USA, economist Milton Friedman, 1912-2006

By Nick Beams:

Milton Friedman 1912-2006: “Free market” architect of social reaction

21 November 2006

In his afterword to the second edition of Capital in 1873, Karl Marx noted that the scientific character of bourgeois economics had come to an end about 1830.

At that point the class tensions generated by the development of the capitalist mode of production itself made further advances impossible.

“In place of disinterested inquirers there now stepped forward hired prize-fighters; in place of genuine scientific research, the bad conscience and evil intent of apologetics.”

The economist Milton Friedman, who died last Thursday aged 94, will be remembered in years to come as one of the classic representatives of this tendency.

Indeed his own career, culminating in his rise to the position of intellectual godfather of the “free market” over the past four decades, is a graphic example of the very processes to which Marx had pointed.

In the post-war boom, now looked back on as a kind of “golden age” for capitalism, at least in the major economies, Friedman was very much on the margins of bourgeois economics.

When this writer begun a university study of economics in the latter half of the 1960s Friedman, and the free market Chicago School in which he was a central figure, were regarded as eccentrics, if not oddities.

This was the heyday of Keynesianism, based on the notion that regulation of “effective demand” by government policies—increased spending in times of recession, cutbacks in periods of economic growth and expansion—could prevent the re-emergence of the kind of crisis that had devastated world capitalism in the 1930s. …

If Friedman’s free market dogmas had no scientific content, they were nonetheless extremely valuable in the service of definite class interests, as the experience of Chile was to graphically demonstrate.

In 1975, following the overthrow of the elected Allende government in a military coup on September 11, 1973, the head of the junta, Augusto Pinochet, called on Friedman and his “Chicago boys”—economists trained under his tutelage—to reorganise the Chilean economy.

Under the direct guidance of Friedman and his followers, Pinochet set out to implement a “free market” program based on deregulation of the economy and privatization.

He abolished the minimum wage, rescinded trade union rights, privatised the pension system, state industries and banks, and lowered taxes on incomes and profits.

The result was a social disaster for the mass of the Chilean population.

Unemployment rose from just over 9 percent in 1974 to almost 19 percent in 1975.

Output fell by 12.9 percent in the same period—a contraction comparable to that experienced by the United States in the 1930s.

Pinochet’s financial fraud: here.

A very different economist compared to Friedman; from the Google cache, 1/2/06:

On 1 January 2006, United States economist and editor of Monthly Review, Harry Magdoff, died.

A Monthly Review interview with this analyst of imperialism is here.

British socialist economist Andrew Glyn: here.

For almost the past four decades the central policy of successive US administrations, starting with Reagan, has been the transfer of untold wealth to the heights of society, raising social inequality to levels never seen in economic history. Last week, the present incarnation of this program, President Donald Trump, conferred the highest US civilian honour, the Presidential Medal of Freedom, on its ideological godfather, the originator of so-called supply-side economics, Arthur Laffer. The birth of the theory is reputed to be a meeting over dinner in 1974 between Laffer, White House Chief of Staff Donald Rumsfeld, his deputy Dick Cheney, a former classmate of Laffer at Yale, and Wall Street Journal writer Jude Wanniski. Outlining his new theory, Laffer drew on a napkin what became known as the Laffer curve. The curve purported to show that if taxes on the ultra-wealthy and corporations were reduced this would unleash economic growth that would then bring increased revenue to the government and pay for itself. This late 20th-century version of economic snake oil became the basis for the tax cuts initiated under Reagan and forms a key ideological foundation for the massive corporate and personal income tax cuts enacted by the Trump administration at the end of 2017: here.

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