Free Essay

Senior Research Paper: Milton Friedman

In: People

Submitted By xxdarklonerxx
Words 1382
Pages 6
Milton Friedman

Jordan Locke


10 April, 2013

Jordan C. Locke 10 April, 2013
Period: 2
Ms. House

Milton Friedman

Milton Friedman once said, "If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand”. Due to Friedman's many accomplishments and published works in the Economics field, I felt that he would be a great economist to write about. Milton Friedman was born in 1912, to two Jewish immigrant parents that lived in New York City. He earned his Bachelor's degree at Rutgers University at the age of twenty. He then went to the University of Chicago in 1933 to earn his Masters. In 1946, he earned his Doctorate at the Columbia University. He received the John Bates Clark Medal, honoring economists that had achieved the most outstanding levels of achievement by the age of Forty. He received the Nobel Peace Prize for his achievements in the field of consumption analysis, monetary history and theory, and for his demonstration of the complexity of stabilization policy. He served as an adviser for President Richard Nixon, and he was the president of the American Economic Association in 1967. He retired from the University of Chicago in 1977, and became the senior researcher at the Hoover Institute at Stanford University. He was the premier spokesman for the monetarist school of economics and a pioneer in promoting the value of free market economics, when the position was not popular. Milton Friedman was a provocative teacher at the University of Chicago. He got his students involved with their studies. He was a gifted writer and communicator.
Milton publish a book with his Co-Author, Simon Kuznets, called “Income from Independent Professional Practice” in 1945. In his book, he argued that state procedures limited entry in the medical profession, allowing doctors to charge higher prices or fees than they would be able to do if “competition” were more open. “A Theory of the Consumption Function” was his landmark work in 1957 and took on the Keynesian view so that individuals and households can adjust their expenditures on consumption to show their current income.
In another book, called “Capitalism and Freedom”, Friedman wrote that the most important economics book of the 1960's was making a case for a relatively free markets to a general audience. The younger generation who may have read it were more encouraged to study economics on their own, because he actually worded his works to where the younger minds can understand and follow his example.
His ideas spread all around the world with the book he wrote with his wife, Rose Friedman. “Free to Choose” was one of the best-selling non-fiction book of the 1980's, and was written to go along with a TV show on the Public Broadcasting System. That book made Milton Friedman a household name. PBS telecast the series, beginning in January 1980. The general format was that of Dr. Friedman visiting and narrating a number of success and failure stories from history, which Dr. Friedman attributed to capitalism or the lack there of. Following the primary show, Dr. Friedman would engage in discussion with a number of selected debaters drawn from trade unions, academy and the business community, such as Donald Rumsfeld (then of G.D. Searle & Company) and Frances Fox Piven from the City University of New York. The interlocutors would offer objections to the proposals put forward by Friedman, who would in turn respond. After the final episode, Friedman sat down for an interview with Lawrence Spivak. The series was re-broadcasted in 1990, with Linda Chavez moderating the episodes. Arnold Schwarzenegger, Ronald Reagan, Steve Allen and others give personal introductions for each episode in the series. After the documentary part of the show, Friedman would sit down with a single opponent to debate the issues raised in the episode.[i]
Most of his work was on price theory- the theory that tells how prices are most likely are determined by individual markets. Going against Keynes and a vast majority of the academic establishment of the moment, Friedman brought evidence to bring back the quantity theory of money- the idea that the price really depends on the money supply.
In the book “Studies in the Quantity Theory of Money” that was published in 1956, he stated that in the long run, increased monetary growth increasing prices, but has little or no effect on the output. But in the short run, he debated that an increase in the money supply growth may cause employment and output to increase, and it decreases in the money supply growth will have the opposite effect. Friedman's solution to the problems of inflation and short-run fluctuations in employment and the real GNP was called the money-supply rule, which will cause inflation to disappear. In 1963, Friedman and Anna Schwartz Co-Authored “Monetary History of the United States”, which stated that the Great Depression happened because the Federal Reserve doesn't have corrupted monetary policies. Before the manuscript was published, the Federal Reserve took this moment to write a very long critical review. Because of their agitation the Fed governors closed their policies within minutes after the board's meetings to the public. They then had a counter-history written to distract people from the Monetary History. [ii]
Milton's book has been very influential for anyone who is interested in the economics profession. One part of that influence was in the change of the treatment of the monetary policy that was given by MIT Keynesian Paul Samuelson in one of his best-selling textbooks Economics. Samuelson stated, “few economists regard the Federal Reserve monetary policy as a panacea for controlling the business cycle,” in his 1948 edition. In 1967 Samuelson also stated that monetary policy had “an important influence” on spending total. William Nordhaus from Yale, said “Money is the most powerful and useful tool that macroeconomic policymakers have,” he also added that the Fed, “is the most important factor,” in making a policy.
During the 1960s the Keynesians and other economists believed that the government battled with the constant long-run trade-off between unemployment and inflation, this was called the Phillips Curve. In this the government can increase the demand for goods and services, which will permanently lower unemployment but by doing this they would have to accept a higher inflation rate. In the late 1960s, Friedman went against this view and debated that the moment that people adjusted to the higher inflation rate, unemployment will, eventually, go back up. He suggested that to keep unemployment down it would need a inflation rate that is constantly going up. [iii]
In the 1970s stagflation, due to the constant rising inflation that is also thrown in with the rising unemployment, Friedman had some very strong evidence that was capable of persuading many economists and Keynesians. Once again Samuelson's writings were a barometer for the change of economists' way of thinking. In the 1967 version says that the policymakers had gone against the inflation and unemployment. In the 1980 edition it said that there were ways that the trade-off in the long run than in the short run, then the 1985 version states that there is no long-run trade-off.


