Prof. Milton Friedmanthe winner of the Nobel Prize in Economics, "for his achievements in the field of consumption analysis, monetary history and theory, and his demonstration of the complexity of stabilization policy," is the best-known and most respected free market economist in the world. His interest in, and advocacy of free market can well be traced back to his very formative years as an economist when, at the young age of 33, he co-authored the article"Income from Independent Professional Practice" with Simon Kuznets, arguing that "the state licensing procedures limited entry into the medical profession, thereby allowing doctors to charge higher fees to the detriment of patients than if competition were more open."
In his landmark work of 1957 - A Theory of the Consumption Function, Prof. Friedman countered the Keynesian view that individuals and households adjust their expenditure on consumption to reflect their current income. His empirical study threw a puzzle at him: the cross-section data showed increase in the percentage of income saved as the income rose, while the time series data showed much less change in the savings proportion over the years which Friedman resolved by postulating a new concept"people's annual consumption is a function of their expected lifetime earnings" that was prominently quoted in the citation for his Nobel Prize.
It is his monumental work o fMonetary History of the United States, 1867-1960that was published in 1963, along with Schwartz, that sparked a great debate in macroeconomics between the Keynesians and the monetarists. Though Friedman started out as a conventional Keynesian in the 1940s, he led the intellectual counter-revolution against Keynes, of course with an abiding respect for him althrough his life. His respect for Keynes can be gauged from what he said of him in one of his interviews: his "General Theory of Employment, Interest and Money is a fascinating theory. It is one of those very productive hypothesesa very ingenious one, a very intelligent one. But it turned out to be incompatible with the facts when it was put to the test." Yet, he was of the opinion that this theory had "altered the shape of economics."
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