A staunch supporter and advocate of free markets, Milton Friedman was given the Nobel Prize for Economics in 1976. His most notable contributions to economics include monetary history and its theory, consumption analysis and lest we forget – stabilization theory. Unfortunately, though, for all his achievements, Friedman is remembered for his polarizing opinions that led to the rise in conservatism during Reagan’s presidency.
Son to Jewish immigrants residing in New York City in 1912, Milton Friedman went to Rutgers University where he earned a B.A. at age 20. Then he went forward to the University of Chicago where he received his M.A. in 1933 and finally a PhD in 1946 from Columbia University.
Among his famous works it was the Income From Independent Professional Practice that he had co-authored with Simon Kuznets that established his name in the economic hall of fame. In this publication he went on to argue that because medical profession had several barriers to entry, doctors could collect much higher fees, which would never be the case if competition was allowed.
However, the most famous work of Milton Friedman has to be the Theory of the Consumption Function that was published in 1957. It was an add-on to the Keynesian view but on a more household and individualistic level. The work explored the idea of consumption and expenditures being a better judge of current income. It was his view that what a person consumed annually was directly related to the permanent income, a term that he exclusively introduced in the book to provide an exact measure of the income a person can expect in the coming years.
Friedman was active in several other economic ideas too. Inflation, money supply, the analysis of the Great Depression, monetary policies of the time and more. However, his most notable contributions remain education vouchers, negative income tax, removing of licensing of doctors, free floating exchange rates and a volunteer army.