Friedman, Milton. "The Social Responsibility of Business is to its Profits." . The New York Times Company, 13 Sep 1970. Web. April 16, 2013. <>. Krugman, Paul. "Who Was Milton Friedman?." The New York Review of Books. NYREV Inc., 15 Feb 2007. Web. 16 Apr 2013. <>. "The Concise Encyclopedia of Economics: Milton Friedman." Library of Economics and Liberty. Liberty Fund, Inc.. Web. 16 Apr 2013. <>.


[ i ]. Friedman, Milton. The Concise Encyclopedia of Economics. The New York Times Company, 1970.
[ ii ]. Friedman, Milton. The Social Responsibility of Business is to Increase its Profits. The New York Times Company, 1970.
[ iii ]. Friedman, Milton. The Social Responsibility of Business is to Increase its Profits. The New York Times Company, 1970.
[ iv ]. Krugman, Paul.Who Was Milton Friedman?NYREV Inc, 2007

Similar Documents

Premium Essay


...Claremont Colleges Scholarship @ Claremont CMC Senior Theses CMC Student Scholarship 2012 Corporate Social Responsibility and Financial Performance: Does it Pay to Be Good? Harmony J. Palmer Claremont McKenna College Recommended Citation Palmer, Harmony J., "Corporate Social Responsibility and Financial Performance: Does it Pay to Be Good?" (2012). CMC Senior Theses. Paper 529. This Open Access Senior Thesis is brought to you by Scholarship@Claremont. It has been accepted for inclusion in this collection by an authorized administrator. For more information, please contact CLAREMONT McKENNA COLLEGE CORPORATE SOCIAL RESPONSIBILITY AND FINANCIAL PERFORMANCE: DOES IT PAY TO BE GOOD? SUBMITTED TO PROFESSOR MATTHEW MAGILKE AND DEAN GREGORY HESS BY HARMONY J. PALMER FOR SENIOR THESIS FALL 2012 DECEMBER 3, 2012 Acknowledgements I have many people to thank for their help with this study. First and foremost, I want to thank my thesis reader, Professor Magilke, for all his help. This study would have be quite difference without his constant guidance and our numerous meetings and e-mail exchanges. Second, I would like to thank Mary Martin, the Reference & Instruction Librarian for Business and Law, at the Claremont Colleges Library. Obtaining the CSR data would not have been possible without her help and the library’s funding. Third, I want to thank the Kravis Leadership......

