Milton Friedmanʼs Contributions in Historical Contexts:

Abstract

The year 2012 marks the centennial anniversary of Milton Friedmanʼs birthday and the 50th an-niversary of the publication of Capitalism and Freedom （1962）. This paper examines the his-torical significance of his contributions, by mainly reviewing the growing recent research on his economics. Friedman has been popularly described as the Chicago school, monetarist, market fundamentalist, and neo-liberal; I argue that it is necessary to examine these convention-al labels from a historical perspective. Friedman witnessed several and sometimes overlapping historical eras, and the paper focuses on the his-torical contexts of the following: economic sci-ence in the latter half of the twentieth century, the National Bureau of Economic Research tra-dition, the Chicago school research tradition, money and business cycle theories, the role and responsibility of public intellectuals, and the neo-liberalism movement. This paper arrives on the following conclusion. Friedmanʼs ideas drew upon the economics of mathematical and empir-ical nature, seen in the latter twentieth century, yet his approach deviated from the more domi-nant Cowles or MIT approaches, as he regarded economics as an applied and empirical policy science. His works shared common characteris-tics with the NBER tradition, and he changed the nature of the post-War Chicago school by importing the NBER tradition. His monetary and business cycle analysis is a mixture of old Chi-cago monetary tradition and the NBER tradition. His active role as a public intellectual was met with success and controversies, as did his in-volvement with the neo-liberal movement. Al-though Friedman should be primarily studied from a historical perspective, one cannot avoid reviewing his contributions only because he ex-erted a great influence on the history of econom-ics. This becomes more acute especially in the wake of the current economic and financial cri-sis. The paper primarily examines three ques-tions: whether Friedmanʼs ideas contributed to the current crisis, what Friedman would have done if he were alive, and what could be done to improve on Friedmanʼs contributions. The paper concludes that historians of economics would and should continue arguing about and with Friedman. JEL classification numbers: B20, B22, B31.