Illustration by
J. William Middendorf II, Heritage Foundation Trustee
The Heritage
Foundation bids goodbye to a leading intellectual light of the 20th
century whose powerful ideas continue to transform our world.
Milton Friedman's economic, philosophical, and political writing
inspired decades of Heritage work in such diverse areas as Social
Security reform, competition in education, and tax policy. We are
particularly indebted for his role in championing economic freedom,
and that effort lives on in the Heritage Foundation/Wall Street
Journal annual Index of Economic
Freedom. The life of Milton Friedman is proof that a single
individual's ideas can shape history for the better.
Born in New Jersey
to Jewish Hungarian immigrants, Friedman witnessed most of
mankind's most murderous century. The years of his life-1912 to
2006-neatly encompassed all the most barbarous acts of which the
human race is capable. But Friedman remained an optimist.
Friedman was an
optimist because he believed in an unfettered capitalist economy
that could produce prosperity that would balance and often outweigh
every horror of society's latest social experiment. Over his life,
fascism replaced plutocracy, communism replaced fascism, socialism
eclipsed communism, and Islamism rose in the end. The drumbeat of
collectivism-the submission of the individual to the state-was the
20th century's most characteristic political feature, and each new
form was nearly as appalling as the last. Even today, the world has
not learned this lesson. The siren song of autocracy-the forging
together of a nation, a religion, a race to increase its collective
power-relegates society to near-perpetual adolescence.
Writing in the
early 1960s, Friedman accurately described the danger of
collectivism. In 1962, he published Capitalism and Freedom,
ultimately his most famous book, partly as a response to the
growing scope of the U.S. federal government under Presidents
Eisenhower and Kennedy. Here is how he responded to the rhetoric of
Kennedy's inaugural address:
The free man
will ask neither what his country can do for him, nor what he for
his country. He will ask rather "What can I and my compatriots do
through government" to help us discharge our individual
responsibilities to achieve our several goals and purposes, and
above all, to protect our freedom? And he will accompany this
question with another: "How can we keep the government from
becoming a Frankenstein that will destroy the very freedom we
establish it to protect?" Freedom is a rare and delicate plant.
Our minds tell us, and history confirms, that the great threat
to freedom is concentration of power.
Friedman's
greatest legacy may be his demonstration that good economic policy
strengthens democracy and, thereby, freedom. For instance, a
monetary policy that creates inflationary pressure and high
interest rates can lead to the breakdown of democracy, as factions
battle for government relief.
Friedman sensibly
argued that economic policy should create a level playing field. In
the area of monetary management, the Federal Reserve should attempt
to maintain a stable price level, rather than fine-tune the economy
to achieve certain output and employment results.
Friedman's work
was heretical, and not just among economists. In the 1950s and
early 1960s, the Great Depression was too recent, and fear of a
recurrence quite real. Franklin Delano Roosevelt was a popular hero
because his interventionist New Deal was believed to have pulled
America out of the hopeless economic mire created by his
predecessor, the laissez-faire Herbert Hoover. Interventionist
economics-popularized by the New Deal and formalized by economists
like John Maynard Keynes-was the only game in town. Yet Friedman
had an edge over his opponents-university professors, the
mainstream media, both superpowers, and most of the rest of the
world-because in the end, Friedman was right.
Friedman's bold
prediction that monetary policy would become the dominant economic
tool of the modern age proved prescient. Today, few, if any,
government officials have more economic influence than the Chairman
of the Federal Reserve. The cult of Alan Greenspan that grew over
the last 20 years owes more to Milton Friedman than it does-with
all due respect-to Alan Greenspan. And modern U.S. economic policy,
despite all the predictions of the 1950s, is based on limited
government interference, monetarism, and the free market-Friedman's
then-heretical ideas.
America is hardly
unique in this. Across the world, countries that adopted free
markets have prospered. There are now an easily identifiable club
of market economies and a no-less-identifiable club of
protectionist dinosaurs. The United States, Australia, the United
Kingdom, and Ireland share more than a common ethnic heritage; they
share an Anglo-Saxon model of economics that builds prosperity
exactly as Friedman described.
When state
spending and taxes rise, economic growth falls, as Britain
discovered in the 1970s. There is a reason why France suffers a 9
percent unemployment rate and why its growth languishes at 2
percent per year. And there is a reason why Hong Kong, Singapore,
Chile, and the United Arab Emirates have prospered, particularly
relative to their neighbors. Friedman's theories of economic
freedom have been adopted, in practice, by virtually every state
that aspires to be an economic power. Some countries have attempted
to restrict the political consequences of economic liberalization
by allowing economic freedom only. But as Pinochet's Chile and
Gorbachev's Soviet Union can attest, this is risky and ultimately
untenable-Friedman was right that economic freedom underlies other
freedoms.
Friedman's last
major work, Free to Choose, built on Capitalism and
Freedom, containing more concrete suggestions and less
philosophical debate. The book was enthusiastically received,
selling 400,000 copies in its first year of publication. The
television series that accompanied Free to Choose has been
re-released several times and remains popular today, 26 years after
its premier.
The unifying theme
of Friedman's life and work was belief in the power of the
individual, prosperity, and freedom. He has left both mankind and
the profession of economics with enormous gifts and was able to
enjoy that rare experience of worldwide validation during his
lifetime.
By making his
powerful insights accessible in clear language, Friedman saved
millions or billions of people from decades of oppressive statism.
Even so, he has been taken from us too soon.
Tim Kane, Ph.D., is
Director of the Center for International Trade and Economics, Bill Beach is
Director of the Center for Data Analysis, and Andrew Peek is a
Research Assistant, at The Heritage Foundation.