Sunday, November 26, 2006

Milton Friedman’s Intellectual Integrity

I think I saw reference in some obituaries to Milton Friedman’s “intellectual integrity”. Friedman was an important intellectual figure and had many qualities. Apparently, he loved developing an argument, was unfailingly polite, and never became angry at disagreement. But, given the literature of a few short years ago, intellectual integrity is not a quality I would choose to emphasize.

Harry Johnson, in his Ely lecture at the annual meeting of the American Economic Association, considered how Friedman and his allies had promulgated the monetary counter-revolution. Johnson suggests that one might more successfully promote a counter-revolution if one is willing to misrepresent one’s opponents and encourage a lack of scholarship among one’s acolytes. That is, one should actively discourage them from checking out what proponents of other views actually say. Johnson doesn’t exactly say Friedman illegitimately bends his arguments to fit his pre-existing political biases; instead he presents his account as an application of Friedman’s “as-if” methodology:
”Indeed, I find it useful in posing and treating the problem to adopt the ‘as-if’ approach of positive economics, as expounded by the chief protagonist of the monetarist counter-revolution, Milton Friedman, and to ask: suppose I wished to start a counter-revolution in monetary theory, how would I go about it – and specifically, what could I learn about the technique from the revolution itself? To pose the question in this way is, of course, to fly in the face of currently accepted professional ethics, according to which purely scientific considerations and not political considerations are presumed to motivate scientific work, but I can claim the protection of the ‘as if’ methodology against any implication of a slur on individual character or a denigration of scientific work.” – Johnson
(By the way, Johnson is also scathing on my favorite group of economists, the Italian-Cambridge school.)

One aspect of Friedman’s claims is his lack of originality. He claimed to not take his ideas from Keynes, but to draw on the wisdom of a prior Chicago “oral tradition”. But some think no such oral tradition existed; Friedman made it up. I forget where I read this charge – I think in a Don Patinkin essay collected in one of his books.

Friedman’s policy precepts did not work in practice, either. His ideas strongly influenced the monetary authorities on either side of the Atlantic during the Reagan and Thatcher administrations. I’d like to be able to turn to Cambridge economists here, specifically Kaldor (1982). But I only know Kaldor’s most well-developed critique of monetarism secondhand, through, for example, Turner (1993). (Kaldor was an early proponent of the “endogenous money” approach.)

Apparently, Friedman encouraged Wald in his development of sequential testing. This is an useful approach to classical statistical hypothesis testing in which the sample size is not pre-specified, but turns out to be no larger than needed. It has industrial applications in, for example, reliability acceptance testing.

  • Johnson, Harry G. (1971). “The Keynesian Revolution and the Monetarist Counter-Revolution”, American Economic Review, V. 61, N. 2 (May): 1 -14
  • Kaldor, Nicholas (1982). The Scourge of Monetarism, Oxford University Press
  • Turner, Marjorie S. (1993). Nicholas Kaldor and the Real World, M. E. Sharpe


Anonymous said...

Kaldor's critique of Monetarism was devestating and very accurate. He predicted how it would (not) work in 1970, nearly a decade before Thatcher/Reagan tried to impose it. Well worth finding out more about it and reading it first hand.

Robert Vienneau said...

Thanks for the reading recommendation.