Friedman in Cambridge

Nowadays, political divides may be less about economics and more about symbolic/existential issues. But I also believe that economics has become a lot less political. That is, contemporary economists are not as easily placed on the market vs. government scale and perhaps prefer to be viewed as scientists rather than ideologues.

I’m reading Samuelson Friedman: The Battle Over the Free Market, and there are plenty of entertaining examples of where the field is coming from:

The rift between left and right in economics, born of the bitter duel between Keynes and Hayek in 1931, had permanently soured the atmosphere between the two sides and continued to cause otherwise well-mannered academics to insult each other. At the height of the Keynes Hayek clash in the Thirties, Pigou, the professor of economics at Cambridge, complained that since the Keynes and Hayek debate the quality of intellectual discourse at Cambridge had devolved into "the method of the duello," with the quarrel "conducted in the manner of Kilkenny cats." He asked, "Are we, in our secret hearts, wholly satisfied with the manner, or manners, in which some of our controversies are carried on?" In the two decades after that, however, the political divisions in economics remained poisonous.

And here’s about Friedman’s visit to Cambridge in 1954-55:

But while Friedman took the many cultural differences in his stride, Rose Friedman was appalled by the stark gulf between Keynesians and the few laissez-faire economists left in Cambridge. What disturbed us most was the bitterness and hostility that the two groups exhibited toward each other and the almost complete absence of any intellectual dialogue between them, she recalled. A similarly hostile divide was evident between American economists, too. "We were accustomed to being in a minority with respect to our political and economic views on most campuses in the United States at this time," she explained. "However, we have never been on a campus in the U.S. where the cleavage was as deep or as emotional as it was in Cambridge."

The Circus was unfazed by Friedman's cocky confidence and relished the chance to take him on in public. Joan Robinson not only went out of her way to give a lecture directly challenging one of Friedman's favorite topics freeing currencies from the straitjacket they had been confined to by Keynes at Bretton Woods—she invited him to attend as her guest. In her talk, she robustly defended Keynes's decision to tie the price of currencies to each other. Before World War Il, governments had fixed the price of their currencies and therefore the prices of their exports and imports to their domestic needs. But the result was often painful. By pegging the pound sterling at too high a price directly after World War I, Britain's Conservative government had provoked mass unemployment as British exporters struggled to find customers prepared to pay such a high price. Having delivered her talk, Robinson invited Friedman to the stage to defend his contrary point of view: that currencies should be free to float on the market. It was a high point for Friedman, who enjoyed the ensuing argument and the attention given to him and his ideas in the heart of Keynesianism. Friedman found his eight-week Cambridge stint “extremely stimulating and instructive, and led to my forming close professional friendships that paid dividends.

In this post  I claimed that the mainstream left today has actually accepted a lot of neoliberal policies, and I think the “floating currencies” example is a good illustration. It would be weird today to imagine a mainstream Cambridge economics professor arguing for a new Bretton Woods.