Rational Action

Max Sawicky on Milton Friedman:

Friedman’s impact of economic thinking is large in two connected, malignant ways. One is the idea that the economy is a self-regulating, self-correcting mechanism that works for the best when left alone. The second is that this state of affairs has an ethical foundation.

I shy away from most of the criticisms that Max endorses, but these three sentences are spot on. Paul Krugman’s look back at Friedman in the NY Review of Books is a must read. He is catching some criticism for his opening:

Until John Maynard Keynes published The General Theory of Employment, Interest, and Money in 1936, economics—at least in the English-speaking world—was completely dominated by free-market orthodoxy.

Check out this post on the History of Economics Society mailing list about the state of the discipline pre-Keynes. The thread is fascinating.

Update: Why do I shy away from the linked criticisms? Well actually, the only one that caught my eye was Dean Baker’s take on the natural rate hypothesis. Baker finds it worthless in its current formulation, but I think it’s an elegant model that fits the facts. I’ve read some of the other criticisms but I don’t feel like looking them over again…

This entry was posted on Monday, January 29th, 2007 at 1:35 pm and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.