WE ARE ALL FRIEDMANITES:

The Great Liberator (LAWRENCE H. SUMMERS, 11/19/06, NY Times)

IF John Maynard Keynes was the most influential economist of the first half of the 20th century, then Milton Friedman was the most influential economist of the second half.

Not so long ago, we were all Keynesians. (“I am a Keynesian,” Richard Nixon famously said in 1971.) Equally, any honest Democrat will admit that we are now all Friedmanites. Mr. Friedman, who died last week at 94, never held elected office but he has had more influence on economic policy as it is practiced around the world today than any other modern figure. [...]

While much of his academic work was directed at monetary policy, Mr. Friedman’s great popular contribution lay elsewhere: in convincing people of the importance of allowing free markets to operate.

All you really need to know about the Modern Age is that its greatest economist's singular achievement was to explain that Adam Smith was right 230 years ago.

MORE:
Milton is dead, but we are all Friedmen now (William Rees-Mogg, 11/20/06, Times of London)

Despite the quality of his work on US monetary history, Friedman was a radical conservative rather than an originator. He defended the free-market principles of the classical school and renewed the quantity theory of money. He became the prime advocate of these ideas. They regained their earlier influence in Britain through the Institute of Economic Affairs and through journalists such as Peter Jay of The Times and Samuel Brittan, of The Financial Times. But Friedman was the intellectual leader.

In 1970 Friedmanite monetarism was a minority doctrine, regarded by most economists as cranky or obsolete. By 1975, under the pressure of world inflation, Milton Friedman had the best of the battle, and the Keynesians were in full retreat. By 1980 practical policy around the world had become monetarist. The battle was fought over the most effective remedy for inflation. Keynes had written The General Theory (1936) as an anti-deflation book; it did not deal effectively with inflation.

After 30 years of broadly monetarist policies the world now enjoys low inflation and relatively high rates of growth. So long as Keynesianism delivered the goods — which it continued to until the late 1960s — it remained orthodox; Friedmanism is now delivering the goods. So long as that continues, monetarism and free markets will remain the world orthodoxy.

All economic theories must be tested by their outcomes. Classical theory, of which the Friedmanites are a subsect, dates back to 1776 and Adam Smith’s Wealth of Nations. The same year produced the US Declaration of Independence. Political and economic liberty are twins; they stand or fall together.

Posted by Orrin Judd at November 19, 2006 8:48 PM