer behavior and its relationship with economic fluctuations. Moreover, it challenged the Keynesian notion that fiscal policy could effectively stabilize the economy by manipulating consumer spending through changes in government expenditures or taxes (Friedman & Schwartz, 1963). Instead, monetarism posited that monetary policy—specifically controlling the supply of money—could provide a more stable foundation for economic growth.
In summary, Friedman’s work on consumption analysis during his time at the U.S. Treasury and Rutgers University laid the groundwork for his future contributions to economics. His theories challenged the prevailing Keynesian perspective, offering new insights into consumer behavior and paving the way for monetarism as an alternative approach to managing economic fluctuations.
References:
– Friedman, M. (1957). A Theory of the Consumption Function. Princeton University Press.
– Friedman, M. A., & Savage, L. J. (1948). Utility analysis and statistical inference. Journal of Political Economy, 56(3), 279-304.
– Friedman, M. A., & Schwartz, A. J. (1963). A Monetary History of the United States: 1867-1960. Princeton University Press.
University of Chicago: The Chicago School of Economics
Milton Friedman’s tenure at the University of Chicago marked a significant turning point in his career and played a crucial role in the establishment and propagation of monetarism, which challenged Keynesian economics. During this period, Friedman developed a strong interest in monetary policy over fiscal policy, advocating for free markets and smaller government intervention. He also established the influential Money and Banking Workshop, where his monetary studies evolved into a substantial body of work.
The Chicago School of Economics was a neoclassical school founded in the 1930s by Frank Knight with the aim of promoting free markets and individual freedom, including the concept of rational expectations. Friedman became one of its most renowned alumni, contributing to the evolution of monetarism as a counterpoint to Keynesian economics. In particular, Friedman’s ideas on rational behavior challenged existing views on consumption and income analysis, introducing the hypothesis of permanent and transitory income (permanent income hypothesis). His work during this era laid the groundwork for a new perspective on economic patterns and proved influential in shaping modern capitalism.
The Money and Banking Workshop at the University of Chicago allowed Friedman’s monetary studies to evolve from individual scholarship into a comprehensive body of research, creating a significant impact in the fields of monetary history and statistics. The workshop fostered an environment where economists could collaborate and share ideas, contributing to the advancement of economic theory and policy.
Friedman’s work during his time at the University of Chicago proved instrumental in challenging the Keynesian consensus, influencing not only academic debates but also shaping the policies of governments such as those led by Ronald Reagan and Margaret Thatcher in the late 20th century. His advocacy for monetarism paved the way for a renewed focus on monetary policy and a reduction in government intervention in the economy, reshaping economic thought and practice.
Nobel Prize in Economic Sciences (1976)
In 1976, Milton Friedman’s groundbreaking contributions to economics were recognized with the prestigious Nobel Memorial Prize in Economic Sciences. This award honored his achievements in three significant areas: consumption analysis, monetary history and theory, and stabilization policy.
Consumption Analysis:
Friedman began his career in economics by revolutionizing our understanding of consumption patterns through the hypothesis of rational behavior. In 1941, he published a seminal study on consumers’ budgets during the Great Depression, which introduced the concept of permanent and transitory income. His permanent income hypothesis asserted that individuals base their spending decisions on the assumption that income fluctuations are temporary, leading to a more stable economy.
Monetary History and Theory:
Friedman’s monetary theories challenged the dominant Keynesian perspective on fiscal policy by emphasizing the importance of controlling the money supply to maintain economic stability. This approach, known as Monetarism, placed less emphasis on government intervention in the economy and paved the way for a resurgence in free markets.
Stabilization Policy:
Another key aspect of Friedman’s work was his advocacy for a market-driven approach to economic stabilization through monetary policy, rather than fiscal policy as preferred by Keynesians at the time. He demonstrated that controlling inflation and unemployment could be achieved by managing the money supply to maintain price stability and promote long-term growth.
The importance of Friedman’s Nobel Prize in Economic Sciences cannot be overstated, as it represented a turning point in economic thought, moving away from Keynesian economics towards the principles that would shape modern capitalism. His ideas on consumption analysis, monetary history and theory, and stabilization policy reshaped economic theory, making him a leading figure in 20th-century economics.
Friedman’s groundbreaking work challenged the dominant Keynesian perspective of his time, which held that fiscal policy was the primary tool for managing the economy. By emphasizing monetary policy and free markets, Friedman laid the foundation for modern capitalism, influencing economic thought for generations to come.
