Milton Friedman's Economic Theories Essays

Milton Friedman's Economic Theories Essays

Length: 2877 words (8.2 double-spaced pages)

Rating: Powerful Essays

Open Document

Essay Preview

History and Background

Before the introduction of Keynesian economics and Milton Friedman’s Monetarism theory, there was classical economics. These economists believed in self-adjusting market mechanisms, however with that the market needs perfect competition. Wages and prices in the market must be flexible. These economists believe that supply and demand pulls would always help the economy reach full employment.
Full employment could be achieved by the market forces and with that changes the level of employment resulting in a fixed income and aggregate output. They believed that fixed income was a result of full employment and the price level was established by the supply of money in the economy. Since classical economist believed that it was the market that leads to full employment in the economy, they thought the market could do without any government intervention.
Government spending and taxes cause overall harm to economy because it would decrease individual spending and private consumption. Raising taxes on private consumption would only help fund public consumption and pay for government spending.
Classical economist’s theory of monetary policy was thought to only affect prices and wouldn’t affect truly important factors such as employment. It was a major concern that if the government was to finance its’ spending only by increasing how much money was produced then it would have the same out come as expansionary monetary policy.
Classical economists found that their original theories were problematic when the Great Depression hit the United States. They originally argued that the market was self-adjusting so with no government intervention they thought it would automatically correct itself. They thought tha...


... middle of paper ...


...://www.econtalk.org/archives/2010/02/phelps_on_unemp.html

3. Kevin D. Hoover. "Phillips Curve." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved May 25, 2010 from the World Wide Web: http://www.econlib.org/library/Enc/PhillipsCurve.html

4. Krugman, P. (2007, February 15). Who was Milton Friedman. Retrieved May 22, 2010, from http://www.nybooks.com/articles/archives/2007/feb/15/who-was-milton-friedman/?pagination=false


5. Friedman, M., & Schwartz, A. (1963). A Monetary History of the United States 1865-1960. National Bureau of Economic Research. Retrieved April 21, 2010, from GoogleBooks

6. Alan S. Blinder. "Keynesian Economics." The Concise Encyclopedia of Economics. 2008. Library of Economics and Liberty. Retrieved May 28, 2010 from the World Wide Web: http://www.econlib.org/library/Enc/KeynesianEconomics.html

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on The Economic Theories of Milton Friedman

- The Economic Theories of Milton Friedman Milton Friedman, like so many great life stories, was the product of a very tough childhood. He was son to a couple of poor immigrants, born on 31 July 1912, in New York, America. At the age of fifteen, Friedman's father died. Despite this, he won a scholarship to both Rutgers University and the University of Chicago, where he achieved a Bachelor of the Arts degree in economics. The very next year he received an MA at Chicago University. He then worked for the National Bureau of Economic Research (from 1937) while teaching at many universities, but it was only at Chicago in 1946 that he was given the title of 'professor of economics'....   [tags: Economics Monetarist private ownership]

Powerful Essays
782 words (2.2 pages)

Essay on The Life and Work of Milton Friedman

- “A society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.” (Milton Friedman). One of the most significant economists in the world is considered to be Milton Friedman. Milton Friedman, born on July 31, 1912, in New York, to a working-class family of Jewish Hungarian immigrants, was educated at Rutgers University and at the University of Chicago. Friedman is mostly known for his support for free markets, advocacy of capitalism, and as one of the most influential American economists of the twentieth century....   [tags: Milton Friedman, economy, ]

Powerful Essays
1687 words (4.8 pages)

Essay on The Brilliance of Conservative Economist Milton Friedman

- Before the introduction of Keynesian economics and Milton Friedman’s Monetarism theory, there was classical economics. These economists believed in self-adjusting market mechanisms, however with that the market needs perfect competition. Wages and prices in the market must be flexible. These economists believe that supply and demand pulls would always help the economy reach full employment. Full employment could be achieved by the market forces and with that changes the level of employment resulting in a fixed income and aggregate output....   [tags: Milton Friedman]

Powerful Essays
2621 words (7.5 pages)

