Was Milton Friedman a Closet Keynesian? Sumner Kicks Krugman but Glasner Sets the Record Straight

     Tom Brown won 'commentator of the week' Sumner says as the title of his recent Krugman bashing post should be "Sumner Kicks Krugman.'

     http://www.themoneyillusion.com/?p=22875

     Sumner throws all his usual criticisms of Krugman together creating kind of a Sumner bashes Krugman collage:

     "Paul Krugman admits he doesn’t know much about the history of economic thought, and then goes on to prove it.  If only he’d read some of Brad DeLong’s writings on Milton Friedman he might change his mind."

     "To summarize, back in the good old days:

     "Milton Friedman said interest rates are not a good indicator of the stance of monetary policy.  Keynesian said they were."

    "Milton Friedman said inflation was caused by expansionary monetary policy, Keynesians said it was caused by unions and droughts."

     "Milton Friedman said ultra-low interest rates were a sign that money had been tight.  Keynesians disagreed."

       "Milton Friedman said the Fed could control inflation if it wanted to.  Keynesians said it could not.

Milton Friedman said there was no long run tradeoff between inflation and unemployment.  Keynesians said there was."

      "Milton Friedman said the BOJ could raise Japan’s inflation rate.  Keynesians said it could not.

Milton Friedman said IS-LM was misleading, Keynesians say it’s useful."

      "Milton Friedman said tight money caused the Great Depression.  Keynesians said money was easy.

But Paul Krugman insists that Friedman was mostly a Keynesian, and that all these fundamental differences were merely disputes over “empirical propositions“—they used the same basic model.  If that’s so, I’d hate to see what a different model looks like!"

     Krugman did say that he doesn't care about the history of economic thought for its own sake. I agree that Krugman's argument here at least needs to be qualified. He first employed this argument regarding his use of Minsky in skirmishes with Steven Keen and other MMT friends. 

     I do think that his argument is both questionable and can at a minimum be taken too far: it is a fair criticism of Krugman that his great merit is also a vice of his: as a 'kinda sort New Keynesian' who gets the severe limits of this school he tends to opt for empirical reality when NK theory gets knotty, as it is wont to do. However, this leaves a kind of pure empiricism without any theoretical moorings at all. 

   Ironically, David Glasner does a good job of having his back here-not that defending Krugman's position is what motivates him. I say ironically because Glasner calls out Sumner's Friedman narrative here-'he in no way was a Keynesian and radically opposed IS-LM!' by: using economic history. 

  Actually, this is a great strength of Glanser-though certainly not the only one: he is such a keen economic historian. It is based on his deep knowledge and respect for history that he doesn't give Fredman a pass. While both Sumner and Glasner are both Market Monetarists Glasner clearly has a lot more respect for economic history than Sumner himself despite his potshots about Krugman's knowledge. 

  Indeed, Sumner truly is Friedman's true heir-Milton Friedman 2.0 not Glanser. Indeed, Glasner is not a Monetarist in Friedman's tradition at all but Hawtrey.  In any case, thank God for Glanser because he provides a much needed reality check to Sumner:

    Basically Friedman tried to claim that that he didn't adopt Keynes' theory of the demand for money in The General Theory but rather that he heralded from an alternative 'Chicago oral tradition.' Glanser does a good job at poking holes in this 'oral tradition.'

     "So what is the evidence that Friedman provides to counter the scandalous accusation by Patinkin and Johnson that Friedman invented a Chicago oral tradition of the quantity theory? (And don’t forget: the quantity theory is a theory of the demand for money) Well, it’s that, at the London School of Economics, there were a bunch of guys who had crazy views about just allowing the Great Depression to run its course, and those guys were quantity theorists, which is why Keynes had to start a revolution to get rid of them all, but at Chicago, they didn’t allow any of those guys to spout their crazy ideas in the first place, so we didn’t need any damn Keynesian revolution."

      "Good grief! Is there a single word that makes sense? To begin with those detestable guys at LSE were Austrians, as Friedman acknowledges. What he didn’t say, or didn’t know, is that Austrians, either by self-description or by any reasonable definition of the term, are not quantity theorists. So the idea that there was anything special about the Chicago quantity theory as opposed to any other species of the quantity theory is total humbug."

      "But hold on, it only gets worse. Friedman holds up Jacob Viner as an exemplar of the Chicago quantity theory oral tradition. Jacob Viner was a superb economist, a magnificent scholar, and a legendary teacher for whom I have the utmost admiration, and I am sure that Friedman learned a lot from him at Chicago, But isn’t it strange that Friedman writes: “as I have read Viner’s talk for purposes of this paper, I have myself been amazed to discover how precisely it foreshadows the main thesis of our Monetary History for the depression period, and have been embarrassed that we made no reference to it in our account.” OMG! This is the oral tradition that exerted such a powerful influence on Friedman and his fellow students? Viner explains how to get out of the depression in 1933, and in 1971 Friedman is “amazed to discover” how precisely Viner’s talk foreshadowed the main thesis of his explanation of the Great Depression? That sounds more like a subliminal tradition than an oral tradition."

     http://uneasymoney.com/2013/08/05/second-thoughts-on-friedman/

     I may not agree with Glasner much less Market Monetarism on everything but in his attention to getting the economic history right he does God's Work as it were and often serves as a useful reality check to his own Marekt Monetarist buddy Sumner. 

    In looking at Krugman's own admission about economic history we see that there are some problems with Krugman's preference for 'pure empiricism.'

     "David Glasner has been making a series of posts on the legacy of Milton Friedman, some of them in response to Scott Sumner; they’re interesting if you want to delve into the intellectual history. I’m not personally big on such things — in general, what people thought Keynes or Friedman meant ends up being more important than what they turn out, on close reading, to (maybe, possibly) actually have meant. For what it’s worth, I think Glasner makes a good case that Friedman was indeed more or less a Keynesian, or maybe Hicksian — certainly that was the message everyone took from his Monetary Framework, which was disappointingly conventional. And Friedman’s attempts to claim that Keynes added little that wasn’t already in a Chicago oral tradition don’t hold up well either."

    http://krugman.blogs.nytimes.com/2013/08/08/milton-friedman-unperson/

   He does owe a debt to Glasner. So much of what is wrong with Friedman-Sumner is this convenient 'alternative history' they're always spinning. It's not the 'sorta kinda New Keynesian' Krugman but the Hawtrey school inspired Glasner who often ends up being this corrective, demonstrating the limits of pure empiricism.

   P.S. Glasner also does a good job in answereing the complaint of a commentator that economics lacks the kind of empriciallly verifiable and regularized results that can decide these kinds of debates: 

  "Ray, I understand why you think that economics is not scientific, and I sympathize with your skepticism. Economics has established very few empirical regularities that can be relied on with the confidence with which we rely on Newton’s Laws of motion. Is that the fault of economics and economists? Perhaps, but I also blame nature. The social world is complicated and it’s hard to come up with any simple laws, that are as robust as Newton’s Laws (which turned out not to be true after all). Nevertheless, a downward-sloping demand curve doesn’t do a bad job of describing reality. And the proposition that if you place a price ceiling on a product, you will create a shortage of the product is, I think, fairly well supported empirically. I could mention a few others, but for purposes of this discussion, I will just leave it at that. If you haven’t seen it you might be interested in a recent post by Noah Smith on his blog “the death of theory?”

    Economics as a social science can't create anything as regularized and literally always true as physics. So clearly the standard by which to evaluate quality of work in economics is different.