Monetarism: Control of Money Supply
Monetarism, one of Milton Friedman’s most influential contributions to economics, became a significant challenge to Keynesian economics. This economic philosophy emphasized control of the money supply as the primary tool for maintaining price stability and managing inflation.
Early on in his career, Friedman published groundbreaking research on monetary history and theory. These works laid the foundation for the monetarist approach that would eventually change the course of macroeconomic thought. In 1953, while at Rutgers University, he wrote “The Role of Monetary Policy,” which critiqued the Federal Reserve’s role in managing the economy through interest rate adjustments and instead advocated for controlling the supply of money as a more effective means to influence economic conditions.
Friedman’s ideas on monetarism were further developed during his time at the University of Chicago, where he established the influential Money and Banking Workshop in 1953. This workshop brought together economists to discuss monetary history and monetary policy, fostering a collaborative environment for monetarist research.
Monetarism’s appeal lay in its ability to offer clear and predictable relationships between money, inflation, and economic growth. Friedman argued that controlling the money supply could prevent inflation and stabilize the economy better than relying on fiscal policy or government intervention in the market. This perspective challenged the prevailing Keynesian belief that fiscal policies were the most effective tool for managing economic fluctuations and unemployment.
Friedman’s advocacy of monetarism grew even stronger following the 1960 publication of “A Monetary History of the United States, 1867-1960,” which he co-authored with Anna J. Schwartz. The book provided empirical evidence that showed a close relationship between changes in the money supply and fluctuations in economic activity, further bolstering support for monetarist principles.
The monetarist approach gained significant recognition when Friedman correctly predicted stagflation – the combination of stagnant growth and high inflation – in his 1967 American Economic Association presidential address. Keynesian economists had assumed that such a phenomenon was impossible, as the Phillips curve, which demonstrated a historical correlation between unemployment and inflation, suggested a stable tradeoff between the two variables. However, Friedman argued that this relationship was only temporary and would eventually break down. His prediction proved true during the late 1970s when stagflation occurred, confirming monetarist theory’s validity and reshaping economic thought.
Friedman’s monetarism also challenged the conventional wisdom regarding the role of the Federal Reserve in the Great Depression. In his influential book “A Monetary History of the United States,” Friedman argued that the Federal Reserve failed to prevent the Great Depression by not providing sufficient liquidity to the banking system during its early stages, allowing widespread bank failures and a subsequent drop in the money supply. This, in turn, contributed to the deepening economic downturn. Although some critics contested Friedman’s interpretation, his monetarist perspective on the role of the Federal Reserve significantly influenced modern economic thought.
Today, Milton Friedman’s contributions to monetarism continue to shape economic policy and research, with central banks around the world adopting various forms of inflation targeting as a means to maintain price stability and promote economic growth. His ideas on controlling the money supply have proven to be an important and effective tool for managing modern economies.
In conclusion, Milton Friedman’s advocacy for monetarism – control of money supply – fundamentally changed the way economists approach macroeconomic management and policy making. By emphasizing the importance of controlling the money supply in maintaining price stability and managing inflation, Friedman provided an alternative perspective to the prevailing Keynesian views that challenged the role of fiscal policy as the primary means to manage economic fluctuations. His ideas on monetarism not only reshaped modern capitalism but also paved the way for the development of contemporary central banking practices.
Challenging Keynesian Economics: The Great Depression and the Phillips Curve
Milton Friedman’s influential role in modern capitalism is rooted in his groundbreaking challenge to Keynesian economics, as demonstrated by his analysis of stagflation and the role of monetary policy during the Great Depression.
In the late 1960s, Milton Friedman presented a prediction that seemed impossible according to the prevailing economic theories based on the Phillips curve: the simultaneous occurrence of stagnant economic growth, high inflation, and high unemployment – stagflation. At that time, Keynesian economists assumed the stable tradeoff between unemployment and inflation, and argued for expansionary fiscal policies that drove higher inflation with low unemployment rates.
Friedman’s counterargument to this notion was that consumers adapt their expectations to long-term inflation and adjust their spending accordingly, effectively canceling its impact on employment levels. This theory, which became a great triumph for postwar economics when the stagflation of the late 1970s proved it accurate, signified one of Friedman’s most significant accomplishments as an economic theorist.
