Stephen Moore Turns F. A. Hayek into Chopped Liver

Tuesday, July 31 2012 is the 100th anniversary of Milton Friedman’s birth. There is plenty to celebrate. Milton Friedman, by almost anyone’s reckoning, was one of the great figures of twentieth century economics. And I say this as someone who is very far from being an uncritical admirer of Friedman. But he was brilliant, industrious, had a superb understanding of microeconomic theory, and could apply microeconomic theory very creatively to derive interesting and testable implications of the theory to inform his historical and empirical studies in a broad range of topics. He put his exceptional skills as an economist, polemicist, and debater to effective use as an advocate for his conception of the classical liberal ideals of limited government, free trade, and personal liberty, achieving astonishing success as a popularizer of libertarian doctrines, becoming a familiar and sought-after television figure, a best-selling author, and an adviser first to Barry Goldwater, then to Richard Nixon (until Nixon treacherously imposed wage-and-price controls in 1971), and, most famously, to Ronald Reagan. The arc of his influence was closely correlated with the success of those three politicians.

So it is altogether fitting and proper that the Wall Street Journal would commemorate this auspicious anniversary with an appropriate tribute to Friedman’s career and his influence. But amazingly, the Journal was unable to find anyone more qualified to write about Friedman than none other than one of their own editorial writers, Stephen Moore, whose dubious contributions to the spread of economic understanding and enlightenment I have had occasion to write about in the past. Friedman has many students and colleagues who are still alive and active. One would think that there would have been more than a handful of them that could have been asked  to write about Friedman on this occasion, but apparently the powers that be at the Journal felt that none of them could do the job as well as Mr. Moore.

How did Mr. Moore do? Well, he recites many of Friedman’s accomplishments as a scholar and as an advocate of less government intervention in the economy. But in his enthusiasm, Mr. Moore was unable to control his penchant for making stuff up without regard to the facts. Writing about the award of the Nobel Prize to Friedman in 1976, Moore makes the following statement:

Friedman was awarded the Nobel Prize in economics for 1976—at a time when almost all the previous prizes had gone to socialists. This marked the first sign of the intellectual comeback of free-market economics since the 1930s, when John Maynard Keynes hijacked the profession.

Here is a list of Nobel Prize winners before Friedman

1969: Ragnar Frisch, Jan Tinbergen

1970: Paul Samuelson

1971: Simon Kuznets

1972: Kenneth Arrow, J. R. Hicks

1973: Wassily Leontief

1974: F. A. Hayek, Gunnar Myrdal

1975: Leonid Kantorovich, T. C. Koopmans

So there were eleven recipients of the Nobel Prize before Friedman. Of these Gunnar Myrdal was a prominent Social Democratic politician in Sweden as well as an academic economist, so perhaps he qualifies as a socialist. Wassily Leontief was a Russian expatriate; he developed mathematical and empirical techniques for describing the production process of an economy in terms of input-output tables. This was an empirical technique that had no particular ideological significance, but Leontief did seem to think that the technique could be adapted to provide a basis for economic planning. So perhaps he might be also be classified as a socialist. Paul Samuelson was a prominent adviser to Democratic politicians, an advocate of Keynesian countercyclical policies, but never supported socialism. Kenneth Arrow has been less involved in politics than Samuelson, but has also been a supporter of Democrats.  Apparently that is enough to make someone a socialist in Mr. Moore’s estimation. Ragnar Frisch and Jan Tinbergen were pioneers in the development of econometrics and other mathematical tools used by economists. They also tried to make those tools serviceable to policy makers. Frisch and Tinbergen were classic technocrats who, as far as I can tell, carried very little ideological baggage. But perhaps Mr. Moore has subjected the baggage to his socialism detector and heard the alarm bells go off.  J. R. Hicks was a prominent English economic theorist who was not identified strongly with any political party.  Although he helped create the standard Keynesian IS-LM model, he was theoretically eclectic and as far as I know never wrote a word advocating socialism. Simon Kuznets was an archetypical empirical technocratic economist who was one of the fathers of national income accounting. He actually was the coauthor of Milton Friedman’s first book, Income from Independent Professional Practice, clear evidence of a deeply socialistic mindset. T. C. Koopmans, an early pioneer of econometric techniques, was awarded the Nobel Prize largely for his work in developing the mathematical techniques of linear programming which is a method of finding solutions to a class of problems that can be understood in terms of allocating resources efficiently to achieve a certain desired result, such as maximizing the nutritional content from a given expenditure on food or minimizing the cost to obtain a given level of nutrients. Leonid Kantorovich, a Soviet mathematician, developed the mathematical techniques of linear programming even before Koopmans. His results were actually subversive of Marxian theory, but their deeper implications were not understood in the Soviet Union. Again, the Nobel Prize was awarded for technical contributions, not for any particular economic policy or economic ideology.

But the most amazing thing about Mr. Moore’s statement about the bias of Nobel Prize Committee in favor of socialists is that he effectively re-writes history as if F. A. Hayek had not already won the Nobel Prize two years before Friedman. What is one supposed ot make of Moore’s statement that the award of the Nobel Prize to Friedman in 1976 “was the FIRST sign of the intellectual comeback of free-market economics since the 1930s?”  What was Hayek, Mr. Moore?  Chopped Liver?

13 Responses to “Stephen Moore Turns F. A. Hayek into Chopped Liver”

  1. 1 JW Mason July 30, 2012 at 10:21 pm

    Milton Friedman, by almost anyone’s reckoning, was one of the great figures of twentieth century economics. And I say this as someone who is very far from being an uncritical admirer of Friedman. But he was brilliant, industrious, had a superb understanding of microeconomic theory, and could apply microeconomic theory very creatively to derive interesting and testable implications of the theory to inform his historical and empirical studies in a broad range of topics.

