Milton Friedman, free-market economist who inspired Reagan and Thatcher, dies aged 94

Milton Friedman, the Nobel-winning monetarist economist who was an intellectual architect of the free-market policies of Republican US presidents, and an adviser to Margaret Thatcher when she was Prime Minister, died yesterday in San Francisco. He was 94.

Over half a century, Mr Friedman, the son of Hungarian Jewish immigrants, established himself as arguably the most influential economic thinker of his time. Over that post-war period, "Friedmanism" - the belief that changes in money supply dictate fluctuations in the economy - supplanted Keynesianism as the dominant economic philosophy of the industrial world.

Inflation, he believed, was caused by too much money chasing two few goods. Conversely, deflation was the result of too little money in the economy. He argued that the Depression was not a failure of capitalism, but of government, as the monetary authorities in the US and Europe reduced liquidity in the system, thus making a bad situation worse.

As Mr Friedman celebrated his 90th birthday in 2002, Ben Bernanke - then a Federal Reserve governor, now chairman of the US central bank - sought belated forgiveness for the error: "Regarding the Great Depression, you're right," Mr Bernanke acknowledged. "We did it. We're very sorry." Those monetary beliefs underpinned the 30-plus books that appeared under his name, most notably perhaps A Monetary History of the United States, 1867-1960, as well as a host of other writing including a regular column in Newsweek magazine. He urged deregulation and individual initiative as the keys to economic success - a view embraced by the US presidents Nixon, Ford and Reagan, and by Mrs Thatcher in Britain.

Mrs Thatcher said: "Milton Friedman revived the economics of liberty when it had been all but forgotten. He was an intellectual freedom fighter. Never was there a less dismal practitioner of a dismal science. I shall greatly miss my old friend's lucid wisdom and mordant humour."

Friedman, and the "Chicago School" of economics he led, helped to bring down the post-war Bretton Woods system of fixed exchange rates, as the dollar was devalued twice in the early 1970s.

In 1976 he was awarded the Nobel Prize for Economics. In subsequent years, the Fed and other central banks adopted his prescription of rigorous control of the money supply to stamp out the inflation left by the 1970s oil-shocks.

His laissez-faire philosophy extended beyond economics. Mr Friedman was a fierce opponent of the military draft, and called for the decriminalisation of prostitution and drug use. He courted controversy, not least when he and other Chicago School economists advised Augusto Pinochet in Chile, after the overthrow in 1973 of Salvador Allende, the democratically elected president. Mr Friedman defended himself by pointing to the ultimate fall of General Pinochet. "Freer markets lead to free people," he said.

"It's hard to think of anyone who's had more of a direct influence on social and economic policy in this generation," Professor Allan H Meltzer of Carnegie Mellon University, who is preparing a two-volume history of the Fed, said yesterday.

Start your day with The Independent, sign up for daily news emails
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Photographer / Floorplanner / Domestic Energy Assessor

£16000 - £25000 per annum: Recruitment Genius: A Photographer/ Floor planner /...

Ashdown Group: Front-End Developer - Surrey - £40,000

£30000 - £40000 per annum: Ashdown Group: Front-End Developer - Guildford/Craw...

Recruitment Genius: Customer Service Assistant

£13500 - £15000 per annum: Recruitment Genius: A Customer Service Assistant is...

Recruitment Genius: Sales Executive - OTE £35,000

£16000 - £35000 per annum: Recruitment Genius: An ambitious and motivated Sale...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence