Good friend and fellow economist, Arnold Harberger, describes Milton Friedman as having “no frills, no pettiness, no fear.” It is with this countenance that Friedman spearheaded the monetarist movement in opposition to the prevailing wisdom of Keynesian economics throughout the twentieth century. Milton Friedman was a counter-revolutionary stalwart in advocating for the merits of unfettered markets and limited governmental interference.

Jennifer Burns’ Milton Friedman: The Last Conservative is a thorough and enlightening journey through the life and ideas of one of the most influential economists of the twentieth and twenty-first centuries. Her 482-page book is absolutely packed with details about Friedman’s contributions to the field of economics and applications to public policy. There are scant few pages that do not contain Friedman’s notable ideas, intellectual battles, or influences on world leaders. With meticulous research and engaging prose, Burns paints a vivid portrait of Friedman’s intellectual evolution and provides an impressively extensive summary of the economic history of the twentieth and twenty-first centuries. She provides a refreshingly evenhanded account of Milton Friedman’s life in the context of global events at the time. Burns details the major challenges facing the world in each decade of Friedman’s life and what he did to tackle those challenges and shape history.

Milton Friedman was a master communicator. Unlike most academics, he was able to effectively connect with his fellow scholars, with policymakers and politicians, and with the public. This singular ability to reach vast numbers of people with his ideas further magnified their impact. Three major themes emerge from the history of Friedman’s life: First, his unique ideas and contributions; second, his intellectual fights; and third, prominent controversies and the evolution of his thinking.

Ideas and Contributions

Milton Friedman’s impact on economics and global policy cannot be overstated. From military conscription to school vouchers, Friedman applied Chicago price theory to a vast array of topics and, not only that, he saw many of his ideas come to fruition. Even to the layperson, his name is synonymous with free markets and limited government. Friedman reshaped the landscape of economic theory and practice, leaving an enduring legacy that continues to influence policymakers and scholars to this day.

One of Friedman’s most notable contributions was his proposal of a negative income tax, which laid the groundwork for the concept of universal basic income. By advocating for a system that incentivized work while providing a safety net for low-income individuals, Friedman introduced a revolutionary approach to welfare policy. His emphasis on using policy that harnessed market mechanisms and minimized government interference reflected his belief in the power of free markets to allocate resources efficiently and promote economic growth.

Many of Friedman’s ideas came from challenging prevailing economic theories, particularly those of John Maynard Keynes. He developed the permanent income hypothesis in 1957 in collaboration with his wife Rose Friedman, Dorothy Brady, and Margaret Reid, revolutionizing our understanding of consumption behavior. This hypothesis, which suggested that consumption patterns are determined more by long-term income expectations than by current income levels, challenged traditional Keynesian views on consumption and savings behavior.

Friedman’s seminal work, A Monetary History of the United States, 1867–1960, published in 1963 and co-authored with Anna Schwartz, further cemented his reputation as a leading economist and father of the monetarism school. The book meticulously documented the role of monetary policy in shaping economic outcomes, debunking the prevailing view that free enterprise was responsible for economic instability. Instead, Friedman and Schwartz argued that fluctuations in the money supply were the primary drivers of economic fluctuations, challenging the orthodoxy of the time and laying the groundwork for monetarist theory.

Milton Friedman’s ideas about freedom and monetary policy wielded considerable influence over a wide array of policymakers throughout his lifetime. His advocacy for limited government intervention in the economy and emphasis on the importance of monetary policy resonated deeply with key figures in politics and economics. Friedman’s counsel was sought by presidents such as Nixon and Reagan, who valued his expertise in navigating economic challenges and implementing policies aligned with their vision of conservativism. Additionally, Federal Reserve Chairs including Arthur Burns, Paul Volcker, and Ben Bernanke were heavily influenced by monetarism, some embracing it while others rejecting it, almost whole cloth, to their peril. His intellectual guidance extended beyond American borders, with British Prime Minister Margaret Thatcher also seeking his advice and incorporating his ideas into her economic agenda to decrease the size of the British government.

