The positive economist in retrospectJennifer Burns: Milton Friedman: the last conservative. New York: Farrar, Straus & Giroux, 2023, 578 pp.
Milton Friedman is perhaps best known in philosophy of science for his 1953 essay “The Methodology of Positive Economics,” in which he famously defended the view that economic theories should be assessed for the accuracy of their predictions and not the realism of their assumptions. Over the ensuing six decades, philosophers of economics and the social sciences furiously debated Friedman’s claim time and again, either on its own grounds or by connecting it to broader philosophical positions (canonically, Popper’s). Thanks to the historian J. Daniel Hammond, who extensively interviewed Friedman and explored his archive, philosophers of economics already had a decent grasp on how Friedman built his methodology (e.g., Hammond 2009). However, there are still some good reasons for a philosopher of science to plunge into Jennifer Burns’ new archivally based biography of Friedman.
For a start, it allows us to reconsider Friedman’s methodological piece from a different angle: its politics. In presenting himself as willing to recommend only those economic policies whose predictions were best supported by the evidence, Friedman cultivated an image as someone who, assuming some shared values, sought to build a political consensus on economic policies, urging the economic profession generally to predict the most likely effects of their theories and advise policymakers only on the grounds of empirically validated predictions. Through Burns’ biography, however, we learn how far from consensus-seeking Friedman was as an economist up to the publication of his 1953 piece and beyond. To be sure, economics had been a polarized discipline long before Friedman joined its rank, with the late-nineteenth-century division between classical and progressive economists giving way by the era of the Great Depression to a division between neo-classical and institutional economists, with young Friedman (born in 1912) by then a front-row spectator. The first part of Burns’s biography maps all these controversies onto the landscape of US economic policy, locating Friedman’s personal and intellectual development at each stage.
Friedman lost no time in joining the battle. Already as a graduate student, he started challenging the few existing areas of consensus among his senior colleagues. His doctoral advisors and employers at the National Bureau of Economic Research had to deal with Friedman’s research on the monopolistic practices of the American Economic Association – too hot a topic for a supposedly non-partisan economic observatory. After a protracted negotiation, Friedman got away with his claims. “There is no significant study in the field of economics whose results are not likely to be used in public controversy”, argued Friedman (92). But he also engaged in private controversies. For almost a decade, he went back and forth between academic jobs and the US Administration, taking active part in the internal politics of both, usually with polarizing effects. For instance, Friedman’s well-known fight against the Cowles Commission, masterfully dissected by Burns, was by no means a purely intellectual quarrel about their differences on how to test a model. Friedman actively chased Cowles out of Chicago, formally advising against further funding, preventing academic appointments and personally harassing some of its members. “A collective picture of Friedman was emerging,” claims Burns: “a retrograde thinker at best, a political hack at worst” (201). When he obtained the prestigious John Bates Clark medal in 1951, it was not because of his success as an apolitical consensus-builder but in spite of his reputation as a deeply political controversialist.
According to Burns, Friedman nevertheless went on to distance himself from that reputation through his collaborations with four overlooked women: Anna Schwartz, Rose Friedman (his wife), Dorothy Brady and Margaret Reid. Burns shows how many of Friedman’s masterpieces, e.g., on the monetary history of the US (Friedman and Schwartz 1963) or on the consumption function (Friedman 1957), originated in his regular exchanges with all these female economists with whom he engaged in egalitarian exchanges, at least until the point of publication, where often he claimed authorship. Burns explores the complexity of these personal dynamics, in particular in his marriage, leaving readers to reach their own conclusions.
In the second half of the book, Burns explains how the positive economist became the public intellectual between the 1960s and 1980s. First came the political essays published in his collection Capitalism and Freedom (1962), followed by his regular columns in Newsweek, and later on by his television series and book Free to Choose (1980), all of them developed with the crucial assistance of Rose Friedman. In parallel, Friedman became an advisor for politicians in the US and abroad, reaching his simultaneous apogee and nadir under Richard Nixon’s presidency. The latter part of Burns’ biography becomes, in fact, a political history of the US, tracing Friedman’s efforts to articulate a form of libertarian conservatism, with mixed success. For Burns, his anti-poverty policy, enacted via the negative income tax, had a better posterity than his compromises on the fight against segregation.
From a methodological standpoint, it is interesting to see the role Friedman’s predictive abilities played in this second half of his career. Burns illuminates Friedman’s long fight to orient the policy of the Federal Reserve according to the measures of the money supply that he and Schwartz had constructed in A Monetary History of the United States. Money-supply measures such as M2 were held to predict, most significantly, inflation – a major policy target in the turbulent 1970s. Under Nixon’s presidency, Friedman would have direct access to the chairman of the Federal Reserve, his old mentor Arthur Burns, and indirect access to Nixon through his former Chicago colleague George Shultz.