Another critical challenge to Keynesian economics came from Milton Friedman during his investigation into the causes of the Great Depression. In A Monetary History of the United States (1963), co-authored with Anna Schwartz, he argued that the Federal Reserve’s failure to maintain a stable money supply worsened the economic crisis by contributing to the wave of bank failures that led people to hoard cash and withdraw deposits, in turn making banks reluctant to issue loans.
The Federal Reserve could have prevented this collapse by providing additional liquidity to the banking system or bailing out troubled institutions, Friedman asserted. Instead, its actions further exacerbated the depression by reducing the available money supply, thereby deepening the economic downturn. This theory was met with controversy from neo-Keynesian economists who argued that the Fed did increase the monetary base and question whether they could have prevented the catastrophic drop in the money supply.
Regardless of the debate surrounding Friedman’s conclusions, his influence on modern capitalism cannot be understated. His monetarist approach to economic management challenged the dominant Keynesian paradigm, focusing on control of the money supply and allowing the free market to address inflation and stabilize the economy. This shift in economic thought led to the implementation of anti-inflationary policies under President Ronald Reagan and British Prime Minister Margaret Thatcher, reshaping modern capitalism as we know it today.
By advocating for the importance of monetary policy, Friedman not only challenged established economic theories but also paved the way for a new era of economic thinking. His groundbreaking work continues to inform contemporary economic debates and influence policymaking around the world.
FAQs: Milton Friedman’s Economic Ideas
1. What is Milton Friedman most famous for in economics?
Milton Friedman is best known for his influential role in modern capitalism through his theories of monetarism, free-market capitalism, and the challenge to Keynesian economics.
2. How did Milton Friedman’s ideas impact economic theory?
Friedman’s ideas transformed economic thinking by refuting significant parts of Keynesian economics and promoting monetary policy focused on controlling the money supply as a means for managing inflation and stabilizing the economy. His theories influenced modern capitalism, leading to smaller government, deregulation, and anti-inflation policies during the Reagan and Thatcher administrations.
3. What is monetarism?
Monetarism is an economic theory that emphasizes the importance of controlling the money supply as a primary tool for managing economic conditions, as opposed to relying on fiscal policy or government intervention. Milton Friedman’s theories of monetarism challenged the dominant Keynesian approach and influenced modern capitalism by advocating for smaller government and deregulation in most areas of the economy.
4. What is the difference between monetarism and Keynesian economics?
Monetarism focuses on control of the money supply, whereas Keynesian economics emphasizes fiscal policy to influence economic conditions. Monetarism argues that government intervention through fiscal policies may not be necessary to stimulate the economy and can even hinder its natural ability to recover, as Friedman demonstrated in his analysis of stagflation and the role of monetary policy during the Great Depression.
5. What is the Phillips curve?
The Phillips curve is an economic model that shows a historical correlation between unemployment and inflation. Keynesian economists used it to argue for expansionary fiscal policies based on the belief that there was a stable tradeoff between unemployment and inflation, i.e., high inflation would always be accompanied by low unemployment and vice versa. However, Friedman’s analysis of stagflation demonstrated that this correlation was not stable and that both inflation and unemployment could coexist at high levels.
Theoretical Economist: The Hypothesis of Rational Behavior
Milton Friedman, a Nobel laureate and champion of free-market capitalism, is best known for his revolutionary ideas on monetarism and the hypothesis of rational behavior. Before delving into these concepts, it’s important to understand Friedman’s contributions to economic theory in its early stages.
Friedman’s groundbreaking publications during his time at the U.S. Treasury and Rutgers University laid the foundation for his theoretical work. One of his earliest achievements was the Theory of the Consumption Function, which introduced the concept of permanent and transitory income. Friedman argued that consumers base their decisions on their long-term expectations, saving when their current income exceeds their permanent income and spending when it falls below it. This hypothesis has remained a cornerstone of modern economic theory, particularly in understanding consumption patterns and the relationship between income and spending.
In addition to his work on consumption analysis, Friedman’s professional income study at the National Bureau of Economic Research introduced crucial concepts like permanent income and expected utility that would shape subsequent research in the field. His contributions during this period established him as a significant figure in economics and paved the way for his later work on monetarism and free-market capitalism.
When Friedman joined the University of Chicago, he played a critical role in shaping its reputation as a hub for monetarist thought through his establishment of the money and banking workshop. This platform allowed monetary studies to evolve into a substantial body of research that would later challenge the Keynesian consensus on economic management. The Chicago School of Economics, which emphasized free markets and individual freedom, became synonymous with Friedman’s ideas on rational expectations and monetarism.
