Das Milton Friedman Problem?: A Reassessment of Friedman's Contributions to Economic Methodology

Abstract

In terms of economic methodology, Friedman’s most well-known contribution is his 1953 essay, “The Methodology of Positive Economics.” This important contribution has overshadowed his earlier contribution to economic methodology, entitled “Lerner on the Economics of Control” (1947). Whereas Friedman (1953) argued that economic theory can be built upon unrealistic assumptions, ironically, what has been almost forgotten is that Friedman (1947) attacked the theory of market socialism precisely for its unrealistic assumptions. This irony presents an interesting puzzle, which we adjudicate in this essay. We argue that in each case, Friedman was making an immanent critique of his intellectual opponents that was rhetorically consistent, yet methodologically inconsistent. This methodological inconsistency is irreconcilable, since Friedman (1953) contradicts the analysis of Friedman (1947).