An aspect of Friedman that particularly attracted him to policymakers was his advocacy for pragmatic policy reforms. Friedman emphasized the practicality and feasibility of reforms. In many situations, he would have preferred that the government not be involved at all, but if it had to be, he proposed the most economically viable approach to intervention. A notable example of this is his concept of a voucher system for education, which aimed to provide families with greater choice and autonomy in their children’s schooling. Despite facing opposition from proponents of the status quo, Friedman remained steadfast in his belief that vouchers could improve educational outcomes and promote greater equality of opportunity.

Friedman was passionate about bringing the economic way of thinking to the average American. He wrote three major works for a public audience including Capitalism and Freedom (1962), Free to Choose (1980), and Money Mischief (1992). In these works, he succinctly details the application of economic thinking to economic phenomena Americans experience in their daily lives. Capitalizing on his communicative abilities, Friedman played a pivotal role in shaping public opinion on issues such as the role of the Federal Reserve and the military draft. His advocacy for rules-based monetary policy challenged the prevailing wisdom of discretionary policymaking, while his intellectual arguments against conscription helped pave the way for the establishment of an all-volunteer military which happened when the draft was abolished in 1973.

Intellectual Battles

Friedman became famous for his sharp wit and intellectual fights in which he never resorted to personal attack or innuendo but stuck to the merits of the case. He would respectfully spar with fellow economists, public intellectuals, and economics graduate students. Some students were hesitant to take his classes because Friedman had no qualms about intellectually grappling with his students mid-lecture. This proved to be rather embarrassing to some more timid students, but regardless, his students expressed gratitude that he challenged them because it made them better economists. His constant intellectual battles with other economists shaped the landscape of economic theory and policy as well as invited others to take up the intellectual defense of individual freedom. 

Friedman markedly challenged Keynesian economics at every turn. Friedman tested his quantity theory of money against Keynes’s income-expenditure theory in his book A Monetary History of the United States, advocating for controlling the money supply to curb inflation. He further developed monetarism, advocating for rules-based monetary policies over discretionary ones, emphasizing the importance of targeting the quantity of money. By developing the consumption function, Friedman demonstrated that consumers prefer consumption smoothing, disputing Keynes’s assertion that consumers had a higher marginal propensity to consume out of their current income. Friedman’s skepticism extended to formal economic models promoted by the Cowles Commission, which he, in effect, expelled from the University of Chicago.

The decades-long AM/FM debate, named after the economists involved—AM abbreviating Albert Ando, and Franco Modigliani and FM abbreviating Milton Friedman and David Meiselman—resulted in numerous papers that solidified monetarism and reshaped the economic profession’s agenda. Friedman’s advocacy for monetary policy’s efficacy over fiscal policy clashed with proponents of Keynesian demand management, including Samuelson, Solow, Tobin, and Modigliani. Friedman challenged the Phillips curve’s premise of a stable inverse relationship between inflation and unemployment, asserting that it misrepresented the real dynamics of the economy. He demonstrated that the tradeoff between inflation and unemployment was temporary, not permanent. Friedman also engaged in a heated debate with rational expectation economists like Robert Lucas and Robert Sargent, who argued against the effectiveness of monetary policy. Friedman countered, asserting that monetary policy indeed had real effects, challenging dogmatic applications of rational choice theory.

Milton Friedman’s intellectual battles shaped modern economic thought, elevating monetarism as a credible alternative to Keynesian economics. His advocacy for rules-based monetary policies, skepticism of formal economic modeling, and challenges to prevailing theories like the Phillips curve and rational expectations continue to influence economic discourse and policy formulation. Economists today, regardless of their preferred school of thought, are obliged to grapple with these ideas that Friedman brought to the forefront.

