Milton Friedman, who died yesterday at 94, was the leader of the Chicago school of economists and a libertarian whose view of government noninterference in the economy went to orthodoxy from heresy.

By the time he won the Nobel Prize in Economics, in 1977, Friedman had gone from an anti-Keynesian bomb thrower to the prophet who had predicted stagflation, the economic downturn of the mid-1970s combining high unemployment and high inflation that Keynesianism did little to illuminate.

By then, Friedman was wellknown by at least a portion of the American public for his libertarian views, first propounded in his bestselling “Capitalism and Freedom” (1962). He also had a weekly column in Newsweek magazine between 1966 and 1984 that he used as a forum for promoting policies inspired by classical liberal philosophy. Among these were drug legalization, school vouchers, and the negative income tax, first proposed under President Nixon; a different version eventually became the Earned Income Tax Credit.

If Friedman was known for dramatic and sometimes eccentric views outside the academy — J.K. Galbraith claimed he believed that city garbage collection was “an infringement on human liberty” — within the economics profession, Friedman was known as the great advocate of monetarism, the view that government’s main role in the economy should be regulating the money supply. This was in stark disagreement with John Maynard Keynes, the Cambridge economist who felt that government, through tools like taxation, spending, and interest rates, could blunt the force of downturns.

Friedman preferred to leave freedom of action to individuals. “I stand for the values of freedom, not just the practical benefits,” he wrote. “Even if free market economics was not the most efficient system, I’d still be in favor of it because of the human values it represents of choice, challenge, and risk,” he wrote in “Capitalism and Freedom.” Traditional economics — or at least Keynes — treated individuals as in some ways irrational because their spending was dealt with as if it were purely a function of current income, rather than based on the expectation of future earnings. It was this key insight, that individuals base their actions on long-term expectations, that Friedman labeled the “permanent income hypothesis” that underlay “A Theory of the Consumption Function.” When the book appeared, in 1957, it created a revolution in the way economists view spending patterns. Accurately measuring or estimating lifetime earnings became an important goal for economists.

In 1963, Friedman breathed another gale against government intervention in the economy, “A Monetary History of the United States.” In it, he and co-author Anna Schwartz collected money supply data going back to the American Revolution to show that episodes of inflation and depression were related to mismanagement of the quantity of money available. The Great Depression of the 1930s was made worse, he argued, by bungling on the part of the Federal Reserve

By the time President Reagan took office in 1981, Friedman was already seen as godfather to the supply side movement, which posited that lower tax rates would increase tax receipts. Whether he specifically endorsed the Laffer curve is uncertain, but Friedman was by the 1980s regarded by conservatives at least as a prophet of freedom. He returned the affection, and when the boom years of the 1980s came to an end, he blamed President George H.W. Bush’s tax increases.

Friedman was born in Brooklyn. His parents were immigrants from the Austro-Hungarian Empire who eventually opened a clothing shop in Rahway, N.J., where Friedman graduated early from high school and matriculated at Rutgers at 16. At Rutgers, where his teachers included the future Fed chairman Arthur Burns, Friedman took high honors and then earned a master’s degree in economics with a thesis on railway stock prices.

He then worked at a series of government jobs, at which he wrote his earliest economics journal papers, mainly on technical statistical issues. But they were impressive contributions, according to his biography in the “New Palgrave: A Dictionary of Economics,” which says, “Even at this early stage Friedman’s work bears the imprint that readily identifies all his subsequent work. It is seemingly ‘simple,’ eschewing complexities and complications, concentrating on essentials.”

During World War II, he worked at one point for the Internal Revenue Service and, to his later chagrin, helped design mandatory withholding tax. In 1945, he published his Ph.D. thesis, a study showing that high licensure requirements for doctors gave them monopoly powers and made them comparatively more expensive than dentists. The book ruffled feathers at the American Medical Association. It also was an early inkling of the kinds of thinking that would make Friedman a leading and early opponent of price and rent control regulations, the military draft, and minimum wage laws.

In 1946, he returned to the University of Chicago and became a full professor just two years later. He developed an international network of like-minded intellectuals, including Karl Popper and Friedrich von Hayek, called the Mont Pelerin Society after the Swiss spa where it first met in 1947. Hayek came to Chicago just three years later. In 1994, Friedman wrote the introduction to the 50th anniversary reissue of Hayek’s “Road to Serfdom.”

With “Capitalism and Freedom,” Friedman made the jump to public intellectual from academic notoriety. Among other broadsides, the book contained a critique of President Kennedy’s “Ask not what your country can do for you” speech on the grounds that free individuals should avoid interacting with the state as servant or ward. He then became economic adviser to Barry Goldwater in his 1964 presidential campaign, though Goldwater ignored Friedman’s advice to lower tariffs and free exchange rates.

Friedman also advised Nixon and Reagan, and it was estimated by some that as many as 80% of the economists on Reagan’s staff had studied with Friedman.

After retiring from the University of Chicago in 1983, he became senior research fellow at the Hoover Institute at Stanford University.

Milton Friedman

Born July 31, 1913, in Brooklyn; died November 16 of heart failure at a San Francisco hospital; survived by his wife, Rose Director, an economist he met in graduate school, two children, four grandchildren, and three great-grandchildren.

Please see the Sun‘s special section, Remembering Milton Friedman.