Milton Friedman (1912–2006)

Who They Were

Milton Friedman (1912-2006) was an American economist and the leading figure of the Chicago school. Over a long career centred at the University of Chicago, he became the most prominent postwar advocate of free markets and a persistent critic of Keynesian demand management, writing largely against Keynes. His early scholarship included A Theory of the Consumption Function (1957), and he later set out his broader program in The Counter-Revolution in Monetary Theory (1970). In 1976 he received the Nobel Memorial Prize in Economic Sciences for his work on consumption analysis, monetary history and stabilisation policy. Beyond academia he was a widely read public intellectual, including in a 1970 New York Times Magazine essay on the social responsibility of business. He shared with Friedrich Hayek a defence of economic liberalism that shaped late-twentieth-century policy debate.

Key Contributions

Friedman is most associated with monetarism, the school holding that changes in the money supply are the dominant driver of nominal output and inflation. With Anna Schwartz he documented the historical relationship between money and the economy, arguing that monetary mismanagement deepened the Great Depression. In the late 1960s he and Edmund Phelps independently advanced the natural rate hypothesis: there is no long-run tradeoff between inflation and unemployment, so attempts to exploit the Phillips curve merely raise expected inflation. His permanent income hypothesis reinterpreted the consumption function, holding that households base spending on expected lifetime income rather than current receipts. Together these ideas challenged the postwar Keynesian consensus and reshaped how central banks think about inflation expectations and the limits of activist stabilisation policy.

On EconRecall

American economist, leader of the Chicago school and monetarism, and 1976 Nobel laureate known for reviving the role of the money supply. Play the games that feature Milton Friedman: