Post Keynesians on Milton Friedman

There is some discussion of Milton Friedman at the moment by Paul Krugman (here and here).

So in that spirit, I think some heterodox Keynesian views of Friedman are worth mentioning:

Thomas Palley, “Milton Friedman: The Great Conservative Partisan,” November 27th, 2006.

James K. Galbraith, “The Collapse of Monetarism and the Irrelevance of the New Monetary Consensus,” March 31, 2008.

One can also revisit Friedman’s debate with the Post Keynesian economists Paul Davidson and Sidney Weintraub (Davidson and Weintraub 1973), which, I think, makes profitable reading.

All in all, Thomas Palley has a nice summing up of Friedman’s monetarist doctrine:

“Monetarism’s most famous aphorism is that ‘inflation is always and everywhere a monetary phenomenon.’ This saying reflects Friedman’s polemical powers, capturing for monetarists what all sensible economists already knew. Inflation is about rising prices, and prices are intrinsically a monetary phenomenon since they are denominated in money terms.

Sustained inflation requires that the money supply grow in order to finance transacting at higher prices. For Friedman, this made villainous central banks the exclusive cause of inflation because of his belief that they control the money supply. However, the reality is that the private sector can also inflate the money supply through its own credit creation activities. Additionally, central banks (viz. the Bernanke Fed) may be compelled to temporarily accommodate inflationary private sector pressures to avoid triggering costly recessions. The implication is that inflation can have different causes, something Friedman denied. Sometimes inflation is caused by excessively easy monetary policy or large budget deficits financed by central banks. Other times it is due to private sector forces, including speculative booms and conflicts over income distribution.”
Thomas Palley, “Milton Friedman: The Great Conservative Partisan,” November 27th, 2006.

Moreover, attempts by central banks to actually control base money or the broad money stock, as under Margaret Thatcher and Paul Volcker, ended in miserable failure. Central banks soon turned to inflation targeting, and the idea of direct controls on money supply growth died a humiliating death.

This is no doubt what prompted John Kenneth Galbraith (father of James K. Galbraith) to say that “Milton Friedman’s misfortune is that his economic policies have been tried”!

UPDATE
Here are some further links:

Ramanan, “Nicholas Kaldor on Milton Friedman’s Influence,” The Case For Concerted Action, 13 July 2013.

“Milton Friedman’s Distortions, Part II,” Unlearning Economics, July 12, 2013.

“Milton Friedman’s Distortions,” Unlearning Economics, November 27, 2012.

BIBLIOGRAPHY
Davidson, Paul and Sidney Weintraub. 1973. “Money as Cause and Effect,” The Economic Journal 83.332: 1117–1132.

James K. Galbraith on Obama, Social Security and the Debt Ceiling

This is an interesting interview with James Galbraith, and covers quite a few issues. With the debt ceiling issue now becoming a looming disaster if Republicans have their way, Galbraith alerts us to the fact that Obama’s Democratic party and especially its leadership have long since ceased to be progressive on economics.

An important point is that the US financial sector will also suffer badly if the debt ceiling is not raised, and they will probably pressure the Republicans to make some deal: will the Republicans bow to the same powerful interests who fund them and the Democrats?