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
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
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. …