There’s been a lot of tributes to the departed intellectual godfather of the “free market”, Milton Friedman. But as the Guardian’s chief economist points out, while ‘policy makers pay lip service to Friedman's ideas, they behave like Keynesians’ because Friedmanite policies were tried and failed. Read more below:
Another Guardian comment - a study in failure - suggests that Friedman was ‘big government's best friend’, as ‘one piece of public policy he was responsible for that was widely and internationally adopted was one that greatly increased the ability of central governments to collect taxes’.
My friend Phil recently made some good points about Friedman in an email - about how his economic ideology provide the intellectual coherence for the economic motives of business in the 1970s onwards:
The most important thing about Friedman and the Chicago School and why
they became the rage (rather briefly actually) was because the fall in
the rate of profit had created crisis conditions globally in the 70s
that required a massive attack on the working class. The ruling class
needed an ideological justification for that and Friedman had been
banging on for years about inflation and monetary supply.
His ideas about the need to control the monetary supply (monetarism)
fitted neatly with the need for the capitalists to portray wage rises as
far too high and the major cause of inflation (in fact, falling
profitability was the real main reason for inflation, as the capitalists
substituted by raising prices, forcing workers to go for larger wage
rises to keep up).
Friedman would never have amounted to anything if it weren't for the
coup in Chile and the end of the postwar boom in the West. The Chile
coup provided him with an ideal controlled experiment - after all, once
you've smashed the working class you can do practically anything and
virtually any capitalist policy will succeed (in terms of capitalism)
after that. The end of the boom required a huge attack on the working
class and some ideological justification was needed, and Friedman
Without those, he would have been just another right-wing crank
economist, like Hayek had been for fifty years before the 80s.
Ultimately, however, both Friedman's monetarism and Hayek's
laissez-faire capitalism haven't really worked for capital. They did
their first job - provide the ideology which disarmed Keynesianism and
other schools and legitimised the massive attacks on workers' pay,
living standards and rights in the 70s and 80s. But they haven't been
able to really lift capitalism into a new protracted boom period
anything like the 'long boom' after WW2. In fact, capital today is more
dependent on the state than ever.
For another anti-capitalist view of Friedman, see Nick Beams analysis - : “Free market” architect of social reaction. Beams points out that Friedman was extremely valuable in the service of definite class interests. Friedman’s role in Chile is never mentioned in all the tributes to Friedman, probably because this is where Friedman’s policies were most at home – amongst a brutal military dictatorship. But as Beams argues, his policies meant social disaster for the mass of the Chilean population. It is clear that in reality Friedman was no champion of ‘freedom’.
Finally, check out this amusing short poem - Supply-sider moves into deficit – which asks if Freidman will get his free lunch in the luxury wing of heaven.