Milton Friedman (1912-2006), was a revolutionary economist whose work was essential in shaping the way modern microeconomics is taught today. His in-depth research on microeconomics make him standout as one of the greatest economists in history. He did outstanding work on consumption analysis, theory and monetary history, which earned him international recognition and made him an economic adviser to various leaders such as President Ronald Reagan. His strong belief in free market capitalism inspired his in-depth study in the field, thereby developing numerous microeconomic theories opposed to the traditional Keynesian theories. He outlined his opposition to the theorists, wrote books and devote his life to creating strong economists in America where he taught, up to his death.
On his research on the Great Depression, Milton published a book on the role of monetary policy in worsening the financial environment. This introduced him into microeconomic research, where he would question various standards as well as come up with a lot of input into the subject. At University of Chicago, he formulated the Theory of Economic Function in1957. It argued that one's decisions on savings and consumption are shaped by permanent changes in income generated, rather than ephemeral changes. This was the birth of the permanent income hypothesis, a great milestone in the study of modern micro-economics. It is the justification as to why a short-term increase in tax diminish savings but keep the consumption levels static with other factors remaining equal.
Milton then proceeded to analysis and criticism of prevailing macroeconomic theories. When he came to the scene, economics was dominated by the complex Keynesian Economic Theories. Among the facts that troubled him included the greater importance of fiscal policy over monetary policy and the role of government spending in neutralizing volatility of business cycle. Opposed to these Keynesian theories, Milton came up with his own free market monetarism. He pointed out how monetary supply poses both short-term and long-term effects by influencing price levels of various commodities. Further research on this field led to the contradiction of the Keynesian Multiplier and Philips Curve. He taught the way economics is taught, inspiring critical questioning of existing principles through a practical approach.
The microeconomic work by Milton provided a basis for the development, criticism and public approval of many theories which were studied in this course. The greatest achievement was the contradiction of the Keynesian principles, which he overturned, thereby setting the trend for other economists to revolutionize the way this subject is understood, handled and taught. He set a distinguishing function between microeconomics and macroeconomics. The monetary theories he came up with drew macroeconomics as a wide field specializing in the structure, performance, and decision-making of a whole system, rather than focusing on the individual contributing factors or individual markets. In addition to that, he encouraged a critical approach where every theory can be broken down by anyone into a practical unit and analyzed from a critical perspective. It is through such processes that we identify the relationship between factors in different fields such as macroeconomics and microeconomics.
Conclusively, Milton Friedman was a revolutionary economist, whose work did not only shape the way microeconomics is taught today but also discredit traditional beliefs, principles, and standards which did not live up to his expectations. He came up with various economic theories, through which various aspects of the financial structure of the society can be analyzed, understood and refined. Through his service at the University of Chicago, he created many exemplary economists, whose prowess can be passed on to future students, hence, his legacy continues. He will be remembered for his outstanding work on monetary economics.
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