The Hindu Business Line : <I>A return to freedom </I>

The life of Nobel Laureate Milton Friedman of the world famous Chicago school, who died the other day at the ripe age of 94, was typical of the Great American Dream. Born to immigrant working class Jewish parents who fled Europe during the period before the rise of Nazi Germany, he struggled to keep himself afloat economically and worried, despite being an outstanding thinker in the field, about being able to support a wife and family during the Great Depression. The academic world was not always as liberal towards people of other backgrounds and working in Washington during Roosevelt's New Deal years was lifesaver. It was later that he became convinced that the government was not always a good caretaker of the economy and bureaucracies everywhere were the same in their effects. He also remained firmly convinced of the superiority of research institutions as places to work in and never became a career public servant.

Economics as a science

In the later decades he became a great influence on, and an intellectual hero to, many free-trade minded leaders and thinkers of the world, especially British Prime Minister, Margaret Thatcher, and American President, Ronald Reagan. His lifelong partner and collaborator for over 60 years was fellow-student of economics at the University of Chicago in the 1930s, Rose Director, whom Friedman married later. It was a happy marriage of like-minded thinkers. Friedman was a lifelong student who sought to give Economics a status of science, combining both rigorous mathematical analysis and socially relevant public policy prescriptions. Normally one expects that the more academic an economist is, the less relevant his theories would be to practical policy. Friedman broke with this stereotype.

Market-based control

His significant achievement was the championing of free trade and free market economics as part of the process of democracy and human liberalisation which bore fruit long after the prescriptions of monetary economics, which he was most closely linked with, played itself out.

He saw a strong link between the quantity of money in circulation and output, and in this, he was actually reiterating ideas that had once held sway three centuries ago. He wanted governments to give up the interest rate as an instrument of fiscal policy, seeing that high inflation did not preclude high unemployment, a phenomenon familiar to us as stagflation. He strongly defended a return to a period of market-based control of economic future of the world, in the manner of the 18th century economic thinkers. He was not popular with the prevailing orthodoxy, especially at places like Cambridge and LSE and their admirers in the developing world, who preferred the interventionism of Maynard Keynes, with governments spending their way both to pull out of a depression and to create real effective demand for goods and services. Friedman also took on the conventional wisdom in A Theory of the Consumption Function, showing that people's annual consumption is linked to their expected lifetime earnings, contradicting the Keynesian view that they adjust their expenditures on consumption to current income. To him, useful economic theory, for it to be called an objective science, had to be free of value judgments and an engine of prediction.

Milton Friedman's influence was far more than on matters of strictly academic theory or economics. He wrote and spoke persuasively on the need for human freedom to choose one's own destiny and was the author of celebrated TV serials such as Free to Choose written with his wife Rose Friedman, which became a non-fiction best seller of the year in 1980.

S. Ramachander

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