Doug Henwood wrote about Friedman:
> But he was wrong about the economic influence of the money supply.
> And if you want to talk about the social role of money, give me
> Marx anyday.
I don't know if Friedman made any attempt to understand Marx on money, but he had great respect for Keynes whom he placed in his pantheon of great economists (along with A. Smith, Alfred Marshall and George Stigler).
"If they [Milton and Rose Friedman] were to throw a small dinner party--indoors!--for Mr. Friedman's favorite economists (dead or alive), who'd be invited? Gone was his tonguetied-ness of a moment ago, as he reeled off this answer: 'Dead or alive, it's clear that Adam Smith would be No. 1. Alfred Marshall would be No. 2. John Maynard Keynes would be No. 3. And George Stigler would be No. 4. George was one of our closest friends.'" <http://www.opinionjournal.com/editorial/feature.html?id=110008690>
Keynes on money, however, has much in common with Marx, and their views are radically at odds with Friedman's. Friedman failed to comprehend this difference and so never really came to grips with the alternative theory of money keynes and Marx represent.
Both Keynes and Marx treat the money motive - which they identify with avarice - as irrationally rooted in a mistaken conception of the good life.
Here, for instance, is Marx characterizing the assumptions about motivation on which classical political economy is based, assumptions which Marx claims accurately describe the motivation dominant in capitalism, but which classical political economy mistakenly universalizes.
"political economy – despite its worldly and voluptuous appearance – is a true moral science, the most moral of all the sciences. Self- renunciation, the renunciation of life and of all human needs, is its principal thesis. The less you eat, drink and buy books; the less you go to the theatre, the dance hall, the public house; the less you think, love, theorise, sing, paint, fence, etc., the more you save – the greater becomes your treasure which neither moths nor rust will devour – your capital. The less you are, the less you express your own life, the more you have, i.e., the greater is your alienated life, the greater is the store of your estranged being. Everything which the political economist takes from you in life and in humanity, he replaces for you in money and in wealth; and all the things which you cannot do, your money can do. It can eat and, drink, go to the dance hall and the theatre; it can travel, it can appropriate art, learning, the treasures of the past, political power – all this it can appropriate for you – it can buy all this: it is true endowment. Yet being all this, it wants to do nothing but create itself, buy itself; for everything else is after all its servant, and when I have the master I have the servant and do not need his servant. All passions and all activity must therefore be submerged in avarice." <http://www.marxists.org/archive/marx/works/1844/manuscripts/ needs.htm>; see also <http://www.marxists.org/archive/marx/works/1844/ manuscripts/power.htm>)
Keynes takes the same view of the money motives. In “The End of Laissez Faire” he claims “the essential characteristic of capitalism” is “the dependence upon an intense appeal to the money-making and money-loving instincts of individuals as the main motive force of the economic machine.” In “Economic Possibilities for our Grandchildren” he characterizes both the "money-making" and “money-loving” aspects of this “main motive force” as irrationally rooted in a mistaken conception of the good life. He looks forward to a time when:
“We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession—as distinguished from the love of money as a means to the enjoyments and realities of life— will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease.”
When that time arrives (a time Keynes, writing in 1930, placed at least one hundred years into the future), though
"there will still be many people with intense, unsatisfied purposiveness who will blindly pursue wealth-unless they can find some plausible substitute. But the rest of us will no longer be under any obligation to applaud and encourage them. For we shall inquire more curiously than is safe to-day into the true character of this 'purposiveness' with which in varying degrees Nature has endowed almost all of us. For purposiveness means that we are more concerned with the remote future results of our actions than with their own quality or their immediate effects on our own environment. The 'purposive' man is always trying to secure a spurious and delusive immortality for his acts by pushing his interest in them forward into time. He does not love his cat, but his cat’s kittens; nor, in truth, the kittens, but only the kittens’ kittens, and so on forward forever to the end of cat-dom. For him jam is not jam unless it is a case of jam to-morrow and never jam to-day. Thus by pushing his jam always forward into the future, he strives to secure for his act of boiling it an immortality."
And we will then be free
”to return to some of the most sure and certain principles of religion and traditional virtue—that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable, that those walk most truly in the paths of virtue and sane wisdom who take least thought for the morrow. We shall once more value ends above means and prefer the good to the useful. We shall honour those who can teach us how to pluck the hour and the day virtuously and well, the delightful people who are capable of taking direct enjoyment in things, the lilies of the field who toil not, neither do they spin.” <http://www.eco.utexas.edu/~hmcleave/368keynesgrandchildrentable.pdf>
These very different assumptions about the psychological role of money in capitalism underpin a theory of mone very different from the quantity theory (which Keynes treats as itself a symptom of psychopathology).
Ted