Milton Friedman, free-market economic prophet, dies at 94

SAN FRANCISCO- (AP)- Milton Friedman, a Nobel Prize-winning economist who championed individual freedom, influenced the economic policies of three U.S. presidents and befriended world leaders, has died at age 94. Friedman died on Thursday in San Francisco, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis. He did not know the cause of death.

''America has lost one of its greatest citizens,'' President George W. Bush said in a statement. ''Milton Friedman was a revolutionary thinker and extraordinary economist whose work helped advance human dignity and human freedom.'' In numerous books, a Newsweek magazine column and a PBS show, Friedman championed individual freedom in economics and politics. The longtime University of Chicago professor pioneered a school of thought that became known as the Chicago school of economics. His work is still widely influential in the business world, academia and politics.

''Milton Friedman revived the economics of liberty when it had been all but forgotten,'' said former British Prime Minister Margaret Thatcher, one of the politicians and colleagues who lauded Friedman. ''He was an intellectual freedom fighter. Never was there a less dismal practitioner of a dismal science.''

Friedman's theory of monetarism was adopted in part by the administrations of Presidents Richard Nixon, Gerald Ford and Ronald Reagan. It opposed the traditional Keynesian economics that had dominated U.S. policy since the New Deal. He was a member of Reagan's Economic Policy Advisory Board.

Is capitalism humane?
His work in consumption analysis, monetary history and stabilization policy earned him the Nobel Prize in economics in 1976.
''He has used a brilliant mind to advance a moral vision — the vision of a society where men and women are free, free to choose, but where government is not as free to override their decisions,'' President George W. Bush said in 2002. ''That vision has changed America, and it is changing the world.''

Friedman favoured a policy of steady, moderate growth in the money supply, opposed wage and price controls and criticized the Federal Reserve when it tried to fine-tune the economy. A believer in the principles of 18th century economist Adam Smith, he consistently argued that individual freedom should rule economic policy.

Friedman saw his theories attacked by many traditional economists such as Harvard's John Kenneth Galbraith. ''He, more than any other person, has changed the composition and ideology of the economists' profession,'' said Paul Samuelson, a 91-year-old professor emeritus of economics at the Massachusetts Institute of Technology who was a contemporary liberal foil to Friedman's conservatism.

In an essay titled ''Is Capitalism Humane?'' Friedman said that ''a set of social institutions that stresses individual responsibility, that treats the individual ... as responsible for and to himself, will lead to a higher and more desirable moral climate.'' Friedman argued that government should allow the free market to operate to solve inflation and other economic problems. But he also urged adoption of a ''negative income tax'' in which people who earn less than a certain amount would get money back from national coffers.

''Milton was one of the great thinkers and economists of the 20th century, and when I was first exposed to his powerful writings about money, free markets and individual freedom, it was like getting hit by a thunderbolt,'' Gov. Arnold Schwarzenegger of California said in a statement. Friedman lived to see free market reforms spread in the former communist world and Latin America, but played down his own influence.

''I hope what I wrote contributed to that, but it was not the moving force,'' Friedman told The New York Sun in March 2006. ''People like myself, what we did was keep these ideas open until the time came when they could be accepted.'' Born in New York City on July 31, 1912, Friedman began developing his economic theories during the Great Depression when President Franklin D. Roosevelt based his New Deal on the ideas of Britain's John Maynard Keynes, the most influential economist of the time.

Keynes argued that the government should intervene in economic affairs to avoid depressions by increasing spending and controlling interest rates. Friedman graduated from Rutgers University in 1932 and earned his master's degree the following year at the University of Chicago.

After working for the National Resources Commission in Washington from 1935 to 1937, he served on the staff of the National Bureau of Economics Research in New York from 1937 to 1945 and received his doctorate from Columbia University in 1946. After World War II, he taught at the University of Minnesota, then returned to the University of Chicago. He became a senior fellow at the Hoover Institution at Stanford University in 1977. Friedman married Rose Director in 1938. They had two children, Janet and David, and Rose was co-author of some of his books.