Words: 2440 - Pages: 10

Premium Essay

Ethical Perspectives: Friedman vs. Drucker, Murphy

...Ethical Perspectives: Friedman vs. Drucker, Murphy In this paper we will be comparing and contrasting ethical perspectives on business ethics of Milton Friedman, Patrick Murphy, and Peter Drucker. Their methods are drastically different, but the goal is to explain and better understand “business ethics” in today’s world. Milton Friedman “A corporation is an artificial person and in this sense may have artificial responsibilities, but ‘business’ as a whole cannot be said to have responsibilities, even in this vague sense.” (Friedman, 1970). M. Friedman believes that only the individual has social responsibilities. Business as an artificial entity cannot have “social conscience” and think of ethics before its interests or profits. According to Friedman, the primary responsibility of a businessman is to make happy the business owner with profits, and the primary task for the business owner is to make sure there are enough profits to: a. Sustain the business b. Have a stable growth c. Have the ability and means to compete on the market d. Keep happy the parties involved: customers, stockholders and investors. (Friedman, 1970). Furthermore, Friedman discusses the relationship between “social responsibilities of a business” and “socialism” and stresses the idea that if a business or a large corporation is forced to perform its “social responsibility”, example donate a large amount of money to social programs or local schools, business acts irresponsibly......

Words: 1149 - Pages: 5

Premium Essay


...Research Paper DOES CORPORATE RESPONSIBILITY TO STAKEHOLDERS MAXIMIZE FIRM’S VALUE? DOES CORPORATE RESPONSIBILITY TO STAKEHOLDERS MAXIMIZE FIRM’S VALUE? Topic: This paper seeks to explore the economic mechanisms behind corporate responsibility based on a microeconomic perspective of the firm. The ultimate objective is to ruminate on the effects of corporate responsibility of firms to stakeholders. That is how corporate responsibility to stakeholders can help maximize or minimize the firm’s value. In this research paper, I am going to explain the principle of stakeholder and the corporate social Responsibility that corporation owes to its stakeholders. The fact that corporations are entitled to its stakeholders and the environment within its scope of business has been a controversial issue. At the beginning, I will give a clear understanding of what Corporate Responsibility by firms to its stakeholders is. Later, I will make an argument in favor and against Corporate Responsibility by the firm to its stakeholders. Lastly, I will come to a conclusion on how firm’s value is maximized. That is what corporation should do for its stakeholder. According to rigorous research, each person has his or her personal responsibility that needs to be performed in order to maintain a good image in the society. Just as humans are faced with responsibilities, so as Corporations, since they are seen as a group of individuals working together to accomplish a goal, that goal being making...

Words: 1817 - Pages: 8

Premium Essay

Strategic Management

...Question 1 Introduction Louw and Venter (2010:20) explain that strategic management is concerned with the overall effectiveness and choice of direction in a dynamic, complex and ambiguous environment. The success of an organisation is mainly determined by the effectiveness and efficiency of its management. In the words of Peter Drucker, efficiency is concerned with ‘doing things right’, while effectiveness is concerned with ‘doing the right thing’. Strategic management is the deliberate effort to allocate resource and get above average returns through competitive advantage so that in the long run the organisation can generate wealth maximization for its stakeholders. There are a number of advantages of strategic management as stated by Pearce and Robinson (2009:10), it helps reduce resistance to change therefore getting buy in from all stakeholders is critically important. It also results in better decisions because it facilitates group interaction. Group based strategic decisions generate a variety of specialized input which involves all the different areas in the organisation and an in depth range of alternatives and makes it more likely that the best solutions will be chosen. Strategic management enhances the organisation’s ability to prevent problems. It creates a framework through which managers can encourage their staff to focus on planning, monitoring and evaluating the success of these plans. There are also disadvantages of strategic management as Pearce and......

Words: 1709 - Pages: 7

Premium Essay

Doc, Docx, Pdf, Wps, Rtf, Odt

...Academy of Management Learning & Education, 2005, Vol. 4, No. 1, 75–91. ........................................................................................................................................................................ Bad Management Theories Are Destroying Good Management Practices SUMANTRA GHOSHAL Advanced Institute of Management Research (AIM), UK and London Business School The corporate scandals in the United States have stimulated a frenzy of activities in business schools around the world. Deans are extolling how much their curricula focus on business ethics. New courses are being developed on corporate social responsibility. Old, highly laudatory cases on Enron and Tyco are being hurriedly rewritten. “What more must we do?”, the faculty are asking themselves in grave seminars and over lunch tables (Bartunek, 2002). Business schools do not need to do a great deal more to help prevent future Enrons; they need only to stop doing a lot they currently do. They do not need to create new courses; they need to simply stop teaching some old ones. But, before doing any of this, we—as business school faculty—need to own up to our own role in creating Enrons. Our theories and ideas have done much to strengthen the management practices that we are all now so loudly condemning. vested interests, which are dangerous for good or evil” Keynes (1953: 306). This is precisely what has happened to management. Obsessed as they are with the “real world” and......

