Friedman and Maynard Keynes Economics

On Milton and Maynard, Monetarism and Keynesianism

Milton Friedman Keynes

The other giant of twentieth-century economics with whom Friedman invites close comparison is, inevitably, John Maynard Keynes.

There are in fact fascinating similarities between the two: their prodigious output, their wide range of concerns combined with a central interest in monetary theory; their talents for controversy and antiestablishmentarianism; their international status; their exceptional mental acuity and agility in debate; their noted personal charm.

A second matter that compels comparison is the 'monetarism v Keynesianism' debate that has raged in economics over the past two decades. Keynes gave birth to the 'Keynesian revolution' in macro-economic thought and policy via his General Theory (1936). One of Friedman's intellectual crusades has been to replace that revolution with a 'monetarist counter-revolution' (Friedman, 1970c) as the ruling paradigm in macro-economics.

The intensity of the monetarist-Keynesian 'war' in economics has propagated a belief, prevalent among Ministers of Finance, let alone students of economics, that Keynes and Friedman are to be seen as completely opposed, both scientifically and ideologically. An underlying theme of this essay is such a belief is in many ways erroneous, if not misguided in its entire general thrust.

Given the size of the task, this essay confines itself to a critical appreciation of but a few aspects of Friedman's large and diverse work: his methodological approach, his macro/monetary economics, and to a general consideration of Milton Friedman qua normative political economist.