From The Collected Works of Milton Friedman, compiled and edited by Robert Leeson and Charles G. Palm.
"The Friedman Doctrine" by Robert McKenzie, J.M. Pick, and Dr. Peter Howells The Listener, 8 May 1980 © Immediate Media Company London Limited
SIR: May I add three points to Peter Jay’s very interesting article on Professor Milton Friedman (THE LISTENER, 1 May). As Jay indicates, I chaired, at the University of Chicago, nine discussions for American television based on Friedman’s Free to Choose films, which paralleled Jay’s own six-part discussion on BBC television here.
(1) Friedman readily acknowledges that he is not a Conservative; and that he is especially scornful regarding the British Conservative tradition as developed from Disraeli’s Crystal Palace speech through the post-’45 policies adumbrated in particular by R. A. Butler and Harold Macmillan. Friedman considers this ‘One Nation’ tradition to be unacceptably paternalistic and far too preoccupied with the use of state power, in Disraeli’s phrase, ‘to elevate the condition of the people’.
(2) Professor Friedman is, of course, in British terms, a classical 19th-century Liberal, deeply committed to the modern application of the ideas of Adam Smith. Like a true Manchester Liberal, he is opposed to anything that interferes with the operation of the ‘invisible hand’, whether it be factory legislation, the limitation of hours of work, minimum wages, social welfare legislation, or any other attempt to use the power of the state to advance the welfare of the people.
(3) While Friedman is personally very charming and a most skilful proponent of his own ideas, he is also as dogmatic in advancing these ideas as any Marxist. His methods are totally non- empirical. He seeks out and uses facts and illustrations which he believes demonstrate the validity of his own ideas. As I found out in the course of many exhilarating and exasperating hours of discussion with him, he simply will not entertain any evidence which appears to conflict with his own a priori judgment. To take one example: he is convinced that Britain, since 1945, has been uniquely debauched by excessive welfare spending and the pursuit of equality. When I produced comparative figures prepared by the Brussels Commission which showed that British spending on health and welfare (as a proportion of the GNP) is one of the lowest of the nine; and that governments in this country (central and local) take a smaller share of the GNP than the European average, he simply declined to consider the evidence.
Robert McKenzie
London School of Economics
SIR: In placing the Galbraith and Friedman economic ‘blockbusters’ in the line of succession to Civilisation and The Ascent of Man, Peter Jay (‘Who really are the British monetarists?’, THE LISTENER, 1 May) writes: ‘Inevitably, when the subject shifted to economics, the air of scientific objectivity … became very difficult to sustain.’
Scientific objectivity in economic reasoning may be difficult for economists, who lack a rigorous scientific training, and who are insufficiently independent of established viewpoints to view the
1 From The Collected Works of Milton Friedman, compiled and edited by Robert Leeson and Charles G. Palm.
evidence afresh. But if you happen to be a scientist determined to set out the unchallengeable truth of the economic dilemma, ‘scientific objectivity’ is certainly not impossible.
Indeed, it has been achieved, and sustained. Unfortunately, neither Mr Jay nor Professor Friedman is in a position to view an objective view objectively! Professor Friedman is too deeply embedded in his own well-oiled groove, and Mr Jay, I understand, is engaged in his own attempt to diagnose and prescribe a cure for the world’s economic ailments, deaf and blind to suggestions that a successful attempt has already been made.
The key problem has been diagnosed as a fundamental misunderstanding among economists of the function of energy in the business of economic development. The correct prescription includes (a) a dose of error-correction, which economists find exceedingly difficult to swallow, and (b) strict budgetary discipline, applied to energy, rather than monetary, expenditure.
J. M. Pick
The Friedman Doctrine
SIR: Peter Jay (THE LISTENER, 1 May) was right to criticise the fashion in British political discourse for uncritically ascribing to ‘monetarism’ four largely independent propositions. It is not true, however, that one can subscribe to the last, most overtly ideological, of these; namely, that free enterprise capitalism is the best system of political economy known to man, without some reference to the earlier ‘technical’ propositions on the role of money, fine-tuning and the natural rate of unemployment.
This would be clearer if Peter Jay had made explicit the fifth proposition, hidden in the first and second on his list, that changes in government spending have no effect upon the Gross National Product except where such changes are directly reflected in changes in the money supply. The truth, or otherwise, of this proposition, that government spending financed by taxation or borrowing merely ‘crowds out’ private spending, determines in no small measure the ease with which one can subscribe to claims for the welfare maximising capacity of the free market system. Thus the present government’s enthusiasm for reducing the public sector borrowing requirement. If private replaces public spending with no loss of output, this is a fact of great convenience to a party ideologically committed to the more general merits of private enterprise. For Keynesians, however, ‘crowding out’ undermines a major argument for a large public sector; namely, that relatively small changes in its expenditure have a significant effect on the stabilisation of output. Strictly, logical contradiction may not follow from accepting the ‘crowding-out’ thesis while arguing for a larger public sector, but a good deal of intellectual inconvenience most certainly would.
Dr Peter Howells
Department of Applied Economic Studies
North East London Polytechnic
11/13/12
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