David R. Henderson  

David Friedman's Defense of His Father

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David Friedman's latest post is titled "Austrian Fantasy." It's well worth reading.

In the post, David defends his father from Lew Rockwell's statement that the whole world is reading Murray Rothbard and that outside of mainstream economics, Milton "is almost a nobody." Yes, Lew actually said that. So David goes about his defense the way he always has and his father always did: look at the numbers.

What I really like about his post, besides his empirical precision, is the passion and love he shows for his late father, Milton Friedman.

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CATEGORIES: Austrian Economics

COMMENTS (41 to date)
J Storrs Hall writes:

Hear, hear!

Eric Hosemann writes:

Bear with me while I do a little inventory.

I have read Machinery of Freedom, and I am reading Price Theory. I follow David's blog and have listened to several of his talks. He seems like the last person one would want to provoke with spurious comments.

I've read Free to Choose, Money Mischief & Capitalism and Freedom. I've watched the whole Free to Choose series too, along with all the YouTube fodder I can handle without jeopardizing my marriage. I can't imagine what the libertarian universe would be without his guiding light. And he's a Nobel prize winner to boot. By the way, Milton's absolute joy in engaging his ideological foes is THE standard all lovers of freedom should aspire to.

I've read Rothbard's Man, Economy and State too, and listened to plenty of his playfully vitriolic talks downloaded from Mises.org. Murray was a force, and still is. But there is something missing in him that David and Milton have in spades. I don't know quite what it is but I feel it has something to do with Rothbard's willingness to use hyperbole and exaggeration in characterizing his ideological opponents, whether contemporary or historical. David talks about this a little in the comments to his post.

In any case, Rockwell's sniping and chest-beating are uncalled for and aren't helping advance the cause of freedom.

Matt writes:

Lew Rockwell's fetish for Milton Friedman and mainstream economics is truly fascinating. Did Rockwell ever shoot his mouth off about Friedman while Friedman was alive?

Austrians seem to harbor much bitterness at the respect Friedman and his colleagues garnered over the years-a respect Austrians feel entitled to.

Friedman knocked over a few windmills in his time and backed off from some ideas. Friedman was a world class scholar and gentleman.

Austrians should not criticize, but emulate Friedman. Knock down windmills rather than people. Why don't Rockwellesque Austrians learn mainstream economics before attacking it, I wonder? I suspect they prefer pious vocabulary to disciplined analysis and mathematics.

Pierre Lemieux writes:

Thanks for pointing this out. It made me realize that I am a repenting ex-Rothbardian!

charlemagne writes:

As people have pointed out in the comments of David's blog, many (dare I say most?) readers of Rothbard get his books or audiobooks for free at Mises.org. I have listened to many Rothbard essays, and some full books, including vol. 1 of his history of economic thought before smith.

Sure, I have bought M. Friedman books too, but it is possible that Mises.org's international reputation and free resources have driven his influence *in terms of number of readers* above Friedman's? It would have been nice if Rockwell had supported his claim with some numbers on downloads from his organization's site, but alas, Rockwell seems to think it's simply axiomatic that Rothbard is more widely read (joking).

David R. Henderson writes:

@Pierre Lemieux,
You're welcome. I liked both Friedman and Rothbard a lot. I considered them both friends, although Murray clearly didn't think that way after I joined the Reagan administration. I do think MIlton was the better economist and will have the bigger (and is already having the bigger) long-run impact. Also I think Milton was the much fairer-minded person.

Nick Bradley writes:

When Milton Friedman passed, the Mises Institute published an obit that was fairly conciliatory, saying basically that "despite our disagreements over monetary policy, Milton Friedman was a champion of freedom and liberty".

I also blogged for LRC for about a year in '07/'08 (focusing on the Paul campaign), and I wouldn't blog there again. The site is much more visceral and crude than it was then, with people like David Kramer blogging.

On Rothbard, it seems like he practiced "avant-garde economics", writing papers merely to ruffle feathers and piss people off. Furthermore, he took a "no compromise" position on cooperating with the sate to advance liberty, while Milton Friedman may have gone too far in making compromises with statists.

