🇺🇸Milton
Friedman

When Milton Friedman published A Monetary History of the United States with Anna Schwartz in 1963, he offered a devastating reinterpretation of the Great Depression: it had not been caused by the inherent instability of capitalism, as Keynes's followers claimed, but by a catastrophic failure of the Federal Reserve, which had allowed the money supply to contract by one-third between 1929 and 1933. If the central bank had done its job, Friedman argued, the Depression would have been a severe recession. The argument was meticulous, empirically grounded, and politically explosive, because it implied that government management of the economy was not the solution to economic crises but frequently their cause. No single work of twentieth-century economics did more to shift the intellectual ground from Keynesian demand management to what became known as monetarism — and no economist more successfully combined rigorous academic scholarship with a public mission to limit the role of government in economic life.

Milton Friedman was born on July 31, 1912, in Brooklyn, New York, the fourth child of Jewish immigrants from Berehove, then part of Austria-Hungary. The family moved to Rahway, New Jersey, where he grew up in modest circumstances. His father died when he was fifteen. He won a competitive scholarship to Rutgers University, graduating in 1932, and then studied economics at the University of Chicago and Columbia University, where he earned his PhD in 1946. During the 1930s and early 1940s he worked for the US government, contributing to wartime tax policy. In 1946 he joined the economics faculty at the University of Chicago, where he would remain for the next three decades, building the institution into the most influential economics department in the world and shaping a generation of economists who would go on to remake economic policy across the globe.

The Chicago School under Friedman rested on several foundational commitments: that free markets are generally superior to government intervention at allocating resources; that monetary policy is the primary lever of macroeconomic stabilization; that inflation is "always and everywhere a monetary phenomenon," caused by excessive growth in the money supply; and that professional economists should engage seriously with the empirical evidence rather than relying on theoretical priors alone. His 1957 book A Theory of the Consumption Function challenged Keynesian orthodoxy by showing that consumption tracks permanent income rather than current income — a finding that undermined predictions about the size of fiscal multipliers. His 1968 Presidential Address to the American Economic Association introduced the concept of the "natural rate of unemployment," arguing that there was no stable long-run trade-off between inflation and unemployment — a prediction vindicated by the stagflation of the 1970s.

His policy influence stretched far beyond academia. Capitalism and Freedom (1962), written for a general audience, argued for school vouchers, a volunteer military, a negative income tax to replace welfare bureaucracies, floating exchange rates, and the deregulation of professions — many of these ideas considered radical at the time, most now part of mainstream policy debate. The ten-part PBS television series Free to Choose (1980), based on his book of the same name co-authored with his wife Rose Friedman, reached millions of viewers and established him as the most effective popularizer of free-market economics of the twentieth century. His influence on the Thatcher and Reagan governments was direct and acknowledged: Thatcher regarded him as a personal inspiration; Reagan's early economic program bore unmistakable Friedman fingerprints.

The debates he provoked were as important as his conclusions. His 1976 Nobel Prize lecture crystallized the monetarist program at the moment of its maximum credibility; Paul Volcker's successful disinflation at the Federal Reserve in the early 1980s — though costly in unemployment — was widely interpreted as a Friedmanite vindication. His critics, including James Tobin and Paul Samuelson, argued that monetarist rules were mechanically rigid and that fiscal policy retained an important stabilizing role. The 2008 financial crisis reopened that debate: the collapse of financial markets suggested that central bank monetary management alone was insufficient, and massive fiscal interventions followed in most advanced economies. Yet Friedman's core empirical insight — that the Federal Reserve's inaction worsened the Great Depression — was so thoroughly absorbed that when the 2008 crisis arrived, Fed Chair Ben Bernanke, a student of that history, acted aggressively to prevent a repeat. At Friedman's ninetieth birthday dinner in 2002, Bernanke had told him: "You're right, we did it. We're very sorry. But thanks to you, we won't do it again." He was ninety-four when he died in San Francisco on November 16, 2006.