Milton Friedman: The Compromise Candidate By Emily Skarbek

As the economics job market is underway and the AEA meetings in Chicago wrap up today, it is perhaps apropos to recount how one of the leading figures of economics in the 20th century was hired. Milton Friedman is one of the few names synonymous with Chicago Economics. For many it would be easy to assume that he was a straightforward appointment when hired at University of Chicago in 1946. As it turns out, he was not. Friedman was the compromise candidate.

Before a job offer was made to Milton Friedman, Chicago made offers to John Hicks, Albert Hart, and George Stigler. Offers were also approved for Lionel Robbins and Paul Samuelson. F.A. Hayek was proposed for a position in the department that same year. Had any combination of these appointments gone through, Chicago Economics would look distinctively different from what it became.

In 1946, the economics department at University of Chicago was in transition. Jacob Viner left for Princeton and T. W. Schultz took over as head of department. Two loose factions of the department emerged along theoretical, methodological, and ideological divides. On the one hand, you had Frank Knight, Henry Simons, Lloyd Mints, and H. Gregg Lewis – Marshallian in theoretical leaning, appreciative of free markets, and emphasizing policy applications. On the other hand, you had Jacob Marschak and Tjalling Koopmans of the Cowles Commission – favoring economic planning, active government intervention, aggregate econometric modelling, and a Walrasian general equilibrium framework.

Within this context, a new paper in the Journal of Political Economy by David Mitch gives a behind the scenes account of the hiring of Friedman drawing on detailed archival evidence. Using the Borda count method, on February 11, 1946, 12 members of the department cast votes.

John Hicks was clearly the first choice, despite the Knight group favoring Stigler as a theorist and to teach the core graduate price theory course. Hicks declined and instead took an appointment at Oxford. Albert Hart was the second choice, but he had already committed to spend a year at Columbia and ended up staying. The remaining offer in the first round was made to George Stigler. The University’s central administration famously vetoed Stigler’s initial job offer and it wasn’t until 1958 that he was attracted back to Chicago.

With the department’s first three picks off the table, Paul Samuelson and Milton Friedman were left. As the paper documents, the department wasn’t just searching for the best economists. They were looking to make appointments that would define the field and what it meant to do economics at Chicago.

In 1945, Henry Simons writes:

Friedman is young, flexible, and available potentially for a wide variety of assignments. He is a first-rate economic theorist, economic statistician, and mathematical economist, and is intensely interested over the whole range of economic policy. … Perhaps the best thing about Milton, apart from his technical abilities, is his capacity for working as part of a team. He is the gregarious kind of intellectual, anxious to try out all his ideas on his colleagues and to have them reciprocate. He would doubtless be worth his whole salary, if he neither taught nor published, simply for his contribution to other people’s work and to the Department group as a whole. But he is also intensely interested in teaching, and far too industrious not to publish extensively. Our problem would be not that of finding ways to use him but that of keeping him from trying too many tasks and, especially, of leaving him enough time for his own research.

Samuelson was particularly controversial. As Mitch details in the paper, “All four members of the Knight group ranked Samuelson as 5 out of 5, as did Kyrk and Harbison. On the other side, the Cowles group and affiliates (Marschak, Koopmans, Lange, and Douglas) along with Schultz all ranked Samuelson as second after Hicks….. The opposition to Samuelson seems to have been grounded as much in perceptions of his activist and Keynesian approach to government economic policy and his arrogant personality as on his formal, mathematical approach to economic theory or his technical approach to applying theory to policy issues.”

Marschak knew Friedman was ideologically free-market but argued that appointing him along with Samuelson “will just preserve the present dis-equilibrium. Since both are sincere thinkers and not shallow politicians, a hearty controversy between them will not do the harm it usually does between men who have more respect for faith than truth, and who refuse to face an argument if it threatens to lead to unpleasant conclusions.”

A memo likely by Simons written in early 1946 states,

“Friedman is, I think, the most talented and promising of younger economists. His technical equipment (mathematical economics and statistics) is superlative. But Friedman has also an inordinately catholic interest in the whole range of economic policy and mature judgment on policy problems. Unlike other persons with comparable technical skills, he remains primarily interested in real policy problems and in political economic philosophy.” It was arguably this mix of technical skills and serious policy interests that made Friedman viable as a compromise candidate.

Clearly Samuelson and Friedman revolutionized economics in dramatically different ways. Their comparable Google scholar citation counts are stunning: Samuelson (99,856 citations / h-index: 106) and Friedman (123,649 citations / h-index: 96). There are also less measurable, arguably equally important ways of making an impact. One wrote the nation’s economics textbooks for 30 years, the other had a much more immediate influence on policy and public discourse. A Google Ngram picks up some of this difference:

For 2017 job candidates, two things are clear from this case study of inside baseball. For the candidate, there is a recipe to have in hand: (PhD + publications + teaching) + or – your personality = academic potential. Bring your A game. But there are always internal dynamics and differences in vision for future departmental development. You can’t control what is going on behind closed doors and it really is often about finding the right “fit”. May the odds be ever in your favor.