Tuesday, July 31, 2012

How Much Did Milton Friedman Love Keynes?

Don Boudreaux, a professor at Koch-funded George Mason University, steps forward to claim that Nicholas Wapshott's charge that Friedman had a "lovefest" with Keynes is untrue. Boudreaux writes of a Friedman essay that Wapshott used to form his opinion:
Does Friedman sound here like a man having a “lovefest” with Keynes?
The Friedman article starts off this way:
John Maynard Keynes (1883–1946) is the latest in a line of great British
economists who had a profound influence on the discipline of economics.
Friedman then lists a number of economists such as Adam Smith, David Ricardo, William Stanley Jevons and Alfred Marshall, and writes (my bold):
Keynes clearly belongs in this line. In listing “the” classic of each of these great economists, historians will cite the General Theory as Keynes’s pathbreaking contribution. Yet, in my opinion, Keynes would belong in this line even if the General Theory had never been published. Indeed, I am one of a small minority of professional economists who regard his Tract on Monetary Reform (1923), not the General Theory, as his best book in economics. Even after sixty-five years, it is not only well worth reading but continues to have a
major influence on economic policy.
Friedman continues:

It is a mark of Keynes’s range, creative originality, and insight that much recent work in statistics has returned to the themes of the[ Keynes' early work], Treatise on Probability.

Friedman than quotes himself from an earlier writing:

“The General Theory is profound in the wide range of problems to which Keynes applies his hypothesis, in the interpretations of the operation of modern economies and, particularly, of capital markets that are strewn throughout the book, and in the shrewd and incisive comments on the theories of his predecessors. These clothe the bare bones of his theory with an economic understanding that is the true mark of his greatness.
“Rereading the General Theory has . . . reminded me what a great economist Keynes was and how much more I sympathize with his approach and aims than with those of many of his followers.”

Sure looks like deep love to me.

Friedman does have a somewhat different tack on monetary theory and calls Keynes out on this. But it is only technical in nature, when looked at in the full  context of Friedman's work, Friedman is quite Keynesian even here.

Indeed, it is fascinating that, the Keynesian, Paul Krugman mentions Friedman in support of his views no less than five times in his latest book. For example, Krugman writes:.
Milton Friedman...at least conceded that monetary policy could be an effective tool for stabilizing the economy. (p. 96)
Indeed, when Friedman published a paper in 1970 titled "A Theoretical Framework for Monetary Analysis,"  many economists were shocked by just how similar it looked to textbook Keynesian theory. (p.101) 
Never mind Keynes, Milton Friedman has crusaded against this kind of [Schumpeterian liquidationist] thinking. (p.205) 


  1. But Keynes published his own anti-semitic opinions. So does this make Friedman a SHJ?

  2. I like Boudreaux. Smart guy, good thinker. Not Rothbardian, true - but no one is perfect. He's certainly - far and away - the best among his GMU counterparts.
    I don't mind his giving Friedman some credit. Yes it is romanticized and, ultimately, inaccurate. But weren't many of us introduced to the wonders of free market thinking through Milton?
    Boudreaux is my favorite non-LvMI/LRC economist today. I give him the benefit of the doubt.

    1. Definitely not Rothbardian. Let's not forget the last time Boudreaux made an appearance on these pages:


      I've followed cafehayek for quite some time and its painfully obvious Boudreaux is a smart guy but he is no libertarian. That's too bad. He writes a lot of op-eds smacking down idiot journalists (that unfortunately probably never get published).

    2. I guess I missed that.
      How can he expect me to stick up for him when he says garbage like that?
      Has he not read MES, P&M, AGD, etc.???