Despite their personal connection, Friedman never succeeded at persuading Arthur Burns – an institutional economist at heart – about his monetary predictions. Just as had happened a decade earlier, in the famed “battle of the radio stations” (so called because the initials of the principal combatants were AM and FM), Friedman’s predictions were not so difficult to challenge: it was enough to dispute which construct rightly measured the importance of money. Even if a monetary aggregate yielded several right predictions – as did happen to Friedman’s in the early 1970s – it could lose its predictive traction without warning. When, in the 1980s, under Paul Volcker, the Fed started to track systematically several monetary aggregates, it was unable to anticipate the effects of its own interventions, to Friedman’s perplexity. In the words of Jennifer Burns, “Slowly, painfully, Friedman would learn that monetarism was built on data from a world that no longer existed: the regulated and regimented postwar era, the land the New Deal built and inflation swept away” (397).
Friedman had rightly captured the importance of money and the role of the Fed in managing it, persuading both his fellow economists and US public opinion. However, this persuasion was not achieved through an array of successful predictions about well-defined variables, as per Friedman’s positivist stance. According to Burns, the key to Friedman’s persuasion is that his ideas “matched experience, offered new ways to tackle old problems, and predicted what would happen next” (468). Using the venerable hedgehog-or-fox dichotomy, I’d say instead that Friedman was an economist hedgehog, a thinker with one big idea from which bold predictions follow, as distinct from the eclectic foxes who put together different information sources to make more accurate forecasts. It was enough that Friedman’s predictions about inflation were broadly correct a few times, at the right moments to capture the world’s attention. Nobody seems to have cared much about the details of his predictive record, e.g., how much better the predictions from his monetary aggregates were compared with those of his competitors.
Friedman certainly offered new ways to tackle old problems; but rather than matching his audiences’ experience, he shaped it with his incessant public engagement. In this, he was perhaps more of an artist than a scientist. His engagement skills – boosted by his wife’s assistance – went well beyond the stereotype of the positive social scientist he might have wanted to be at the start of his career. In my view, philosophers of the social sciences who want to capture what Friedman was need new categories about what social scientists can and should be. Burns’ biography is an excellent case study to test their predictions.
References
Hammond, J. R. 2009. “Early Drafts of Friedman’s Methodology Essay.” In U. Mäki, ed., The Methodology of Positive Economics. Cambridge: Cambridge University Press, pp. 68-89.
Friedman, M. 1953. “The Methodology of Positive Economics.” In Essays in Positive Economics. Chicago: University of Chicago Press, pp. 3–43.
Friedman, M. 1957. A Theory of the Consumption Function. Princeton: Princeton University Press.
Friedman, M. 1962. Capitalism and Freedom. Chicago: University of Chicago Press.
Friedman, M. and Friedman, R. 1980. Free to Choose: A Personal Statement. New York: Harcourt.
Friedman, M. and Schwartz, A. 1963. A Monetary History of the United States, 1867–1960. Princeton: Princeton University Press.
Friedman lost no time in joining the battle. Already as a graduate student, he started challenging the few existing areas of consensus among his senior colleagues. His doctoral advisors and employers at the National Bureau of Economic Research had to deal with Friedman’s research on the monopolistic practices of the American Economic Association – too hot a topic for a supposedly non-partisan economic observatory. After a protracted negotiation, Friedman got away with his claims. “There is no significant study in the field of economics whose results are not likely to be used in public controversy”, argued Friedman (92). But he also engaged in private controversies. For almost a decade, he went back and forth between academic jobs and the US Administration, taking active part in the internal politics of both, usually with polarizing effects. For instance, Friedman’s well-known fight against the Cowles Commission, masterfully dissected by Burns, was by no means a purely intellectual quarrel about their differences on how to test a model. Friedman actively chased Cowles out of Chicago, formally advising against further funding, preventing academic appointments and personally harassing some of its members. “A collective picture of Friedman was emerging,” claims Burns: “a retrograde thinker at best, a political hack at worst” (201). When he obtained the prestigious John Bates Clark medal in 1951, it was not because of his success as an apolitical consensus-builder but in spite of his reputation as a deeply political controversialist.
