Milton Friedman on Keynesian Economics

I select begin by asking mr. Friedman whether in his view the technical competence of Keynesian economists is now being challenged by his researchers I'm not sure how to answer that question the the problem is that the distinction needs to be drawn between the competence of the economists and the correctness of their analysis I would not want to say for a moment that those economists who regard themselves as Keynesian czar in any technical sense less competent than those who regard themselves otherwise on the other hand there's no doubt whatsoever that what now would be held and believed by people who call themselves Keynesian economists is very different from what these same people would have believed 10 or 15 years ago the label may stay the same but the contents designated by that label haven't gradually been changing well would you go so far as to say that your researchers and and the researches of other economists are such as to have rendered indefensible certain of the conclusions which were embraced almost dogmatically say 15 years ago there's no doubt about that whatsoever I don't want to take the credit for my researches but there's no doubt about the fact that there is no economists today or hardly an economist today who would hold the same views that a large fraction of the economic fraternity held in 1945 1948 for example to take a particular case where the revolution has been most extreme as of 1945 just after World War two the great bulk of economists would have argued that money did not matter in any important sense and by money here I mean the quantity of money not income an appointee of money there's hardly an economist today who would argue that way if you want to see how radical the change has been you can do so most easily by comparing principles textbooks that were issued just after World War two and those that are coming out now even I may say when they are different editions as a service and you compare the first edition of pro Samuelson's principles with the seventh which is just out you will find that in the first edition there's a very small section on money and he has nothing but negative comments to make about the quantity theory of money about monetary control he says it's of no importance you look at his seventh edition there's a very large and extensive section on the role of money you will find that he says talks about the quantity theory of money and the importance of monetary policy in a wholly different way a much more favorable way than he did 15 20 years ago what do you think do you think that he and others have found this experience intellectually chastening that is to say have they have they proceeded to alter their approach to economics in in a direction rather more scientific than theological which it had become towards the end of Kings Kings himself I'm not sure I would agree with the implicit judgment about Kings Kings himself was very much of a scientist I think he was wrong on various things but he certainly had a scientific approach and indeed I've always regarded it as a great tragedy that Keynes died when he did because one of his great capacities was flexibility yes he could shift as times changed had Keynes been alive what his call Keynesian economics would never have been carried to the extremes that has had he lived beyond 1946 Keynesian economics would never have been carried to the extremes that it was carried in his the last article of his he ever wrote which was published posthumously he warned the economics profession at large that there was much virtue and old truths and that they should not be carried away by the new things and there's no doubt that he wasn't at that point a Keynesian in the sense in which it was then in turn in fact he went so far as to make complimentary observations about mr. Hayek's book didn't it oh yes indigo Hill Keynes was a he was a he was a great economist we mustn't it seems to me you must avoid denigrating the men because some of his disciples carried some of his arguments much too far he was a great economist he wrote very important works before his general theory which is the work that got him his notoriety and I think that had he lived longer he would have led a retreat from the extreme position he took there

Channel: Reagan Conservatives

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Length: 4min 49sec (289 seconds)

Published: Tue Nov 28 2017