Milton Friedman

Milton Friedman was an American economist who spent most of his career at the University of Chicago and received the Nobel memorial prize in economics in 1976. A leading defender of free markets and monetarism, he argued in a 1970 essay that the social responsibility of business is to increase its profits within the rules of the game. His liberalism was the classical, free-market kind, not the left-of-centre liberalism of American politics. In 'The Methodology of Positive Economics' he held that theories should be judged by their predictions, not by the realism of their assumptions.

Key ideas

• Managers are agents of the shareholders; spending their money on social causes without consent is a kind of taxation without representation.
• Business should pursue profit within the rules of the game, that is, open and free competition without deception or fraud.
• An economic theory is to be judged by the accuracy of its predictions, not by whether its assumptions are realistic.
• Economic freedom is a necessary condition for political freedom.

Major works

• Essays in Positive Economics (1953)
• Capitalism and Freedom (1962)
• A Monetary History of the United States, 1867–1960 (1963, with Anna Schwartz)
• The Social Responsibility of Business Is to Increase Its Profits (1970)

In the conversation

• Discussion My model has ‘the average borrower’. Nobody is the average borrower. What am I talking about? Wanjiru Njenga · 5 replies
• Question Friedman’s billiard player: is predictive success really all a model owes us? Wanjiru Njenga · 4 replies
• Question What did Milton Friedman actually argue in his 1970 essay on business and profit? Rohan Desai · 4 replies