Words: 12106 - Pages: 49

Premium Essay

Evaluation of Corporate Social Responsibility in the Airline and Air Travel Industry

...entirely different from their main line of operation. This paper conducts an empirical and qualitative evaluation of eight major airlines in the air travel industry and their adoption of corporate social responsibility. The paper is mainly structured in two major parts. Broadly stated, the first part is a theoretical perspective whereas the latter part captures the practical evaluation of CSR in eight airlines. Therefore, the first part irons the researcher’s understanding of CSR theory such as the participating stakeholders. In addition, this part captures an overview of CSR in the air travel industry as well as outlining accumulative gains to this trend. The second part covers the broader part of this thesis taking a practical approach. This part includes qualitative analysis, evaluation and review of CSR application programs in eight of the sampled airlines. The chosen airlines where selected by sampling from among three of the largest airline alliances globally. The sampled airlines include British Airways, America Airlines, Qantas, Lufthansa, All Nippon Airways, Air France-KLM, Delta Airlines and Cathay Pacific. The practical part also discussed critical CSR elements as adopted by these airlines subject to an overview of each airline and CSR theory. Notwithstanding, the researcher evaluated various CSR program styles, presentations and structures. Following qualitative analysis and evaluation of the findings, the paper concludes that increased pressure from...

Words: 6790 - Pages: 28

Premium Essay

Abc Learning

...ABC learning a CSR Dilemma Synopsis ABC Learning was an Australian provider of early child hood education services, founded in Queensland in 1988. Through its 18 child care centres it was the largest almost monopolistic single operator of early childhood education services in Australia by 1997. Led by founder and CEO Eddy Groves, ABC Learning continued to grow, by opening new centres and the acquisitions of competitors both locally and internationally. The company experienced a significant drop in their share price in 2008. Trading in the company shares was suspended in early 2008, closely followed by the company going into receivership in November of 2008. This essay will examine ABC Learning and assess the impact of the company’s corporate social responsibility policy or lack thereof and how this contributed to their spectacular collapse. Particular attention will be concentrating on the ethical internal running of the company’s corporate structure and executive leadership, focussing in particular on Eddy Groves’ poor decision making, creative accounting and resulting organisational culture. Dahlberg & Moss (2005) claim that ethics is a practical matter which involves thinking about every day actions and decisions either individually or collectively and then responding with respect for all concerned. When values underpin our responses and choices, ethics is at work. In some instances our decision making can be hindered because......

Words: 3409 - Pages: 14

Premium Essay


...Viewpoints of Business Ethics - Introduction The purpose of this short paper is to compare and contrast three different peer-reviewed journal articles and one online periodical. First, the paper provides a brief introduction of the four articles. Second, the paper compares and contrasts the four articles. Finally, the author presents his views on the topic of social responsibility and business ethics before concluding the paper. Four Articles All four articles center their focus on business ethics. Of the four articles, three are scholarly peer-reviewed journal articles and one, by Friedman, is an online periodical.... [tags: Business, Ethics] :: 4 Works Cited 2005 words (5.7 pages) Strong Essays [preview] Alahmad and Murphy on Business Ethics - The first two journal articles that were compared and contrasted were Ala Alahmad’s 2010 article on To Be Ethical or Not to Be: An International Code of Ethics for Leadership and Patrick Murphy’s 2009 article on The Relevance of Responsibility to Ethical Business Decisions. Some key findings of Alahmad’s writings were that ethics and leadership were closely tied together; they were found to be derivatives of one another. He mentioned that ethics is an individual thought process of making good or poor decisions.... [tags: Business Ethics] :: 4 Works Cited 970 words (2.8 pages) Strong Essays [preview] Ethical Perspectives on Business Ethics - The determination of this paper is to compare and contrast the various......

