- Elgar original reference
Edited by Roger W. Garrison and Norman Barry
Chapter 6: Hayek and Friedman
In the grand battle of ideas, Friedrich A. Hayek and Milton Friedman were, at the same time, soul mates and adversaries. Hayek’s Constitution of Liberty (1960) and Friedman’s Capitalism and Freedom (1962) are rightly seen as companion volumes. By contrast, Hayek’s Monetary Theory and the Trade Cycle ( 1975) and Friedman’s Optimum Quantity of Money and Other Essays (1969) are worlds apart. The tenets of classical liberalism unite these two thinkers; the methods and substance of their economics, particularly the economics of money and business cycles, divide them. A thorough understanding of both the common ground and the battleground requires attention to several different fields of study, including philosophy of science, methodology, political economy and economics. The comparison is facilitated by a wealth of literature produced by Hayek and Friedman as well as a voluminous and still-growing secondary literature aimed at reconciling the differences or at sharpening them. But sorting it all out requires careful attention to the changing views of these two leaders of their respective schools of thought and to the various contexts in which particular arguments were made. Hayek’s own characterizations of the relationship between his views and those of Friedman are sometimes less than helpful. In a mid-1980s interview conducted by W.W. Bartley III, for instance, Hayek (1994, p. 144) claimed that ‘Milton and I agree on almost everything except monetary policy’.
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