Essay The, New York, By Milton Friedman

- ... It is considered the dominant school of economics in a sense that when people refer to economics they are generally referring to the Neoclassical school of thought. People define Neoclassical economics as the mainstream economics, the traditional view. Neoclassical can be slightly related to capitalism. Neoclassical economics is well-known for its prominence of the micro level of economics and the individuals. Very few people truly believe in every aspect of Neoclassicalism. This is due to its belief on the assumption that supply and demand are equal and that the markets are always clear....   [tags: Keynesian economics, Economics, Milton Friedman]

Powerful Essays
852 words (2.4 pages)

Milton Friedman 's Theory Of Corporate Social Responsibility Essay

- Today’s 21st century has brought forth many changes, both positive and negative, as well as, an extremely diverse society whose different needs and wants must be met. Therefore, in an attempt to sustain a balance and comprehend today’s challenges, society as well as, businesses tend to adopt and incorporate certain methods, systems, and theories. As a matter of fact, in the past, the Milton Friedman’s theory of corporate social responsibility was adopted and very influential (Friedman, 1962). The Milton Friedman’s theory stated that the obligation of a business was to maximize its profits, and that business executives had a responsibility to their shareholders rather than to the greater good...   [tags: Social responsibility]

Powerful Essays
1064 words (3 pages)

Milton Friedman's Ideas Essay

- ... This idea became known as the “Chicago School” of economics, a concept of free-market capitalism. (Placeholder2) In the 1960’s Milton Friedman was known to say “there’s no such thing as a free lunch. “If the government spends a dollar, that dollar has to come from producers and workers in the private economy. There is no magical “multiplier effect” by taking from productive Peter and giving to unproductive Paul.” (Placeholder4) Friedman was best known for explaining the role of money supply in economic and inflation fluctuations....   [tags: liberalism, free enterprise, gov. intervention]

Powerful Essays
1642 words (4.7 pages)

Milton Friedman Essay examples

- Milton Friedman Milton Friedman has been credited with many different achievements, including being one of the most effective advocates of economic freedoms and free enterprise, being the greatest economist to ever walk the face of the earth, and proving every single word that Lord Maynard Keynes ever said to be wrong. Why these may or may not all be true, it is obvious that Friedman was a brilliant man of many accomplishments. Milton Friedman was born on July 15th, 1912 in New York City. His parents were poor immigrants and his father died when he was a senior in high school....   [tags: Biography Biographies Essays]

Powerful Essays
2500 words (7.1 pages)

Essay about Contrasting Ethics: Friedman and Drucker

- Contrasting Ethics: Drucker and Friedman Peter F. Drucker and Milton Friedman were two immensely successful men who made a huge impact on the business world during their lifetimes. As a matter of fact, their contributions in both theory and practice are still felt today. Both men were well-educated, leaders in their field, teachers, award winners, and published authors. One noted difference, however, was their backgrounds which were vastly different. Peter Drucker was born in Austria during the early 1900’s of wealthy parents who were both professionals....   [tags: Business Ethics]

Powerful Essays
1499 words (4.3 pages)

Mill and Friedman: Different Only in Their Details Essay

- Political theorists build their ideas upon past theories. Jon Stuart Mill learned from Jeremy Bentham, the father of utilitarianism. Even though regarded highly revolutionary at the time, Mill derived his ideas from utilitarianism thinking. Milton Friedman, one of more prominent neo-liberalism thinkers, was no different. Friedman was largely inspired by Mill and other classical liberalism thinkers when he sought to develop the idea that would address the growth of New Deal policies. The language of Friedman differs from that of Mill because Friedman lived a century ahead of Mill; however, Friedman’s idea does not derive much from Mill’s in its basic principle....   [tags: political theorists]

Powerful Essays
1791 words (5.1 pages)

Four of the Major Economists' Theories Essay

- Four of the Major Economists' Theories “Economics is the science which studies human behavior as a relationship between end and a scarce means which have alternative uses’ seems to capture the essence of Microeconomics, but does not convey much of the spirit of Macroeconomics.” - L. Robbins Although most economists cannot come to agreement on the definition of economics, the preceding quote from l. Robbins, in my opinion, seems to just about sum it up. Since the beginning, when man first had to choose between hunting and sleeping, there was economics....   [tags: Papers]

Powerful Essays
2610 words (7.5 pages)