Leszek Balcerowicz, Daily Star
, November 22, 2006
Great social thinkers almost always start out as polarizing figures,
admired by some and scorned by others, until their radical challenge to
how we understand the world finally prevails. Milton Friedman, who died
last week, was a giant among modern social thinkers for at least two
reasons. First, he profoundly influenced not only his own field of
economics, but also the social sciences more broadly. Second, judging
by historical experience, his influence on public opinion and economic
policymaking improved countless lives for the better.
For decades, Friedman remained stranded in the intellectual wilderness,
spurning the postwar Keynesian consensus that governments should use
fiscal policy to manage aggregate demand - a view that sustained
statist economic policies through the 1970s. Indeed, in the context of
his age, Friedman was a true intellectual revolutionary, combining
rigorous academic research and gracefully written popular books and
journalism to argue for free-market policies - and to affirm the link,
defended by writers from Adam Smith to Friedrich von Hayek, between
economic freedom and political liberty.
In economics, Friedman revived and developed the monetarist theory that
the quantity of money in circulation is the main determinant of how
economies perform. In his masterpiece "A Monetary History of the United
States, 1867-1960" (written with Anna Schwartz), he famously attributed
recessions, including the Great Depression of the 1930s, to a decline
in the money supply. Likewise, he argued that it was an oversupply of
money that caused inflation.
In the 1960s, Friedman showed that Keynesian demand management through
government spending constantly increased the money supply, accelerating
wage and price growth. Together with Edmund Phelps - this year's Nobel
Prize laureate - he proved that there is no stable tradeoff between
unemployment and inflation. Any attempt to use expansionary government
policies to drive unemployment below a certain level, they
demonstrated, would fuel inflationary expectations and undermine both
economic growth and employment. That analysis both anticipated and
explained the combination of rising inflation and rising unemployment
of the 1970s that came to be popularly known as "stagflation."
Friedman was the catalyst for a profound shift in how governments
conduct economic policy. Rather than fiscal stimulation and control,
the main tools of economic management nowadays are monetary policies
conducted by independent central banks. Keynesian demand management was
thus displaced by a new understanding - which we owe largely to
Friedman - that pursuing fiscal discipline and price stability is the
best guarantee of macroeconomic sustainability.
Equally important were Friedman's contributions to influencing public
opinion through works that addressed the role of the state in society.
Alongside Hayek, his colleague at the University of Chicago, Friedman
launched a more general intellectual assault on Keynesianism, arguing
that any government permitted to regulate the economy in the name of
equality posed a threat to individual liberty.
In his Newsweek columns published between 1966 and 1983, and in his
books "Capitalism and Freedom," "Free to Choose," and "The Tyranny of
the Status Quo" (written with his wife, Rose), Friedman offered a
vision of liberty that was both appealing and achievable. Indeed, "Free
to Choose" - later the basis of a popular television series that he
hosted - was published illegally in Poland in the 1980s, helping to
inspire me, and many others, to dream of a future of freedom during the
darkest years of communist rule. With remarkable clarity, Friedman's
popular writings advanced a compelling political philosophy, together
with concrete policy proposals. For example, he pioneered the idea of
school vouchers, arguing that private competition would ensure better
educational performance than government systems.
Friedman's views made him a guiding light for economic conservatives
worldwide. His influence on Margaret Thatcher's government helped
transform Britain from a post-industrial basket case dominated by class
struggle into Europe's dominant economic power. When Vietnam launched
free-market reforms in the 1980s, senior government officials pored
over his writings. He also initiated the now common practice of
measuring and comparing political and economic freedom across
countries, helping to shape opinion in countries that are viewed as
But Friedman's consistent anti-statism also led him to embrace
positions that ran afoul of many conservatives' political
sensibilities, underscoring the intellectual honesty that was the
hallmark of his career. For example, his opposition to governments'
authority to prohibit or regulate human behavior extended to licensing
requirements for doctors and car drivers, as well as to anti-drug laws,
which he believed operated as a subsidy to organized crime. Likewise,
he expended considerable effort agitating against America's military
Although he did not win all his intellectual battles, rarely can it be
said with as much certainty that a man was great, and that the work
that he left behind will retain enduring influence.
I live in a Poland that is now free, and I consider Milton Friedman to
be one of the main intellectual architects of my country's liberty.