The Austrian's biggest beef with Milton Friedman was his explicit cheerleading for a government-ran central bank...he was not a free banker as far as I can tell. Lew also made the insinuation that Dr. Ron Paul is NOT a free banker, which I believe he is: Paul advocates competing currencies, but believes 100% reserve currencies will prevail as the standard.

And finally, Lew & company need to come clean with their explicit role in the whole "newsletter thing" back in the 1980s. Rothbard & Rockwell published those racial-tinged newsletters under Paul's name (w/o his permission) in order to bring right-wing Buchananite nativists into the movement...100% consistent with avant-garde economics. Dr. Paul is the greatest vanguard for liberty in 3 generations, and if these issues come up again in the campaign, Lew needs to step up and take responsibility...instead of hanging up on reporters when they ask questions.

John Papola writes:

Thanks for the link, David.

Milton was, is and always will be one of the single greatest and most effective champions for freedom and peace ever to walk the earth. Anyone who truly cares about advancing liberty should spend time studying the style and substance of Milton's lifework.

Libertarian factionalism, on the other hand, serves no purpose whatsoever outside of satiating some desire to reproduce the barbaric, reptilian satisfaction of school-yard brawls.

fundamentalist writes:

The Economist editorialist laments that so many conservatives are reading Rothbard, today. He did not write that Rothbard has always been read more than Friedman, or that Rothbard has sold more books than Friedman. He wrote that in the current debate over monetary policy conservatives read more Rothbard than they read Friedman.

Rockwell, exaggerated when he wrote that the whole world is following Rothbard, but David Friedman’s posting of books sales completely misses the point. Most of Friedman’s books sold decades ago. Apparently they aren’t selling today.

BTW, the Economist writer creates a straw man of Austrian economics. That’s typical of the rag. They can’t do battle with the real thing so they make a stuffed toy enemy they can defeat. Hayek disagreed with Friedman’s monetary theory and he was far from being a Rothbardian fanatic. And Hayek disagreed on theoretical grounds, not on moral grounds. Ron Paul’s beef with Friedman is not moral, either. It’s practical and based on sound monetary theory.

Friedman was a Keynesian economist in almost all respects. He did Keynesians a favor by re-introducing them to better monetary theory, but it wasn’t good monetary theory. You need Hayek and Mises for that. Rothbard didn’t advance monetary theory at all.

fundamentalist writes:

Matt: “Why don't Rockwellesque Austrians learn mainstream economics before attacking it, I wonder?”

Matt, you have it backwards. As the Economist article that started this kerfuffle demonstrates, mainstream economists know nothing about Austrian econ. All of the top Austrian economists understand mainstream econ exceptionally well. Just try Roger Garrison’s book “Time and Money” which compares the different schools. Or try Mark Skousen’s “Structure of Production.”

And it would be stupid to say that Hayek or Mises, from whom Rothbard learned econ, didn’t understand mainstream economics.

I have read a lot of criticisms of Austrian econ over the years and all I can say is that what they are criticizing is not Austrian economics. I haven’t read a single mainstream economist who understood Austrian econ. I anyone thinks they know of a good critique of Austrian econ I would like to read it. Please don’t mention Cowen or Caplan. I have read their critiques and they commit the same errors as mainstream economists.

I’m not a big fan of Rothbard and think his injecting morality into the economics debate was a serious mistake. The ethical system he developed is a joke. The Mises Institute’s fixation on it harms the libertarian movement.

But Austrian econ is far more than Murray Rothbard. The Mises/Hayek problem with Friedman was his monetary theory. The Austrian business cycle theory demonstrates that business cycles result from monetary pumping as prescribed by Friedman. Business cycles harm people and erode support for free markets.

Friedman saw business cycles as caused by monetary tightening and the solution to be loose monetary policy. Austrians see the Friedman fix as the cause.

So while Austrians applaud Friedman’s defense of free markets, they also see that his monetary theory undermined support for free markets.

Blackadder writes:

A google search for "Milton Friedman" returns 7,950,000 results.

A google search for "Rothbard" (not "Murray Rothbard" mind you, just "Rothbard") returns 3,570,000 results.