The Nobel Memorial Prize in Economic Sciences recognized Friedman’s achievements in consumption analysis, monetary history and theory, and stabilization policy in 1976. This recognition marked the culmination of his professional journey as a proponent of free-market capitalism and monetarism.
As a theoretical economist, Friedman’s assertion that economic models should be evaluated based on their predictive power and the hypothesis of rational behavior significantly influenced economic thinking. His belief in rational behavior meant that consumers made decisions based on available information and expected consequences, ensuring market equilibrium and stability. Friedman argued that individuals maximized utility when making choices, leading to an understanding of consumer demand as a function of prices and income. By focusing on the accuracy of economic models rather than their psychological realism, Friedman paved the way for more rigorous and predictive economic analysis.
In summary, Milton Friedman’s theoretical contributions, particularly his advocacy for the hypothesis of rational behavior, significantly impacted the field of economics. His emphasis on the importance of predictive power in economic models has remained a guiding principle in academic research to this day.
Education and Early Career: Pre-War Economics
Milton Friedman, a Nobel laureate renowned for his advocacy of free-market capitalism and monetarism, began his academic journey at Rutgers University, where he earned an undergraduate degree in mathematics and economics. To supplement his scholarship, Friedman took on various jobs. After graduation, he was awarded a scholarship to attend the University of Chicago’s economics graduate program.
Before earning his Ph.D. from Columbia University in 1946, Friedman held several government roles that deepened his expertise and contributed to publications on consumption and income analysis. For instance, during World War II, he served as a statistical analyst for the U.S. Treasury Department and as mathematical statisticians at Columbia University, conducting studies on wartime tax policy and weapon design, respectively. Friedman’s consumer budget study at the National Resources Committee led to his influential Theory of the Consumption Function, while his professional income study for the National Bureau of Economic Research introduced important concepts like permanent and transitory income (his permanent income hypothesis) into economic science.
The groundbreaking work during these early years set the stage for Friedman’s later challenges to Keynesian economics—a school of thought that dominated macroeconomics at the time. Despite his radical advocacy for monetary policy over fiscal policy and free markets over government intervention, Friedman’s ideas would eventually change the course of economic thought and reshape modern capitalism.
Milton Friedman (1912–2006) was born to immigrant parents in Brooklyn, New York. His family was warm and supportive but financially unstable—his father died during his senior year in high school, forcing Friedman to work multiple jobs throughout college. After graduating from Rutgers University with a degree in mathematics and economics, Friedman went on to earn a Ph.D. in Economics at Columbia University in 1946.
Prior to his doctoral studies, Friedman held various government roles that significantly contributed to his understanding of economic theory and mathematical statistics. At the National Resources Committee, he conducted a consumer budget study that formed the foundation for his groundbreaking Theory of the Consumption Function. Later, at the National Bureau of Economic Research (NBER), Friedman’s professional income study on “Incomes from Independent Professional Practice” introduced important concepts like permanent and transitory income into economic science, which later became known as the permanent income hypothesis.
During World War II, Friedman served as a statistical analyst for the U.S. Treasury Department, where he recommended increasing taxes to suppress wartime inflation and established the first system of income tax withholding. Following his service at the Treasury, Friedman continued to serve as mathematical statisticians on weapon design, military tactics, and metallurgical experiments at Columbia University.
Friedman’s academic career was marked by a series of publications that challenged the Keynesian economics establishment. His free-market theories became known as monetarism, which refuted important aspects of Keynesian economics. By emphasizing control of the money supply through monetary policy and advocating for smaller government and deregulation, Friedman provided intellectual foundations for anti-inflationary, tax-cutting, and pro-market policies adopted by politicians such as Ronald Reagan and Margaret Thatcher.
In the 1930s, Knight founded the Chicago School of Economics to promote free markets and individual freedom. Friedman became its most famous alumnus and helped to develop monetarist theories that challenged Keynesian economics. The school’s focus on rational expectations and the hypothesis of rational behavior in economic modeling influenced economists for decades.
By the time of his death in 2006, Friedman had significantly impacted modern capitalism by reshaping economic thought through his advocacy for free markets, limited government intervention, and monetarism. His work on consumption analysis, monetary history and theory, and stabilization policy paved the way for a new generation of economists to build upon and refine his ideas.