Words: 3552 - Pages: 15

Premium Essay

Franco Modigliani

...Franco Modigliani Paper assignment Franko Modigliani was born in 1918 in Rome. He spent his childhood in Italy and finished Rome University with the degree of Doctor of Laws, in the same year he left Italy because of his Jewish origins and Antifascistic views. Firstly, he moved to France with his wives family and then moved to USA. He was an instructor of economics and statistics At Columbia University and Bard College from 1942 to 1944. In 1944 he also got degree of Doctor of social sciences at New School for Social Research. He defended his thesis for Doctor degree on the topic of “Liquidity Preference and the Theory of Interest and Money”, and was teaching there for a three years. This work was the first publication of Modigliani in English and, in his opinion, it was one of his main achievements. In 1946, he became a naturalized citizen of United states of America. After 1948 he joined University of Illinois, then Carnegie University (1950-1960), and North-Eastern University (1960-1962) afterwards. Since 1962, as a professor of Massachusetts Institute of Technology, he continued he continued his researches in the field of Macroeconomics that he started before, especially Theory of Cash cylces. During these years, he begins study international financial and billing systems, consequences and methods of fighting with inflation, stabilization policy in open economies. Most widely known works of Modigliani was his works in various areas of finance. 1) Personal......

Words: 2644 - Pages: 11

Premium Essay

Corporate Social Responsibility

...Corporate Social Responsibility (CSR) Introduction Business houses, right from the inception of human race, have been regarded as constructive partners in the communities in which they operate. Though they have been instrumental in creating employment, wealth, products and services, yet the pressure on business to play a role in social issues involving employees, stakeholders, society, environment, government etc. is continuously increasing. The society is questioning the existence of business houses, especially in the wake of the scandals and scams conducted by the business houses like UTI, Enron, and WorldCom. In response to it, the organizations around the globe are forced to wake up to the need for being committed towards Corporate Social Responsibility. Over the years this concept of Corporate Social Responsibility (CSR) has gained unprecedent momentum in business and public debate and has become a strategic issue crossing the departmental boundaries, and affecting the way in which a company does business. It has become so important that many organizations have rebranded their core values to include social responsibility. Almost all corporate websites/ policies/reports talk about their endeavors for CSR which has become a way of ensuring that the organization is fulfilling all the obligations towards society and thus is eligible for the license to operate. It assures that the organization can grow on sustainable basis. These activities of CSR ranging from......

Words: 3378 - Pages: 14

Free Essay


...Oklahoma ABSTRACT This paper attempts reconciliation between the two somewhat extreme views espoused by the shareholder wealth maximization paradigm and the stakeholder theory. The stakeholder theory challenges the basic premise built into corporate finance theory, teaching and practice. Corporate finance theory, teaching and the typically recommended practice are all built on the premise that the primary goal of a corporation should be shareholder wealth value maximization. Extant theoretical and empirical research in financial economics also generally accept shareholder wealth maximization as the normative and ideal goal on which all business decisions should be based. This paradigm assumes that there are no externalities and all the participants engaged in transactions with the firm are voluntary players competing in free, fair and competitive markets. A very different view is offered by what is loosely called stakeholder theory. The stakeholder theory posits that the focus on shareholders and firm value is misplaced and managers should be concerned with all stakeholders of the firm. The paper attempts to address what is felt as a lack of dialogue between the two camps. INTRODUCTION Corporate finance theory, teaching and the typically recommended practice at least in the US are all built on the premise that the primary goal of a corporation should be the maximization of shareholder value. Extant theoretical and empirical research in financial......