Controversies and the Evolution of Thinking

Milton Friedman’s intellectual journey reflects a series of profound shifts in his thinking across various economic and political domains. Friedman’s willingness to combat the conventional wisdom at the time was, in itself, controversial. As the economics profession was taking shape and the theorists were sparring with the empirical modelers, Friedman advocated, in the late ’40s and early ’50s, for a new standard of modeling in economics, emphasizing its predictive power. Another transformation occurred notably in 1956 during a summer lecture series at Wabash College, which laid the groundwork for his seminal work, “Capitalism and Freedom.” Here, he articulated nuanced views on private and government monopolies, positing that private monopolies, unlike government monopolies, were likely to be eliminated by eventual entry into the market. Friedman also crafted his nuanced views on taxation where he expressed that he did not reject taxation outright but was mostly concerned about its impact on investment and incentives.

One of the largest controversies Friedman was engaged in stemmed from his skepticism of the 1964 Civil Rights Act. His analysis of discrimination, along with Gary Becker, appeared cold and calculating as they discussed it as something that could be “priced modeled, and theorized.” Friedman stated that he did not think that federal laws could improve the economic position of minorities and that the Civil Rights Act would undermine citizens’ rights to live free from government interference. His school voucher idea got somewhat hijacked by the anti-school-integrationists and his situation was not aided by the fact that the strongest condemnation Friedman had against segregated schools was calling them a “bad solution.”

He also garnered negative global attention and condemnation because of his work with the brutal Pinochet regime in the 1970s in Chile. The Chicago Boys, of which he was just a small part, introduced policies to the Chileans that liberated their economy. These policies resulted in the rapid growth of the Chilean economy, but their economic success was marred by the brutality of the dictatorial regime. As a consequence of his work in Chile, Friedman reassessed the relationship between economic and political freedom. Initially, he recognized that capitalist countries were not always free but questioned the necessary connection between capitalism and coercion. Subsequently, he came to believe that political freedom was essential for economic freedom.

Friedman’s views on government underwent a significant evolution, particularly influenced by the expansions during the Johnson and Nixon administrations. Persuaded by public choice theory, which applied economic principles to the political realm, he began advocating for tax cuts and for fundamentally reducing the size of government, not just reducing their spending. Recognizing the self-interest of government bureaucrats, Friedman shifted towards a more skeptical view of government intervention.

Acknowledging his fallibility, Friedman admitted his error in predicting inflation’s resurgence in the 1980s to a journalist, and “he even admitted he didn’t understand why.” Furthermore, influenced by Hayek and James Buchanan, his ideas evolved from a staunch advocacy of privatization in any case to emphasizing privatization within the framework of the rule of law. Friedman reassessed his stance on immigration later in his life, transitioning from an initial endorsement to skepticism, particularly regarding immigration in the 1980s due to welfare concerns.

Milton Friedman’s intellectual odyssey reflects a dynamic interplay of ideas and experiences, and a tension between sticking to principle and making compromises to implement realistic and sometimes more marginal free market change. Burns does an excellent job of contextualizing Friedman’s ideas within the broader political and intellectual currents of the time, showing how his work was both a product of and a reaction to the prevailing orthodoxies of the era. These changes in his thinking and approaches underscore his willingness to adapt his views in response to evolving evidence and insights, contributing to the complexity and richness of his economic and political thought.

Milton Friedman’s contributions to economics and public policy have left an indelible mark on our world. His innovative ideas, rigorous scholarship, and unwavering commitment to individual freedom continue to inspire economists and policymakers, shaping the trajectory of economic thought and practice for generations to come. Milton Friedman: The Last Conservative comes highly recommended for anyone interested in the intersection of economics, policy, and intellectual history. With its lively prose, rigorous scholarship, and impressively balanced approach, Burns’ book offers a compelling portrait of one of the most fascinating figures in modern intellectual history. Whether you’re a seasoned economist or a curious reader looking to deepen your understanding of the forces that have shaped our world, this book is sure to inform, inspire, and provoke discussion about the influence and impact of the man whose name is one-in-the-same with free markets and individual freedom.