Blackadder writes:

David Friedman’s posting of books sales completely misses the point. Most of Friedman’s books sold decades ago. Apparently they aren’t selling today.

You think that the Amazon rankings are determined by sales made decades ago?

Justin Ptak writes:

Actually, Rockwell asked a question about whether he needed to note that many people are reading Rothbard today while Friedman is unknown outside of academic circles.

The days that Friedman was read monthly in Newsweek are long gone and as the totality of his work becomes widely known his shine fades away.

It seems clear that at least in the liberty movement Rothbard is trending upward while Friedman is in decline.

The title of the Economist article "Missing Milton Friedman" makes this clear.

Kevin writes:

When I first encountered Rothbard's work, I was intrigued. I've since read all his major works, but the more I read, the less impressed I was. Part of the problem was that I had already read the works of many of the people he was criticizing, and it was clear that Rothbard had a bad habit of misrepresenting their work. And too many Rothbardians I've encountered simply repeat those claims verbatim. Indeed, I often get the impression that many Rothbardians only exposure to mainstream economics is from Rothbard's works.

I'm confused why Nick would claim that Friedman was a cheerleader for government run central banks. Nothing of the sort is true. Friedman's explicit position was that we should abolish the Fed and end central banking. He was, however, willing to recommend was he felt were the least bad policies given the central banks existence. This is a distortion Rothbard has done on many occasions; if an economist advocated Policy A as a superior alternative to Policy B, Rothbard would often declare that the economist viewed A as an ideal, first best solution, even if the economist repeatedly declared that a free market was the best option of all.

Saying "we should not be willing to compromise or accept half measures" is an honest view. What Rothbard did, however, was not honest. Saying Friedman supported central banking is dishonest, let alone saying he was a "cheerleader" for it.

I half agree with fundamentalist. It's true that many mainstream economists don't understand Austrian theory very well. But we should be cautious against slipping into a tautology which I've heard from many Austrians of my acquaintance; many argue that the fact that someone disagrees with Austrian economics is proof positive that they don't understand it.

fundamentalist writes:

Blackadder, I could be wrong. Do you have info that the sales figures are for a recent period and not all time figures?

rpl writes:
Blackadder, I could be wrong. Do you have info that the sales figures are for a recent period and not all time figures?
As of right now, the top seller on Amazon.com is a book called A Stolen Life: A Memoir, which was published in July 2011. If a book that was published earlier this month can make it into the top slot, then there is almost certainly some weighting in favor of recent sales.
Blackadder writes:

Do you have info that the sales figures are for a recent period and not all time figures?

See here.

Kevin writes:


The sales rankings are current sales, not total sales. For example, "A Stolen Life" by Jaycee Dugard is the number one ranked book in sales. It was only published last July.

fundamentalist writes:

Kevin: “many argue that the fact that someone disagrees with Austrian economics is proof positive that they don't understand it.”

That’s a good point and I see it all too often. However, when I read critics of Austrian econ I usually see factual errors. For example Coordination Problem blog recently had a discussion about a critique of Austrian econ by Krugman and Cowen. http://www.coordinationproblem.org/2011/01/call-all-economists-lets-answer-a-serious-question.html

Here’s a segment of Boettke’s post:

“Tyler brings up an empirical challenge to the pattern prediction of the Mises-Hayek theory that he raised in his important book, Risk and Business Cycles, that "Comovement [of consumption and investment] is an embarrassing empirical fact for the Austrian account of the boom."”

Krugman and Cowen assert that Mises and Hayek wrote that consumption and investment could not increase at the same time. The “embarrassing empirical fact” is that they do.

However, a casual reader of Mises, Hayek, Rothbard or any other Austrian economist will know that they have all insisted that consumption and investment in fact do rise at the same time. It’s in every article and book on business cycles by Austrian economists.

So how can Krugman and Cowen assert emphatically that Austrians claim investment and consumption cannot rise at the same time when every Austrian economist who has ever written on the business cycle insists that they do?

fundamentalist writes:

So the figures provided by David Friedman are books sales for the past month? If so, it's very impressive that Friedman and Rothbard are selling so well. Though as someone mentioned a lot of Rothbard readers are getting the books for free at Mises. org.

