13 February 2009 Main Posts Milton Friedman as rhetorical strategy Jeff Sparrow It’s bizarre watching intellectual fashions shift. A few years back, most public discussions of economics simply took it for granted that Keynesianism had been discredited and that Friedman was some kind of intellectual powerhouse. Now, you can see the consensus changing all around us. For instance: After World War II, laissez-faire economists had a big intellectual problem: the Great Depression. How could you argue for dismantling the post-WW II social insurance states and returning to the small-government laissez-faire of the past when that past contained the Great Depression? Some argued that the real problem was that the laissez of the past had not been faire enough: that everyone since Lord Salisbury and William McKinley had been too pinko and too interventionist, and thus the Great Depression was in no way the fault of believers in the free-market economy. This was not terribly convincing. So advocates of a smaller government sector needed another, more convincing argument. It was provided by Milton Friedman. Here, Friedmanism is presented almost as a con-job, for which a couple of paragraphs serves as dismissal: The power of Friedman’s theory was, in part, rhetorical. “Keep the money supply growing smoothly” sounds like it means to keep the presses in the Bureau of Engraving and Printing rolling at a constant pace, printing out a steady flow of pictures of George Washington. […] Today, we have reached the end of the line for the Chicago view of financial deregulation. Friedman thought (a) that the central bank could exercise enough influence over the money supply to effectively control it, and (b) that banks and other financial intermediaries would be regulated tightly enough that what is now happening would be impossible. But he never resolved the tension between his view that banks need controls and the Chicago view that business must be unfettered. What’s changed? The world itself, of course. We’re in the middle of paradigm-shifting events. It would be exhilarating were it not so damn scary. Jeff Sparrow Jeff Sparrow is a Walkley Award-winning writer, broadcaster and former editor of Overland. More by Jeff Sparrow Overland is a not-for-profit magazine with a proud history of supporting writers, and publishing ideas and voices often excluded from other places. If you like this piece, or support Overland’s work in general, please subscribe or donate. Related articles & Essays First published in Overland Issue 228 11 November 202211 November 2022 Main Posts On the last day of Subscriberthon, our amazing online editor gives you one last (very good) reason to subscribe Editorial team What's in store for the last day of Subscriberthon? First published in Overland Issue 228 10 November 202210 November 2022 Main Posts On the second-last day of Subscriberthon, our favourite editor-duo give you reason #1002 to subscribe to Overland Editorial team What's in store for the second-last day of Subscriberthon?