Wednesday, August 1, 2012

Murray Rothbard on Milton Friedman


  1. I find it interesting that Rothbard's critique of Friedman is largely political. He doesn't argue that steady expansion of the money supply is bad economics but only that government will abuse the power once you hand it that power.

    This is somewhat the situation we see the ECB today. Will it seek to by-pass the institutional restraints on its power and try to rescue the euro thorough inflation? Or will it remain loyal to its specific mandate?

    But I would also be interested in the Austrian critique of Friedman's view from a purely economic perspective. If you could somehow prevent abuse of the system, would the Friedmanite solution to economic cylces work effectively?

    1. Let me preface this with that I do not know the date at which the following Milton Friedman interview took place. Friedman looks pretty frail, so it is definitely closer to the end of his career than the beginning of it.

      Watch this clip starting at 1:20

    2. Taken totally out of context. Friedman did not want to end the Fed to stop money printing. He wanted a monetary rule to by which money printing would continue.

    3. @ Anon:

      Look, I'm not arguing that Friedman was perfect. The man accepted central banking and helped defend it by doing research that provided central bankers with intellectual ammunition (monetary rules and the like) - that earns no stars in my book.

      Despite Friedman's flaws, he did understand that the fundamental problem was the very existence of an institution (the central bank) in which the whole of society is forced to depend on for monetary affairs. It is Friedman's recognition of that fundamental problem, and having spent his entire career being agnostic toward the central banks' existence that disheartens true free marketeers/Austrians. But like so many high profile intellectuals, Friedman was caught in the overly aggregate, Keynesian theoretical framework through the duration of his career - at least that is the Austrian assessment.

      The question I would like to know the answer to is: whether Friedman recognized the fundamental problem at the beginning of his career or near the end of his time? For if Friedman recognized the fundamental problem at the beginning, why did he still choose to do research that implies central banking must be a given/constant? I want to believe Friedman came to his "first preference" for abolishing the Fed later in life rather than earlier, but I have not the time nor energy to prove that was case.

  2. re: "If you could somehow prevent abuse of the system, would the Friedmanite solution to economic cylces work effectively?"

    If pig had wings, would they fly?

  3. Publishing these snippets with Rothbard was an excellent idea -- 2 - 4 minute bites of brilliance.