But if Friedman is selling so much better than Rothbard, where did the Economist writer get the idea that Rothbard is such an influence?

My guess is that the Economist writer got it wrong and Hayek's Road to Serfdom is the main influence behind Ron Paul and critics of the Fed.

fundamentalist writes:

I have a hard time believing that Friedman or Rothbard's books are currently selling that well, but if so I apologize to David Friedman.

Here’s what I see happened. The Economist disagrees with Ron Paul’s stance on the Fed and its monetary policy and wanted to discredit it. But Mises and Hayek have too much respect to criticize, especially since “Road to Serfdom” is selling so well, so he picks the less respected of the Austrian economists, Rothbard.

But he doesn’t criticize Rothbard’s monetary theory, which he got from Mises. He criticizes Rothbard’s nutty ethics which leads followers to proclaim the state as evil by nature. That way, he can paint all Austrians as nuts and their monetary theory as nutty by association without having to deal with the very sound monetary theory of Mises and Hayek and other good Austrian economists.

It’s assassination by association. Clever, but dishonest.

When it comes to monetary policy recommendation a rothbardian should not have as much beef with Milton Friedman as before the 80's, when Friedman started flirting with different approaches. Which finally led him to the letter to Greg Mankiw, three months before he died, where Friedman argued:

"Even better [than to follow Friedmans monetary rule] would be to abolish the Fed and mandate the Treasury to keep highpowered money at a constant numerical level."

Which is almost like a gold standard. Not 100%, and there is also the risk of the government not keeping it's promise, but still - no more central bank facilitated credit expansion. And that's something, that all Austrians should like in a world of second/third best.

fundamentalist writes:

Stan, interesting post!

I think my main gripe with monetarists is that they seem to think the money supply will never contract unless the Fed forces it to contract. That is clearly not the case.

Credit (one component of money) will easily contract just before a depression because a few debtors default causing bankers get scared and quit lending or even call in some loans.

More people get scared and start paying off loans. As a result the money supply contracts faster than the Fed can act. Or it simply stops growing.

And the Fed does not enjoy absolute control over money or prices. As Friedman wrote, the lags between policy and effect are long and variable. Greenspan said the same thing on a recent CNBC interview. He said the Fed models show a lag of 3 years.

Because their monetary theory is so bad, the Fed can't predict when money growth will suddenly go flat, or even contract. So they end up acting many months after the fact. Add in the lags and their policies tend to become pro-cyclical.

Blackadder writes:

I think my main gripe with monetarists is that they seem to think the money supply will never contract unless the Fed forces it to contract.

This is not the monetarist position. Rather, I think what Friedman would say is that central bank system the Fed can and should prevent this from happening.

This, incidentally, was also the position of the mature Hayek.

Sheldon Richman writes:

I think of myself as an Austrian and I disagree with Milton Friedman in some important areas.But I have to say that the sort of post that prompted David's response is embarrassing. It gives Austrian economics a bad name. Milton Friedman was a great champion of liberty. I'm a fan of David's too!

fundamentalist writes:

Blackadder, yes, Friedman would have said that the Fed should prevent a contraction of money, but at the same time he recognized that a long lag existed between Fed decisions and their impact. That means the Fed would have to see the contraction coming at least three years before it happened and it never had the forecasting tools to do it.

I disagree that it was a "mature" Hayek's position. At one point in the midst of the Great D he succumbed to pressure and suggested that the Fed should find what he called secondary deflation, but that was all. Later he back peddled on that because of the long lags and the inflation that results from pro-cyclical policies.

Blackadder writes:

I disagree that it was a "mature" Hayek's position. At one point in the midst of the Great D he succumbed to pressure and suggested that the Fed should find what he called secondary deflation, but that was all. Later he back peddled on that because of the long lags and the inflation that results from pro-cyclical policies.

