Milton Friedman, one of the most influential thinkers of the 20th Century, was born 101 years ago today.
Friedman was a true public intellectual who influenced policy through his scholarly research and his writing for the general public. Written in collaboration with Anna Schwartz, his Monetary History of the United States didn’t just re-established monetarism as a respectable school of economic thought; it essentially destroyed the pure form of Keynesianism in which “money doesn’t matter”. It also provided the foundation for a new generation of scholars to re-evaluate macroeconomic policy in general and the New Deal in particular.
But as important as the conduct of monetary and fiscal policy may be, Friedman’s influence extends well beyond it. Through two mass-market books (Capitalism and Freedom and Free to Choose) and a seemingly-unlikely PBS television series, he explained with patience and clarity to the general public the lesson first taught by Adam Smith in 1776:
[Without trade restrictions] the obvious and simple system of natural liberty establishes itself of its own accord. Every man…is left perfectly free to pursue his own interest in his own way…. The sovereign is completely discharged from a duty [for which] no human wisdom or knowledge could ever be sufficient; the duty of superintending the industry of private people, and of directing it towards the employments most suitable to the interest of the society.
— An Inquiry into the Nature and Causes of the Wealth Of Nations, Book IV, Chapter IX, p. 687, para. 51.
“Capitalism” is a poor name for an economic system that relies principally on free enterprise, because it’s not really a system at all. It is simply the consequence of people being free to choose what to do with their lives.
Trading things is what people are naturally inclined to do, and the ability to trade is what allows people to specialize in what they produce. Specialization, in turn, gives rise to prosperity through the application of particular skills and the incentive to discover new ways to produce things. It’s a simple but powerful point, and yet it was largely forgotten or dismissed because of the Great Depression. Friedman and Schwartz’s documentation of the ways in which the Federal Reserve not only didn’t prevent the Depression, but in fact made it worse, was the essential step in reviving an appreciation of the benefits of free enterprise. And that revival made possible the revival of the political movement for greater individual freedom in general.
Few, if any, individuals in history have done as much to advance the cause of individual liberty as much as did this son of Ukrainian emigres and dry-goods merchants. From his early and continued advocacy of school choice to his key role in ending the military draft to his emphasis on the link between economic freedom and political freedom, Milton Friedman’s work continues to influence people around the world.
For that I am profoundly grateful.