According to Burns, Friedman nevertheless went on to distance himself from that reputation through his collaborations with four overlooked women: Anna Schwartz, Rose Friedman (his wife), Dorothy Brady and Margaret Reid. Burns shows how many of Friedman’s masterpieces, e.g., on the monetary history of the US (Friedman and Schwartz 1963) or on the consumption function (Friedman 1957), originated in his regular exchanges with all these female economists with whom he engaged in egalitarian exchanges, at least until the point of publication, where often he claimed authorship. Burns explores the complexity of these personal dynamics, in particular in his marriage, leaving readers to reach their own conclusions.
In the second half of the book, Burns explains how the positive economist became the public intellectual between the 1960s and 1980s. First came the political essays published in his collection Capitalism and Freedom (1962), followed by his regular columns in Newsweek, and later on by his television series and book Free to Choose (1980), all of them developed with the crucial assistance of Rose Friedman. In parallel, Friedman became an advisor for politicians in the US and abroad, reaching his simultaneous apogee and nadir under Richard Nixon’s presidency. The latter part of Burns’ biography becomes, in fact, a political history of the US, tracing Friedman’s efforts to articulate a form of libertarian conservatism, with mixed success. For Burns, his anti-poverty policy, enacted via the negative income tax, had a better posterity than his compromises on the fight against segregation.
From a methodological standpoint, it is interesting to see the role Friedman’s predictive abilities played in this second half of his career. Burns illuminates Friedman’s long fight to orient the policy of the Federal Reserve according to the measures of the money supply that he and Schwartz had constructed in A Monetary History of the United States. Money-supply measures such as M2 were held to predict, most significantly, inflation – a major policy target in the turbulent 1970s. Under Nixon’s presidency, Friedman would have direct access to the chairman of the Federal Reserve, his old mentor Arthur Burns, and indirect access to Nixon through his former Chicago colleague George Shultz.
Despite their personal connection, Friedman never succeeded at persuading Arthur Burns – an institutional economist at heart – about his monetary predictions. Just as had happened a decade earlier, in the famed “battle of the radio stations” (so called because the initials of the principal combatants were AM and FM), Friedman’s predictions were not so difficult to challenge: it was enough to dispute which construct rightly measured the importance of money. Even if a monetary aggregate yielded several right predictions – as did happen to Friedman’s in the early 1970s – it could lose its predictive traction without warning. When, in the 1980s, under Paul Volcker, the Fed started to track systematically several monetary aggregates, it was unable to anticipate the effects of its own interventions, to Friedman’s perplexity. In the words of Jennifer Burns, “Slowly, painfully, Friedman would learn that monetarism was built on data from a world that no longer existed: the regulated and regimented postwar era, the land the New Deal built and inflation swept away” (397).
Friedman had rightly captured the importance of money and the role of the Fed in managing it, persuading both his fellow economists and US public opinion. However, this persuasion was not achieved through an array of successful predictions about well-defined variables, as per Friedman’s positivist stance. According to Burns, the key to Friedman’s persuasion is that his ideas “matched experience, offered new ways to tackle old problems, and predicted what would happen next” (468). Using the venerable hedgehog-or-fox dichotomy, I’d say instead that Friedman was an economist hedgehog, a thinker with one big idea from which bold predictions follow, as distinct from the eclectic foxes who put together different information sources to make more accurate forecasts. It was enough that Friedman’s predictions about inflation were broadly correct a few times, at the right moments to capture the world’s attention. Nobody seems to have cared much about the details of his predictive record, e.g., how much better the predictions from his monetary aggregates were compared with those of his competitors.
Friedman certainly offered new ways to tackle old problems; but rather than matching his audiences’ experience, he shaped it with his incessant public engagement. In this, he was perhaps more of an artist than a scientist. His engagement skills – boosted by his wife’s assistance – went well beyond the stereotype of the positive social scientist he might have wanted to be at the start of his career. In my view, philosophers of the social sciences who want to capture what Friedman was need new categories about what social scientists can and should be. Burns’ biography is an excellent case study to test their predictions.
References
Hammond, J. R. 2009. “Early Drafts of Friedman’s Methodology Essay.” In U. Mäki, ed., The Methodology of Positive Economics. Cambridge: Cambridge University Press, pp. 68-89.
Friedman, M. 1953. “The Methodology of Positive Economics.” In Essays in Positive Economics. Chicago: University of Chicago Press, pp. 3–43.
Friedman, M. 1957. A Theory of the Consumption Function. Princeton: Princeton University Press.
Friedman, M. 1962. Capitalism and Freedom. Chicago: University of Chicago Press.
Friedman, M. and Friedman, R. 1980. Free to Choose: A Personal Statement. New York: Harcourt.
Friedman, M. and Schwartz, A. 1963. A Monetary History of the United States, 1867–1960. Princeton: Princeton University Press.
{2024}{Metascience}
No hay comentarios:
Publicar un comentario