Good comment by Liu today in Asia Times Online. It is provocative, as usual:

It is accurate to say Friedman was an early pioneer in reaction to post-Keynesianism, but it is not accurate to label post-Keynesianism one-sided. In fact "only money matters" sounded definitively one-sided to most listeners. Friedman's reaction to Keynesianism is hardly well-founded, though it is admittedly reactionary. As the press report noted, Friedman's emphasis of money is important to the analysis of the business cycle and inflation. But business cycles are not the economy, only one aspect of it. In fact, Friedman's fundamental flaw is his fixation on the business cycle as expressed by the stock market, rather than looking at the whole economy with a wide range of meta-finance concerns such as agricultural economics, labor economics, population economics, the economics of war, pollution, development, and so forth. The list is long and interlinked and any economist ignoring any of part of the list runs the risk of being one-sided.

The market is merely the transactional record of the economy. Students of the market economy tend to confuse business, which is transacted in the market, as the whole economy itself. That is the problem with Business School economists who really should be called "busi-nomists" rather than eco-nomists because by definition and by design they are not concerned with eco, a Greek word oikos, meaning "house". The word describes the complex symbiotic relationships of all living organisms in relation to their environment in the eco-system. Business is only a subsystem of the socio-economic ecosystem. The goal of busi-nomists is to keep the business cycle from recurring crashes even if it means destroying the economy in the process. To achieve this goal, central banking was invented.

This is not to denigrate business experts. All experts, however narrow their field, perform useful functions, and brilliant experts deserve admiration. It is just that they should refrain from fantasizing that they are generalists dealing with the economy. Business exists to make profit for the businessman and there is nothing wrong with that as long as ethical rules are observed. Unlike business, the economy exists to enhance progress in civilization. The former is artificial, the latter is actual. The key problem of the recent decades of Friedman monetarism has not been that money matters but that it matters too much.

Friedman had also written extensively on public policy, always with primary emphasis on the preservation and extension of individual freedom, going beyond economics. His books, periodical columns, media personal appearances and a 1980 10-part series on Public Television with the grand title of Freedom to Choose, followed by a second three-part series in 1984 which together commanded more air time than the 10-part series by Kenneth Clark on Civilization, made him an influential national opinion molder beyond economics. In time, Friedman readily transformed himself from the role of a social scientist to that of a globe-trotting, faith-peddling evangelist of what a disillusioned Japanese central banker later called snake-oil economics.

Friedman's misplaced monument

You get the idea. It gets even better than this, too. A few examples:

The collapse of market fundamentalism in economies everywhere is putting the Chicago School theology on trial. Its big lie has been exposed by facts on two levels. The Chicago Boys' claim that helping the rich will also help the poor is not only exposed as not true, it turns out that market fundamentalism hurts not only the poor and the powerless; it hurts everyone, rich and poor, albeit in different ways. When wages are kept low to fight inflation, the low-wage regime causes overcapacity through over investment from excess profit. And monetary easing under such conditions produces hyperinflation that hurts also the rich. The fruits of Friedman test are in - and they are all rotten.

Getting rich has become the equivalent of doing God's work in market capitalism. Yet many religions consider the attitude toward money as often more indicative of a person's true worth than the mere possession of it. The same is true for civilizations. This explains why modern societies, whose members can be be obsessed with a single-minded quest for material wealth, are constantly faced with recurring crises of values. The pursuit of maximization of wealth leads inevitably to the betrayal of human values that would otherwise forbid unconscionable exploitation of and impersonal disregard for others. Human values cannot be intermediated through price, notwithstanding the infamous World Bank memo by Larry Summers on the economic efficiency gained by allocating pollution to the Third World.

Super-winners in market capitalism are not only respected and admired for what they do to win in the market but also for their alleged wisdom in life. They are sought out constantly for pronouncements on the great questions of the age, even those far removed from their fields of competence.

Here's another zinger:

In microeconomics, led by George Stigler, the neo-classical paradigm was extended by incorporating new observations amenable to economic analysis, breaking new paths with economics interpretations of human capital, ownership rights and transaction costs, assigning measurable values to all things so that marginal utility could inform decision making.

It was an approach that allowed efficiency to overshadow direction. It did not matter where the nation was going as long as it was going there fast and at lowest cost.

Conclusion:

On one level, the Milton Friedman Institute controversy at the University of Chicago [over honoring Friedman] is a local issue in a private university. But the University of Chicago is world-class institution with connections and influence all over the world. What happens at Chicago carries wide implications elsewhere in the world.

On that level, the struggle at Chicago is global. Institutions of higher learning everywhere are all struggling against the illegitimate use of overwhelming, ill-gained financial resources to perpetuate flawed ideologies that had rationalized such ill-gotten gains at the expense of the well-being of billions all over the world, and to blindly increase the efficiency of a global exploitative regime. The problem is especially acute in emerging economies.

The struggle at the University of Chicago could act as a beacon around the world to strip market fundamentalism of its pseudo-science pretense and expose it as a propaganda device to rationalize the exploitation of the many by a few the world over.

full article

Must read for those interested in the economic underpinnings of today's politics, including how we got here.