Above all, economist Milton Friedman was an independent, objective thinker who systematically applied the scientific method to economic problems and eventually to the entire spectrum of the social sciences. He was without peer in achieving this intellectual imperialism, and his fame and accomplishments result from his scientific prowess rather than mere ideology.
Objective, rigorous research
As founder of the famous (University of) Chicago "school" of economics, Friedman was a thoroughgoing empiricist and utilitarian, believing that all theories must be subjected to rigorous testing. He was taught that the only worthwhile theory was a simple one that could be validated or rejected with empirical evidence. To test a theory, he developed sophisticated statistical methods and econometric models.
In the 1950s, Friedman was one of the first to apply this methodology consistently. Today, it is a universal technique among economists and social scientists. Prior to Friedman, many social scientists designed theories based on their own biases and experiences. In the 1930s, John Maynard Keynes never did any quantitative work to validate his "new economics" - a set of claims that emboldened government intervention in economies.
Friedman felt that biases could be overcome by objective examination. He discouraged labels. "I am not a supply-side economist," he insisted. "I am not a monetarist economist. I am an economist."
Ironically, it was his painstaking, objective analysis in the landmark work, "A Monetary History of the United States, 1867- 1960," that gave him such labels. In that work, he and coauthor Anna J. Schwartz asserted that the Great Depression was not a failure of market capitalism, but of government policy. They showed that the Federal Reserve acted ineptly in allowing the money stock to decline by "more than a third," converting a garden-variety recession into the worst economic catastrophe of the 20th century.
Free-market economists such as Ludwig von Mises and Friedrich Hayek failed in their attempts to dislodge Keynesianism because they refused to do any empirical work. But Friedman's quantitative efforts were so powerful that he changed professional opinion about the cause of the Great Depression.
His empirical studies at Chicago convinced him that "money mattered" more than fiscal policy (spending and taxes). Friedman also discovered that "long and variable lags" in Federal Reserve policy would confound Keynesian efforts to fine tune the economy. …