The Hoover Institution: Post-Retirement
After retiring from active teaching at the University of Chicago, Milton Friedman joined the Hoover Institution at Stanford University as a Senior Research Fellow. The Hoover Institution is a public policy think tank that promotes individual freedom, economic and political freedom, and limited government. With this new affiliation, Friedman continued his life’s work of challenging established economic theories and advocating for free markets and limited government intervention.
At the Hoover Institution, Friedman played an essential role in disseminating his ideas through lectures, publications, and collaborations with other scholars. One of his most notable contributions during this period was his collaboration with Anne Schwartz on their groundbreaking book, “A Monetary History of the United States, 1867–1960.” Published in 1963, this book challenged Keynesian economics by arguing that monetary policy, specifically control of the money supply, is crucial for economic stability. The work was recognized with the Nobel Memorial Prize in Economic Sciences in 1976.
Friedman’s advocacy for free markets and limited government extended beyond economics. He believed that free markets promote individual freedom and are essential for a prosperous society. In his writings, he argued that governments should focus on maintaining a stable monetary environment rather than attempting to manage economic outcomes through fiscal policy.
Moreover, Friedman’s time at the Hoover Institution allowed him to engage in interdisciplinary research and collaborations with scholars from various fields. These collaborative efforts enriched his understanding of economics and its applications to real-world problems.
As a Senior Research Fellow, Friedman also played an essential role in shaping the Hoover Institution’s intellectual agenda. He mentored younger scholars, provided guidance on research projects, and contributed to the organization’s publications. His presence at the institution further solidified its reputation as a leading voice for individual freedom, free markets, and limited government intervention.
In summary, Milton Friedman’s role as a Senior Research Fellow at the Hoover Institution was pivotal in his career. This affiliation allowed him to continue advocating for free-market capitalism and monetarism while disseminating his ideas through collaborative research, publications, and mentorship of younger scholars. Ultimately, Friedman’s work at the Hoover Institution contributed significantly to the ongoing debate on economic policy and the role of government intervention in a market economy.
FAQs: Milton Friedman’s Economic Ideas
1. Who was Milton Friedman, and how did he influence modern capitalism?
Milton Friedman (1912–2006) was an influential American economist known for promoting free-market capitalism and monetarism as alternatives to the Keynesian economic theories that dominated the first half of the 20th century. His ideas, such as control of money supply and limited government intervention in the economy, had a profound impact on modern capitalism.
2. What was Milton Friedman’s early career like?
Friedman started his academic journey at Rutgers University and earned a Ph.D. from Columbia University before working for the U.S. Treasury Department during World War II, where he made significant contributions to economic analysis through studies on consumption and income. His groundbreaking work during this period laid the foundation for theories that would later challenge Keynesian economics.
3. What was the Chicago School of Economics, and how did Milton Friedman contribute to it?
The University of Chicago became a center for free-market economics under Friedman’s guidance in the 1950s and 1960s. The establishment of a money and banking workshop allowed his monetary studies to evolve into a significant body of research, contributing to the revival of empirical and theoretical work in monetary history and statistics.
4. What led to Milton Friedman receiving the Nobel Prize in Economic Sciences?
Friedman’s achievements include contributions to consumption analysis, monetary history and theory, and stabilization policy. His groundbreaking ideas challenged the Keynesian consensus and reshaped economic thought for future generations. The Nobel Committee recognized his accomplishments with the award in 1976.
5. How did Milton Friedman challenge Keynesian economics?
Friedman’s monetarist approach to economic management through control of the money supply contrasted sharply with Keynesians, who focused on fiscal policy and government intervention to manage the economy. His advocacy of free-market capitalism emphasized smaller governments and deregulation in most areas, turning the tide away from Keynesian economics by the 1980s.
6. What is monetarism and how did Milton Friedman influence it?
Monetarism refers to the belief that economic stability can be achieved through control of the money supply and allowing the rest of the market to correct itself. Friedman’s ideas, such as controlling the money supply, became synonymous with monetarism, which refuted important parts of Keynesian economics and set the stage for a more market-driven approach to economic policy.
7. What are some of Milton Friedman’s most significant works?
Some of Friedman’s most influential works include “A Theory of the Consumption Function,” “Capitalism and Freedom,” and “A Monetary History of the United States, 1867–1960.” These books challenged Keynesian economics and provided the intellectual foundation for neoliberal economic policies in the late 20th century.