Milton Friedman was considered one of the most influential economists of the mid- to late 1900’s. He is perhaps best known for helping to popularize the theory of monetarism. Monetarism is the idea that the state of a nation’s economy is determined by its money supply (the amount of money in circulation). To stimulate growth, for example, monetarists believe that the government should gradually and continuously increase a nation’s money supply and then take no further action. The forces of a free-market economy, according to Friedman, will efficiently solve most economic problems without government intervention. He explained his theories in the book A Monetary History of the United States, 1867-1960 (1963), which he co-wrote with economist Anna Schwartz.
Friedman and other monetarists disagreed with popular theories of the time supported by the influential British economist John Maynard Keynes and his followers. These economists, called Keynesians, favored regular, short-term government spending to control the economy. Monetarism gradually supplanted Keynesian ideas as the economic policy of the United States and the United Kingdom in the 1970’s.
In 1976, Friedman received the Nobel Prize in economics. The Nobel committee awarded the prize for his “achievements in the fields of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy.” Friedman also received a number of other awards, including the United States Presidential Medal of Freedom and the United States National Medal of Science. He wrote or co-wrote a number of books, including A Theory of the Consumption Function (1957), Capitalism and Freedom (1962), and Free to Choose (1980). The theory of monetarism became less popular beginning in the 1980’s.
Friedman was born on July 31, 1912, in New York City, New York. After receiving a doctorate from Columbia University in 1946, he spent the next 30 years teaching economics at the University of Chicago. He retired from the university in 1977 and joined Stanford University’s Hoover Institution on War, Revolution, and Peace as a senior research fellow. Friedman died on Nov. 16, 2006.