    I’m a communist, and I have to say, I agree with this basically completely. We should all aspire to write something to rival A Monetary History of the UNited States.

  2. 2 greghill1000 July 31, 2012 at 10:06 am

    David, thanks for taking out the intellectual trash. Quick side note: Kenneth Arrow once made a “cautious case for socialism” mainly on the grounds that real world economies lack complete markets in contingent commodities.

  3. 3 greghill1000 July 31, 2012 at 10:07 am

    that is, complete markets in contingent claims (not commodities).

  4. 4 W. Peden July 31, 2012 at 10:29 am

    Here’s an interesting interview with Bob Chitester that reveals a lot about Friedman’s character-

  5. 5 David Glasner July 31, 2012 at 11:45 am

    JW, I appreciate your comment, though I am somewhat nonplussed by your self-identification.

    Greg, How exactly did Arrow define “socialism” in that context? And why was regulation or other kinds of intervention not sufficient to address the non-optimalities associated with incomplete markets? Do you have a citation. I also appreciate your job description.

    W. Peden, Thanks for the link. I had a couple of rounds of correspondence with Friedman, which I won’t go into except to say that he was very diligent in responding to my letters to him, just as Bob Chichester said.

  6. 6 greghill1000 July 31, 2012 at 12:46 pm

    David, here’s the Arrow reference “A Cautious Case for Socialism.” Dissent, Fall, 472-480 (1978). I don’t have the article handy, buy as I recall (after a couple of decades at least), Arrow was interested in some kind of investment planning given incomplete futures markets.

  7. 7 greghill1000 July 31, 2012 at 6:41 pm

    David, one more thought on Arrow’s “cautious socialism.” For investments whose returns are uncorrelated with the wider economy, the cost of risk-bearing falls as the risk is spread across more owners. Hence, all else equal, public ownership of these assets reduces the cost of risk-bearing.

  8. 8 Will August 1, 2012 at 12:01 pm

    Moore is not the first to accuse Samuelson of socialism:

    “Once at a cocktail party he [Schumpeter] said to me: ‘I’d expect a socialist like you to believe that.’ I was quite taken aback, being genuinely surprised, and asked, ‘Do you really take me to be a socialist, Joe?’ I pressed the point beyond that of perfunctory politeness to clear up my understanding of what Schumpeter’s general views were. ‘After all’, I pointed out, ‘I was brought up by the Chicago School under Frank Knight and Henry Simons. I first resisted the Keynesian revolution in macroeconomics. Do you regard anyone who believes in fiscal policy stabilisation and in New Deal welfare programmes as a socialist? By what single criterion would you, after knowing me these many years, define me to be a socialist?’

    “Schumpeter squirmed a bit. After all he was a polite man, and diplomatic behavior does not compel unsparing truth. Finally, Schumpeter explained, ‘My dear Paul, I was merely making reference to what you will not deny, that you lack respect for the pietistic verities of capitalism.'” (Collected Scientific Papers of Paul Samuelson, v.5, p.891)

    I know this is rather off topic, but this may be my one and only chance to dust that off.

    On Friedman, I think anyone will allow that the Monetary History is great scholarship and that he was one of the most skilled rhetoricians of the 20th century (for better or worse). I’ve become rather disenchanted with his theoretical contributions over the past year, though, partly from reading this blog.

  9. 9 Becky Hargrove August 3, 2012 at 10:18 am

    I for one am glad JW ‘came out’ on this post, for he is in active discussion in many places. Perhaps your blog could also be referred to as Uneasy Knowledge! Rest easy I am firmly in the Market Monetarist camp.

  10. 10 Tas von Gleichen August 5, 2012 at 5:09 am

    I couldn’t have put it better. Mr. Friedman was by fare brilliant. I especially like the fact that he was libertarian minded. Less government in my opinion is always the way to go. The private sector almost always can do a better job.

  11. 11 David Glasner August 15, 2012 at 9:52 am

    Greg, Thanks for the citation. Without reading the article, I would still be surprised if Arrow could be classified as supporter of socialism in any comprehensive sense of that very vague term.

    Will, Thanks for sharing that little vignette. Actually, I have always thought that Schumpeter’s treatment of the central planning and socialism in Capitalism, Socialism and Democracy was deeply problematic and possibly dishonest inasmuch as he attempted to demonstrate a thesis that capitalism was doomed by its own success and would eventually replaced by socialism. And to do that he had to dispose of the the Mises-Hayek position on the impossibility of comprehensive central planning. His argument on that point was shockingly bad. There are only two explanations for what was going on. Either he was being dishonest wittingly or unwittingly or he wrote the entire book as an elaborate exercise of irony, a position actually taken by his biographer Thomas McCraw.

    Becky, He is one smart guy. Good to know where you are, cuz sometimes I wonder where I am.

    Tas, If you read Hayek, you will learn that the more point is not to limit the size of government or the activities that it is allowed to engage in, but to ensure that the government always acts in a manner consistent with the rule of law.

  1. 1 Skepticlawyer » Friedman centenary Trackback on July 31, 2012 at 2:39 am
  2. 2 Keen & Grasselli: European Disunion and Endogenous Money, June 2nd 2012 | Letters to a Post-Apocalyptic Dictator Trackback on October 27, 2012 at 1:41 am

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About Me

David Glasner
Washington, DC

I am an economist in the Washington DC area. My research and writing has been mostly on monetary economics and policy and the history of economics. In my book Free Banking and Monetary Reform, I argued for a non-Monetarist non-Keynesian approach to monetary policy, based on a theory of a competitive supply of money. Over the years, I have become increasingly impressed by the similarities between my approach and that of R. G. Hawtrey and hope to bring Hawtrey's unduly neglected contributions to the attention of a wider audience.

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