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Great monetary economist and libertarian policy guru

Born in New York (1912), the son of poor immigrants, Friedman spent his early career at Columbia University. In 1946 he joined the University of Chicago, taking up a position as Professor of Economics. During this period at Chicago Friedman wrote some of his most prolific works, surrounded by the monetarists that made up the "Chicago School". With a mix of monetarist values and classical ideals, Friedman was to produce works which crossed the academic/public divide, making a strong case for limited government, and the perseverance and extension of individual liberties. Friedman was awarded the Nobel Prize in economics in 1976.

Friedman is best known for his monetarist policies – insisting that inflation is highly destructive and that only monetary policy can control it – but that monetary policy is a heavyweight instrument and cannot be used for short-term economic management. But he is also distinguished for pioneering work on other subjects such as the unintended effects of professional licensing and price regulation, tax policy, and the theory of the consumption function.

Life and work

• Inflation is always and everywhere a monetary phenomenon. To control inflation, you need to control the money supply.


• Inflation is like a drug. Its stimulating effect temporary. Only larger and larger doses can sustain the stimulus, before the chaos of hyperinflation removes all the gains.


• Annual consumption is a function of people's expected lifetime earnings – not just their income at the current time.


• Keynes was wrong on just about everything, and his followers are wrong on absolutely everything.


• State licensing rules limits entry into the professions, thereby allowing professionals to charge higher fees than if competition were more open. That (more than the public interest) is why professionals love licensing.


• Rent controls have the opposite effect to those intended. Rental property becomes less profitable and is taken off the market. Instead of delivering cheap housing for all, the controls actually produce a chronic shortage.


• Exchange rates should float freely.


• Minimum wage laws cost jobs. Employers cut out, or mechanise, jobs that are not worth the minimum rate to them. Worst affected are the inexperienced young people, those with poor skills, and minorities.


• Education and other public services should be financed through a system of vouchers, so that everyone has access to important services but service users.

Books by Friedman

A Monetary History of the United States, 1867 – 1960 (1963)

"The interrelation between monetary and economic change has been highly stable" - (p.676)

Written in collaboration with Anna J Schwartz this historic work provides the backbone to Friedman's monetarist theories. Showing a concern for fixed exchange rates, and related problems in the stable growth of money supply, the book highlights the actual efficiency of free markets and flexible exchange rates. Moreover the work rejects government intervention and fiscal policy arguing that such measures have no significant effect on inflation and other fluctuations in the business cycle.

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Capitalism and Freedom, (1962 - with Rose Friedman)

"It is a striking historical fact that the development of capitalism has been accompanied by a major reduction in the extent to which particular religious, racial, or social groups have ...been discriminated against" - (p. 108)

In this book Friedman expresses the need for a negative income tax to supersede a centralised and bureaucratised welfare system. Friedman argues that the current system is unfavourable to the necessary values of individualism and productive work.

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Free to Choose, (1980 – with Rose Friedman)

"Every day each of us use innumerable goods and services...we take it for granted that they will be available when we want to buy them" (1)

This highly readable and popular book discusses the relationship between freedom and economics. Milton and Rose Friedman point out that freedom has been eroded and prosperity undermined due to an increase in regulations and laws set out by governments.

A Theory of Consumption Function, (1957)

This work offers discussion and criticism of Keynes' General Theory, concerned with the regularity and predictability of the consumption function. Again looking to the long term, Friedman suggests that people rather adjust their consumption on the basis of their future expected income. The result - monetary policy is far more stable and powerful than Keynes suggests.

Studies in the Quantity Theory Of Money, (1956)

"The quantity theory is in the first instance a theory of the demand for money" (p. 4)

"Inflation is always and everywhere a monetary phenomenon" - This work sees Friedman reiterate and expound upon this classical theory placing it into a more modern context. Resurrecting the idea of the power of money, Friedman shows that people take a long-term view of this demand for money, and that the quality theory is therefore justified - and that changes in the money supply will lead directly to changes in prices.

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Friedman's main publications

1943 – Taxing to Prevent Inflation (Columbia University Press)
1945 – Income from Independent Professional Practice (New York: National Bureau of Economic Research)
1946 – Roofs or Ceilings? The Current Housing Problem (Foundation for Economic Education)
1953 – Essays in Positive Economics (University of Chicago Press)
1956 – Studies in the Quantity Theory of Money (University of Chicago Press)
1957 – A Theory of the Consumption Function (Princeton University Press)
1959 – A Program for Monetary Stability (Fordham University Press)
1962 – Capitalism and Freedom (University of Chicago Press)
1966 – Price Theory (Chicago: Aldine)
1963 – A Monetary History of the United States 1867-1960 (Princeton University Press)
1968 – Dollars and Deficits (Englewood Cliffs)
1969 – The Optimum Quantity of Money and Other Essays (Chicago: Aldine)
1969 – Monetary Versus Fiscal Policy (Norton & Co)
1970 – Monetary Statistics of the United States (Columbia University Press)
1970 - The Counter Revolution in Monetary Theory (Institute of Economic Affairs, London)
1974 – Milton Friedman's Monetary Framework (University of Chicago Press)
1975 – An Economist's Protest (Glen Ridge, NJ.)
1977 – From Galbraith to Economic Freedom (Institute of Economic Affairs; London)
1978 – Tax Limitation, Inflation and the Role of Government (Dallas, TX: The Fisher Institute)
1980 – Free to Choose (New York: Harcourt Brace Jovanovich)
1982 – Monetary Trends in the United States and the United Kingdom (University of Chicago Press)
1984 – Tyranny of the Status Quo (Harcourt Brace Jovanovich)
1998 – Two Lucky People (University of Chicago Press)

Books about Friedman
Milton Friedman – A guide to his economic thought
(Gower House Publishing Co. Ltd. 1985)
Dr Eamonn Butler

Dr Butler's work aims to summarise the full range of Friedman's economic thought whilst also providing a critique of its strengths and weaknesses. The book concentrates primarily on Friedman's monetarist theories, setting out their historical and economic basis and looking at their implications for government policy. Although it tackles the technical arguments which underlie these theories and does not take refuge in over-simplification, it does so throughout in a way that the student or the interested general reader can follow completely.