You have it backwards. Here is Hayek in 1979:

I agree with Milton Friedman that once the Crash had occurred, the Federal Reserve System pursued a silly deflationary policy. I am not only against inflation but I am also against deflation. So, once again, a badly programmed monetary policy prolonged the depression.
Blackadder writes:

Here is another, similar, quote from Hayek's "The Campaign Against Keynesian Inflation" (written in the mid 1970s):

Such a "secondary depression" caused by an induced deflation should of course be prevented by appropriate monetary counter-measures. Though I am sometimes accused of having represented the deflationary cause of the business cycles as part of the curative process, I do not think that was ever what I argued. What I did believe at one time was that a deflation might be necessary to break the developing downward rigidity of all particular wages which has of course become one of the main causes of inflation. I no longer think this is a politically possible method and we shall have to find other means to restore the flexibility of the wage structure than the present method of raising all wages excep those which must fall relatively to all others.
fawful writes:

I like Rockwell, and I think he has contributed a lot to Libertarianism, (LVMI, especially). However....

There is no way Rothbard has a broader appeal among non-economists than Milton Friedman. Friedman did so much to expand libertarianism, while Rothbard did much to divide the libertarian movement with his fixation on purity.

I suspect a lot of the vitriol the anarcho-capitalists direct towards Milton Friedman is because he is especially beloved by the Koch-funded groups, (Cato Institue, Reason Foundation, etc.) The anarcho-capitalists hate the "Kochtopus" for reasons that have never been totally clear to me, since they agree on the vast majority of issues. But that's the legacy of Murray Rothbard, a lot of division and infighting (e.g. the US Libertarian Party).

David Friedman writes:

"The Austrian's biggest beef with Milton Friedman was his explicit cheerleading for a government-ran central bank...he was not a free banker as far as I can tell."

Can you point to someplace where he came out against free banking? It wasn't exactly a high profile issue.

I can report pointing out to him that, at least in a simplified model, a competitive market for privately issued currency produced the equilibrium behavior of the money supply which he had argued for in his Optimal quantity of money essay. He did not disagree.

Rothbard, on the other hand, was opposed to free banking, although he probably wouldn't have put it that way. He claimed that private fractional reserve banking could and should be banned. That meant that he wanted to constrain, by force, the terms on which individuals voluntarily dealt with each other.

David Friedman writes:

"but David Friedman’s posting of books sales completely misses the point. Most of Friedman’s books sold decades ago. Apparently they aren’t selling today."

The figures I posted were current Amazon rankings, so evidence that the books are selling today. What is your reason for supposing, and asserting, the contrary?

As best I can tell from other people's attempts to reverse engineer the Amazon rankings, my father's books are selling about ten times as many copies per day on Amazon as Rothbard's books are.

I expect the ratio would be considerably higher for total copies ever sold. For one thing, one of my parents' books was at the top of the non-fiction best seller list at two dates a year apart, which I gather is a pretty rare accomplishment.

Michael Suede writes:

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Jim Rose writes:

Partial cross-post from Ideas:

Friedman’s print and media obituaries ran all around the globe:
• “Milton Friedman, the grandmaster of free-market economic theory in the postwar era and a prime force in the movement of nations toward less government and greater reliance on individual responsibility” – New York Times

• “… it was Friedman who by 1980 supplanted Keynes as the world’s most influential economist.” Sunday Times, London.

• “Milton Friedman, who has died aged 94, was one of the greatest economists of all time. He may come to be included in the same category of pre-eminent figures as Adam Smith, Ricardo, Marx and John Maynard Keynes.” – The Guardian

• “Milton Friedman was the father of monetarism and the prophet of laissez-faire economics. It was his debunking of the economics of John Maynard Keynes which was a major factor in leading to the free market revolutions in Britain and the United States. ... he moved the economic consensus decisively to the right.” – The Independent, London

• “Milton Friedman, who has died aged 94, was the last of the great economists to combine possession of a household name with the highest professional credentials. In this respect he was often compared to John Maynard Keynes, whose work he always respected, even though he to some extent supplanted it. Moreover, in contrast to many leading economists, Friedman maintained a continuity between his Nobel-Prize winning academic contributions and his current journalism. The columns he contributed to Newsweek every third week between 1966 and 1984 were a model of how to use economic analysis to illuminate events.” – Financial Times, London