Words: 4065 - Pages: 17

Premium Essay

Corporate Social Responsibility

... by Peter Fischer A Paper Submitted in Fulfillment of the USD School of Law Writing Requirement Energy Law Professor Burleson Spring, 2009 Table of Contents Introduction 2 Background 3 The Need for CSR at Home and Abroad 7 Case Study Analyses: Four Critical Events in the Oil Industry and their Effect on CSR Case Study #1: The Exxon Valdez Oil Spill 9 Case Study #2: Occidental and the Piper Alpha Disaster 12 Case Study #3: A Two-Part Analysis of Shell in the Mid-1990s a) Shell’s Human Rights Violations in Nigeria 16 b) Shell’s Response—Outsource CSR 21 Case Study #4: BP’s Major Advances in CSR 24 Ethics and the Problem of the Public Relations Quick Fix 27 Analyzing the Current Corporate Culture: Failure to Meet the Triple Bottom Line 32 Conclusion 38 Works Cited…………………………………………………………………...…………41 Introduction Over the past twenty years an irrefutable shift in the oil industry has occurred—the shift to Corporate Social Responsibility (CSR).[1] The purpose of this paper is to analyze the motivation behind this shift and determine if these CSR practices are genuine. In other words, does the adoption of CSR denote a tangible change in the way oil companies operate, or is it merely an elaborate public relations exercise? To answer this question, the paper analyzes the motivation behind the shift to CSR......

Words: 12105 - Pages: 49

Premium Essay

The Effectiveness of Business Ethics in Education and Today’s Workplace

...Aug 11, 2009). Under the direction of Kenneth Lay, Enron- once one of the largest companies in America- collapsed in bankruptcy and ruined the lives of thousands of people (McLean & Elkind, May 18, 2006). The Chicago Tribune reported that the Illinois House of Representatives was sending to the Illinois Senate a “13 point article of impeachment-a political form of indictment-alleging Blagojevich has abused the power if his office” (Pearson & Long, Jan 9, 2009). The purpose of this paper is to gauge the Effectiveness of Business Ethics in Education and Today’s Workplace. As business students they graduate from the university setting and enter the business environment they study the ethics in their workplace culture and often find that educational ethics training does not have any value in the work world. “Studies have shown that workers who espouse action on the basis of ethics are often derided as hypercritical prudes or cloying moralists” (Moberg, 2006. pg. 307). This paper will explore the topic of business ethics by the use of critical review of professional and scholarly journal articles, as well as online sources to examine whether this hypothesis is true or not. Literature Review Many...

Words: 2518 - Pages: 11

Premium Essay

Corporate Social Responsibility

...IN PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELOR OF DEVELOPMENT MANAGEMENT DEGREE APRIL 2010 STUDENT’S DECLARATION I hereby declare that this project work is the result of my own original research and where I have use others’ materials, I have fully acknowledged them Signature: ……………………… Date: …………………………… (YEBOAH-MANTEY EMMANUEL) SUPERVISOR’S DECLARATION I hereby declare that the preparation and presentation of this project work was supervised in accordance with the guidelines on supervision of Capstone Project as laid down by Ghana Christian University College Signature: ………………………… Date: …………………… Acknowledgements Table of Contents Declaration I Acknowledgements II Table of Contents III Abstract.....................................................................................................................1 Chapter 1-Overviewof Study 1.1 Introduction................................................................................... 1.2 Background................................................................................... 1.3 Problem Statement ............... 1.4 Purpose of the Study 1.5 Research Questions...

Words: 13052 - Pages: 53

Premium Essay

The Boundaries of Social Corporate Responsibility

...Strategic Corporate Social Responsibility Keywords Corporate social responsibility (CSR), Roles of business, Stakeholder theory, Ethical CSR, Responsibilities and duties, Altruistic CSR, Strategic CSR, Abstract Reviews the development of the corporate social responsibility (CSR) concept and its four components: economic, legal, ethical, and altruistic duties. Discusses different perspectives on the proper role of business in society, from profit making to community service provider. Suggests that much of the confusion and controversy over CSR stem from a failure to distinguish its ethical, altruistic, and strategic forms of CSR. On the basis of a thorough examination of the arguments for and against altruistic CSR, concurs with Milton Friedman that altruistic CSR is not a legitimate role of business. Proposes that ethical CSR, grounded in the concept of ethical duties and responsibilities, is mandatory. Concludes that strategic CSR is good for business and society. Advises that marketing take a lead role in strategic CSR activities. Notes difficulties in CSR practice and offers suggestions for marketers in planning for strategic CSR and academic researchers in further clarifying the boundaries of strategic CSR. Introduction It is no news that today’s business organizations are expected to exhibit ethical behavior and moral management. However, over the past half century the bar has been steadily raised. Now, not only are firms expected to be virtuous, they are being......

Words: 20025 - Pages: 81