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Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking

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  • Hugh Rockoff

    (Rutgers)

Abstract

Adam Smith and Milton Friedman are famous for championing Laissez Faire, yet both supported government regulation of the banking system. In both cases their deviation from free market orthodoxy was based on a careful reading of financial history: especially Smith's reading of the Crisis of 1772 and Friedman's reading of the Crisis of 1929-33. In both cases they based their reading on a complex and nuanced account of human nature. This paper describes their parallel journeys to the conclusion that banking requires government regulation.

Suggested Citation

  • Hugh Rockoff, 2010. "Parallel Journeys: Adam Smith and Milton Friedman on the Regulation of Banking," Departmental Working Papers 201004, Rutgers University, Department of Economics.
    • Handle: RePEc:rut:rutres:201004
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    File URL: http://www.sas.rutgers.edu/virtual/snde/wp/2010-04.pdf
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    References listed on IDEAS

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    Cited by:

    1. Gigliobianco Alfredo & Giordano Claire, 2012. "Does Economic Theory Matter in Shaping Banking Regulation? A Case-study of Italy (1861-1936)," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 2(1), pages 1-78, September.
    2. Alfred Duncan & Charles Nolan, 2020. "Reform of the UK Financial Policy Committee," Scottish Journal of Political Economy, Scottish Economic Society, vol. 67(1), pages 1-30, February.
    3. Sabina Andreea Cazan, 2021. "The financial crisis: a history of the economic schools of thought," Journal of Financial Studies, Institute of Financial Studies, vol. 10(6), pages 48-57, May.

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    More about this item

    Keywords

    banking; Adam Smith; Milton Friedman;
    All these keywords.

    JEL classification:

    • B10 - Schools of Economic Thought and Methodology - - History of Economic Thought through 1925 - - - General

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