Uncle Miltie was: 'Democratic Money' & the Tragedy of Anti-Marxism

Roger Odisio rodisio at igc.org
Tue Nov 16 17:21:26 PST 1999

Doug Henwood wrote:

> Max Sawicky wrote:
> >Indeed he does. Money neutrality is the sine qua non
> >of neo-classical macroeconomics.
> I'm certainly not a neutral money or neutral finance guy; I wrote a
> whole book arguing the contrary. I'm talking about what
> monetary/financial effects are, and what their limits are.
> As for Friedman & neutrality, he sure blamed a lot of the Depression
> on the Fed, which is a monetary explanation. There he wants to
> externalize the blame from the inner workings of capitalism to
> botched interventions by the state.

Friedman's monetary "explanations" go far beyond the depression. During the Friedman-Heller debates in the '60s about the relative merits of fiscal and monetary policy as stabilization/growth devices (during the heady days when the neoclassicals thought govt policy could essentially eliminate the business cycle), Uncle Milty argued that fiscal policy was virtually impotent unless it was ratified by monetary policy. Deficits didn't produce expansion unless they were ratified by more money. More that that, he argued that stable growth could be achieved simply by establishing a constant rate of growth for the money supply (M1, no less, in those days). See, e.g., A Monetary History of the US, which he wrote with his wife. So, yes, Friedman was primarily about monetary explanations, and blaming cycles on wrong policy choices in Washington, period. Because, he says, capitalism=freedom=nirvana for the human condition.

Like most everything this man as ever written, his monetarism is a crock.


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