Martin Wolf: John Maynard Keynes and Milton Friedman, today’s policy orthodoxies are a synthesis of their two approaches.

Martin Wolf: John Maynard Keynes and Milton Friedman, today’s policy orthodoxies are a synthesis of their two approaches.

John Maynard Keynes and Milton Friedman were the most influential economists of the 20th century.
Their differences were, indeed, profound. But so was what they shared. More interesting, neither won and neither lost:
today’s policy orthodoxies are a synthesis of their two approaches.
Martin Wolf, Financial Times, November 22 2006

Keynes concluded from the great depression that the free market had failed; Friedman decided, instead, that the Federal Reserve had failed. Keynes trusted in discretion for sophisticated mandarins like himself; Friedman believed the only safe government was one bound by tight rules. Keynes thought that capitalism needed to be in fetters; Friedman thought it would behave if left alone.

These differences are self-evident. Yet no less so are the similarities. Both were brilliant journalists, debaters and promoters of their own ideas; both saw the great depression as, at bottom, a crisis of inadequate aggregate demand; both wrote in favour of floating exchange rates and so of fiat (or government-made) money; and both were on the side of freedom in the great ideological struggle of the 20th century.

If it were not for the fact that the UK and US are two nations divided by a common language, one might even call both “liberals” in the 18th and 19th century English sense of that word.