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The Economic Theories Of Milton Friedman

778 words - 3 pages

The Economic Theories of Milton Friedman

Milton Friedman, like so many great life stories, was the product of a very tough childhood. He was son to a couple of poor immigrants, born on 31 July 1912, in New York, America. At the age of fifteen, Friedman's father died. Despite this, he won a scholarship to both Rutgers University and the University of Chicago, where he achieved a Bachelor of the Arts degree in economics. The very next year he received an MA at Chicago University. He then worked for the National Bureau of Economic Research (from 1937) while teaching at many universities, but it was only at Chicago in 1946 that he was given the title of 'professor of economics'. Thirty years later, in 1976, he was awarded the Nobel Prize for economics, "for his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilisation policy." Through his life, Friedman has published many books, articles in newspapers and periodicals. He has also appeared on radio and television in countless interviews.

Friedman is strictly a monetarist. This means that he believed that inflation was a direct result of growth in the supply of money into an economy. His views differed however, with those of his contemporaries, in the major point that he believed that economic stability could only be reached through non-intervention on behalf of the government. This policy is often known as laissez-faire (French for 'let things be') economics. The policy at the time was for the government to sharply increase or decrease money supply, to counteract inflation, in an attempt to attain a stable economy. Friedman argued however, that this intervention was destabilising, and that what was needed was a steady money flow to create a basic framework for the economy; the rest should be left up to individual competition. This school of thought goes along the lines of 'It is in the best interest of the producer to satisfy the consumers' wishes. By doing this, they are also acting in their own interest, therefore competition is working to the benefit of the whole economy.' In order for this competition to be present, there needs to be freedom of the individual. He boldly stated that this can only be created by minimal government regulation of the economy, which allows power to be concentrated and wielded by only a few...

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