Individuals are inevitably more nuanced than summaries of their views make them seem, and the brighter the individual, the deeper the level of nuance. John Maynard Keynes and Milton Friedman were very, very bright, so the nuance goes deep. Reading a textbook or a lay article that discusses Keynes or Friedman generally provides little evidence of that nuance. Somehow, Friedman was a one-dimensional supporter of the market, and Keynes a one-dimensional supporter of government control. That is far from the truth, as most academic economists know. Thus, it is useful to explore the writings of past economists in reference to current problems to remind us of the nuance and subtleties of thought that are inherent in the “greats.” Sylvie Rivot’s Keynes and Friedman on Laissez-Faire and Planning does that. It explores the writings of Keynes and Friedman in reference to modern problems, and draws out lessons that might be learned from that exploration.

As Rivot notes, first and foremost, the “book is an exercise of text reading” (p. 2). Her text reading focuses on the underlying logic of Keynes’s and Friedman’s positions as they relate to systemic stability and the role they see for the state. She notes that both Keynes and Friedman “are true liberals in the political sense of the word, highly preoccupied by the preservation of our basic freedom” (p. 3). The goal of her exercise is to “rethink the critical issues of crises” (p. 4), which she sees as the center of modern policy debates.

The book consists of five chapters and an introduction, in which she lays out her goals and summarizes her argument. In Chapter 2, “Keeping the Keynesians Off-stage,” Rivot correctly, in my view, concludes that Friedman’s critique of Keynesian economics was not of Keynes’s economics but of the neo-Keynesian economics that evolved from it. This conclusion seems correct, but not all that novel among historians of thought who specialize in this time period.

Chapter 3, “Private, Public and Semi-public Institutions,” is more interesting. It explores Keynes’s and Friedman’s views on institutions and the state. Rivot points out that Keynes’s views were premised on a belief in the ability of collective institutions to behave efficiently, and that Friedman’s views were premised on the belief that collective institutions were not to be trusted. She argues that this difference led Keynes to focus on second-round real effects of a financial collapse and Friedman to focus on first-round monetary disturbances.

Chapter 4, “Keynes and Friedman on the Employment Policy,” turns to a discussion of how monetary and fiscal policy might be used to bring about stability in a decentralized market economy. Rivot points out that Keynes and Friedman are much more similar in their views than popular views would suggest. Both share a distrust of short-run devices to fine-tune the economy; both take structural unemployment and incentives into account; and both believe that macro policy is much more complicated than managing interest rates.

Chapter 5, “The Functioning of a Monetary Economy,” explores how the differences and similarities in Keynes and Friedman lead to different policy conclusions. Rivot argues that for Keynes, a key role for the state is to drive long-term real expectations, without which the economy would be unstable. For Friedman, the long-run economy is assumed to be stable, and the state should focus on providing a stable competitive framework that anchors nominal expectations.

In her concluding chapter, Rivot explores lessons that we can learn from this exploration. A primary lesson she draws is that some policy devices have to be implemented, and some state interventions are needed. It is not a debate of rules vs. discretion. In this chapter, she considers where the line should be drawn between laissez faire and planning, and initially contrasts Keynes with Friedrich Hayek, and then considers Friedman’s consideration of the Hayek/Keynes debate. She concludes that both Keynes and Friedman accept that some line is needed, but do not tell us where to draw the line.

There is much to like in this book. A careful reading of the texts is always useful, and the book exhibits a careful reading of Friedman and Keynes. But, in the end, I was left feeling somewhat unsatisfied. The first reason is that many of Rivot's conclusions are similar to those that historians of thought specializing in Keynes and Friedman have already noted. For someone steeped in the history of thought tradition, there are not a lot of new interpretations here. That means that the novelty of the book comes in the simultaneous consideration and juxtaposition of Keynes and Friedman. But, as she notes in the beginning, this is a strange juxtaposition. Keynes and Friedman never went one-on-one. They were of different time periods—Keynes did all his theoretical work before World War II and Friedman did his in the 1960s and 1970s. These were very different times, with very different problems. This means that she must put in proxies for them—for example, Friedman is discussed in relation to Abba Lerner, and Keynes is discussed in relation to Hayek. But because of the nuance of thought of both Keynes and Friedman, proxies are problematic. Since both Keynes and Friedman adapted their message to the times, this makes it hard to compare messages and draw conclusions. She notes this problem and, as I mentioned above, and in Chapter 2, concludes that Friedman’s critique of Keynesian economics was not of Keynes’s economics but of the neo-Keynesian economics that evolved from it. But that conclusion also makes the juxtaposition of the two problematic.

A second reason I felt unsatisfied is that the writing was difficult to interpret. For example, on page 145, Rivot states. “It is noticeable that almost anyone today would call for 'fine-tuning'; only stabilization is still considered relevant as a policy issue.” I think that the “anyone” in this sentence is a typo, and that she meant “no one,” but that is not my primary concern. My primary concern is with the ambiguity of the second part of the sentence. What distinguishes “stabilization” from “fine tuning”? She suggests that “during the 1950s and 1960s, stabilization meant anti-cyclical policies, i.e. schemes designed and calibrated ‘once and for all’ such as a constant growth rate of some monetary aggregate advocated by Friedman” (p. 156). But my read of Lerner is that he was also referring to stabilization—his functional finance was a set of rules. The issue was not between fine tuning and stabilization; the issue was the coarseness of the stabilization.

There were also a few places where my read of the literature is different from hers. For example, she states that the message of the Paul Samuelson and Robert Solow Reference Samuelson and Solow1960 article was that “government is able to 'purchase' lower unemployment through demand policy provided that ongoing inflation was tolerated” (p. 23) My read of their paper is that their policy discussion was much more nuanced; they specifically stated that policies could cause the Phillips Curve to shift, and that it would be wrong to assume the Phillips Curve will remain unchanged (Samuelson and Solow Reference Samuelson and Solow1960, p. 193). I agree that Samuelson and Solow have often been wrongly interpreted as Rivot interprets them—as suggesting a long-run trade-off between inflation and unemployment. But a careful read of their article suggests that that is a misinterpretation.

Despite my misgivings, as I said above, I think Rivot’s interpretations of the views and Friedman and Keynes are largely correct; both Keynes and Friedman are much more nuanced than lay expositions of their views would have one believe. Thus, the book is a useful read for economists who still think of Keynes and Friedman as the caricatures of them in the texts and the popular press.