Trading Economics Across the Atlantic: Jan Tinbergen and Milton Friedman

Abstract

Jan Tinbergen and Milton Friedman were both very much inspired making economic theory work, applying it in service of society. The Tinbergen approach - the economist as Social Engineer - was exported to Chicago in the 1940s where one of Tinbergen’s students - Tjalling Koopmans - became a prominent member of the Cowles Commission, where his method and style clashed with the Economics Department dominated by Milton Friedman who was a public intellectual. Koopmans preferred the Walrasian method of looking at economics whereas Friedman relied on a Marshallian, partial equilibrium approach. With Friedman’s departure from Chicago in 1977 his method and approach disappeared. The work of Koopmans and the Cowles Commission more generally formed the basis for New Classical Economics and came to dominate the practice of economics. The irony of these two icons of economics is that they produced disciples who carried their initiative too far.