At Oxford University in 1962, a small coterie of students, mostly Americans, merrily rowed against the leftist political currents predominant among intellectuals everywhere. Some of these rowers had been at the University of Chicago, others had come within the ambit of people from there, and all of us were infused with the doctrines of laissez-faire political economy prevalent in that university’s economics department.
A Conservative member of Parliament, meeting with these free market firebrands, began by saying, “Well, presumably we agree that at least the roads should be owned by the government.” The group greeted with stony silence this heresy against limited—very limited—government.
In one of the group’s favorite periodicals—the New Individualist Review, published at the University of Chicago—a theorist argued that the government must own lighthouses because no market mechanism could price a lighthouse’s service. That provoked this spirited rebuttal: When the light sweeps the ocean’s surface, it improves the surface, which becomes the property of the lighthouse owner, who can charge whatever the market will bear for ships to cross the illuminated surface.
Ah, but does the property right lapse when fog obscures the beam of light? Hairs were split as ideological purity hung in the balance.
These contumacious students were, as students frequently are, inebriated by ideas to the point of silliness. But they were early acolytes of the extraordinary man who just celebrated his 90th birthday in July and merits celebration as America’s most consequential public intellectual of the twentieth century.
By 1962, when he published his great manifesto Capitalism and Freedom, Milton Friedman, then a University of Chicago economist, had done much of the scholarly work for which he was to receive the 1976 Nobel Prize in economics. He has been the foremost champion of “monetarism,” the theory that money supply and interest rates can do more than government fiscal policy (“demand management” and other Keynesian fine-tuning measures) to control business cycles. The theory that stable growth of the money supply can control inflation and moderate recessions is an important ingredient in the recipe for modest government.
Capitalism and Freedom inserted into political discourse such (then) novel ideas as flexible exchange rates, a private dimension of Social Security, tuition vouchers to empower parents with school choice, and a flat income tax. Gary Becker (Nobel Prize, 1992), Friedman’s colleague at the University of Chicago and the Hoover Institution, notes that when Friedman began arguing the case, most nations had top tax rates of at least 90 percent (91 percent in America). Today most top rates are 50 percent or less, so the world has moved far toward Friedman’s position.
Friedman was a charter member of the most influential society you have never heard of—the Mont Pelerin Society, named after the Swiss community where this association of laissez-faire thinkers first gathered in 1947. Its animating spirit was Friedrich Hayek, soon to be at the University of Chicago. In 1955 Hayek prompted the founding of the like-minded Institute of Economic Affairs in London, which around 1962 caught the attention of a junior member of Parliament who 17 years later brought Friedman’s monetarism and respect for markets into Number Ten Downing Street—Margaret Thatcher.
Many intellectuals disdain the marketplace because markets function nicely without the supervision of intellectuals. Their disdain is ingratitude: The vulgar (as intellectuals see them) people who make markets productive make the intellectual class sustainable. As another of Friedman’s Chicago colleagues, George Stigler (Nobel Prize, 1982), said, “Since intellectuals are not inexpensive, until the rise of the modern enterprise system, no society could afford many intellectuals.” So “we professors are much more beholden to Henry Ford than to the foundation which bears his name and spreads his assets.”
Economics is not the “dismal science” when infused with Friedman’s ebullient spirit and expressed in his sprightly prose. So, as President George W. Bush said in May when honoring Friedman, it was fortunate for the nation and the world that Friedman “flunked some of his qualifying exams to become an actuary and became an economist instead.”
John Maynard Keynes, whose preeminence among economists Friedman eclipsed, said the world is mostly ruled by the ideas of economists and political philosophers: “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” But Friedman is far from defunct as he strides jauntily into his tenth decade, still an intellectual dynamo.
Adam Smith, whose banner Milton Friedman has borne high, said, “There is much ruin in a nation.” There is much less of it in ours than there would have been were it not for Milton Friedman.