PHIL103: Moral and Political Philosophy

Econometrician David Hendry criticized part of Friedman's and Anna Schwartz's 1982 Monetary Trends. When asked about it during an interview with Icelandic TV in 1984, Friedman said that the criticism referred to a different problem from that which he and Schwartz had tackled, and hence was irrelevant, and pointed out the lack of consequential peer review amongst econometricians on Hendry's work. In 2006, Hendry said that Friedman was guilty of "serious errors" of misunderstanding that meant "the t-ratios he reported for UK money demand were overstated by nearly 100 per cent", and said that, in a paper published in 1991 with Neil Ericsson, he had refuted "almost every empirical claim ... made about UK money demand" by Friedman and Schwartz. A 2004 paper updated and confirmed the validity of the Hendry–Ericsson findings through 2000.

Although Keynesian Nobel laureate Paul Krugman praised Friedman as a "great economist and a great man" after Friedman's death in 2006, and acknowledged his many, widely accepted contributions to empirical economics, Krugman had been, and remains, a prominent critic of Friedman. Krugman has written that "he slipped all too easily into claiming both that markets always work and that only markets work. It's extremely hard to find cases in which Friedman acknowledged the possibility that markets could go wrong, or that government intervention could serve a useful purpose". Others agree Friedman was not open enough to the possibility of market inefficiencies. Economist Noah Smith argues that while Friedman made many important contributions to economic theory not all of his ideas relating to macroeconomics have entirely held up over the years and that too few people are willing to challenge them.

Political scientist C.B. Macpherson disagreed with Friedman's historical assessment of economic freedom leading to political freedom, suggesting that political freedom actually gave way to economic freedom for property-owning elites. He also challenged the notion that markets efficiently allocated resources and rejected Friedman's definition of liberty. Friedman's positivist methodological approach to economics has also been critiqued and debated. Finnish economist Uskali Mäki has argued some of his assumptions were unrealistic and vague.

In her book The Shock Doctrine, author and social activist Naomi Klein criticized Friedman's economic liberalism, identifying it with the principles that guided the economic restructuring that followed the military coups in countries such as Chile and Argentina. Based on their assessments of the extent to which what she describes as neoliberal policies contributed to income disparities and inequality, both Klein and Noam Chomsky have suggested that the primary role of what they describe as neoliberalism was as an ideological cover for capital accumulation by multinational corporations.

Visit to Chile

Because of his involvement with the Pinochet government, there were international protests when Friedman was awarded the Nobel Prize in 1976. Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial seven-day trip he took to Chile during March 1975 (less than two years after the coup that ended with the death of President Salvador Allende). Friedman answered that he was never an adviser to the dictatorship, but only gave some lectures and seminars on inflation, and met with officials, including Augusto Pinochet, while in Chile.

Chilean economist Orlando Letelier asserted that Pinochet's dictatorship resorted to oppression because of popular opposition to Chicago School policies in Chile. After a 1991 speech on drug legalisation, Friedman answered a question on his involvement with the Pinochet regime, saying that he was never an advisor to Pinochet (also mentioned in his 1984 Iceland interview), but that a group of his students at the University of Chicago were involved in Chile's economic reforms. Friedman credited these reforms with high levels of economic growth and with the establishment of democracy that has subsequently occurred in Chile. In October 1988, after returning from a lecture tour of China during which he had met with Zhao Ziyang, General Secretary of the Communist Party of China, Friedman wrote to The Stanford Daily asking if he should anticipate a similar "avalanche of protests for having been willing to give advice to so evil a government? And if not, why not?"