Jim Rose writes:


the 1980s onwards ideas of your father such as freezing the monetary base, and replacing the Fed with a computer do not strike me as reason to be in the dock as an "explicit cheerleading for a government-ran central bank".

the narrow banking proposal from 1959 with all banks having 100% reserves made up of Fed deposits is rather radical too.

fundamentalist writes:

Blackadder, I have read those comments by Hayek before, but I think he differs with Friedman in a subtle way. Hayek was against the Fed reducing the money supply in a depression when prices were already falling. And he thought the Fed should do something about what he called a secondary deflation. However, he never thought that monetary expansion could end a depression as Friedman did. However, he was also skeptical that the Fed could do what he thought it should do because of the long lags. Friedman saw that problem as well.

Jane writes:

The Amazon sales rankings are entirely misleading. If you want to read Rothbard you go to Mises.org and either read it for free or buy it directly. I don't know anyone that buys Rothbard from Amazon unless the shipping costs are better overseas.

Ryan Vann writes:

Milton probably has the grave most danced on of any economist out there.

"The anarcho-capitalists hate the "Kochtopus" for reasons that have never been totally clear to me, since they agree on the vast majority of issues."

I think the animosity is mutual.

Paul Kilmartin writes:

Is it just my imagination, or are a substantial amount of free Market economists arguing for an Objective valuation model for Friedman vs. Rothbard? Is economic literature not a normal good? Cannot consumers get value from either and/or both? Or are we all merely expressing preference? ;-)

That being said, all of these threads on the topic are some of the most concise framing of various monetary positions I've seen. Speaking as a consumer, I'd love to see one of you writers to reduce the various threads from all sources to a tighter package.

David Friedman writes:

"The Austrian's biggest beef with Milton Friedman was his explicit cheerleading for a government-ran central bank...he was not a free banker as far as I can tell."

I do not see how you could describe someone who blamed the Federal Reserve system for both the Great Depression and various post-war episodes of inflation as a cheer leader for a government-run central bank. Can you offer anything he wrote as supporting that position--or, for that matter, attacking free banking?

As best I can tell, you and people accepting your line of argument are confusing two quite different issues--what questions someone asks with what answers he gets. The difference in that regard between my father and both me and Rothbard was the questions. My father's interest was in how the world as it was could be made less bad. He was prepared to push proposals that seemed unlikely to be accepted, such as abolishing the draft, abolishing minimum wage laws, or floating exchange rates--and two of those three eventually happened.

But he wasn't terribly interested in the question of how the perfect system would work. His view of my proposals for anarcho-capitalism was that they might work but probably wouldn't, mine was that they might not work but, given a suitable environment, probably would, and neither of us thought he had a conclusive proof for his views.

All modern economies have central banks, so figuring out what central banks were doing wrong and persuading them not to do it made more sense than trying to get central banks shut down and replaced with private money issuers. The one discussion of free banking that I remember having with my father was when I pointed out that a perfectly competitive free banking system would produce the same outcome--roughly speaking, prices falling at the real interest rate (more complicated if you allow for the costs to the issuers of issuing)--that he had shown in an essay was, in a technical sense, optimal. He agreed.

But the fact that he thought an existing government institution modified in some fashion would be an improvement didn't mean he thought it would be an improvement over no government involvement at all. On the contrary, at various points he said and wrote that one proposal or another was not what he would want if one were starting with a blank slate, but was what he thought one should be moving to given where we were starting. I'm pretty sure he made that point with regard to vouchers vs an entirely private system of schooling.

P.S.H. writes:

Some organization or another should really make an effort at persuading publishers to release their sales figures. It would be fascinating to draw trend lines and make comparisons.

Douglass Holmes writes:

P.S.H, great point. In this case, it would be nice to know how much money people are willing to spend to read Milton Friedman versus how much they are willing to spend to read Rothbard. Even if "the whole world" is reading Rothbard (which clearly isn't the case), the fact that people are willing to spend money on Friedman's books indicates that Friedman is not "almost a nobody." People still love Milton Friedman and for good reason.
Thanks for this post, David H.

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