Had Milton Friedman landed on earth in 1712, his work may have earned a mention in early national accounting schemes. But he was born in 1912, too late.

Growing up in an epoch of crises, wars and revolution, Friedman, who died last month, made a profitable career as a propagandist for the ruling class. The University of Chicago, founded by the Rockefellers, was his home.

Friedman’s fan club consisted of people who’d like labor weaker and cheaper, indeed “free.” Club members included Ronald Reagan, Margaret Thatcher, the Nobel committee (1976), Chilean dictator Augusto Pinochet, George W. Bush and his treasury secretary, Henry Paulson, and lesser reactionaries.

Friedman thought that regulating the amount of money in circulation would regulate a market economy’s output. This was easy to disprove, theoretically and empirically. Even his supporters at the Federal Reserve ultimately rejected his simplistic claims.

Karl Marx methodically showed that the capitalists do not control economic cycles. Market economies are regulated by the boom-bust laws of commodity production and exchange, operating independently of ruling-class wishes. If the capitalists controlled the economy, they would eliminate crises and recessions, which cut profits and can threaten their rule.

But capitalist economics must maintain the fiction that the capitalists control the economy. In the 1930s, Lord Keynes at least correctly realized that crises are caused by growing imbalances between production and demand, which the exploiters perceive as “overproduction” or “overcapacity.” These imbalances result in economic losses, unemployment and misery.

Keynes’ “remedies” called on governments to spend money by borrowing, thus creating demand. This does not eliminate cycles, and turns governments into armed debt collectors on behalf of wealthy lenders. Furthermore, for every “Keynesian mechanism” used by an oppressor country, ten “anti-Keynesian mechanisms” are imposed on oppressed countries.

Capitalist banks and U.S.-dominated agencies such as the IMF have forced dozens of brutal “restructurings” and budget cuts on oppressed countries, from Africa to the Middle East, South Asia to Latin America. The terrible result has been loss of jobs, nutrition, shelter, education and health. Keynes can be termed the chief theorist of imperialism 40 years into its decline.

By the 1970s, 80 years into the decline, Friedman became the theorist of choice. Friedman’s hypocrisy was astonishing. He claimed to support monetary stability, yet defended the massive, destabilizing speculation in currencies by the Rockefellers’ and other big banks. Currency speculation jumped at least 200-fold between 1973 and 2006. His defense of currency speculation in the name of free markets continued even after speculation had clearly precipitated crises in Thailand, Argentina, Mexico and elsewhere.

Friedman championed “free markets,” but somehow was blind to the Rockefeller and other monopolies charging 10 and 20 times their cost of production for commodities they controlled, such as oil, while underpaying for commodities made by small producers, such as coffee or cotton (unequal exchange).

Friedman praised the “freedom” that came with “free markets” but was blind to the massive use of force — army, police, prisons — required to maintain markets’ ever-more-unequal workings. Chile under Pinochet was a blatant example.

Ironically, Friedman’s obsession with money could help where he would have least wanted it — China. Friedman correctly if unoriginally warned that an unstable currency will destabilize a society.

Today Wall Street is demanding that China open its currency to “market forces,” i.e. speculation. This is part of a comprehensive and intensifying U.S.-led effort to promote counterrevolution in China. Treasury Secretary Paulson focused on China while at Goldman Sachs, where he also championed and personally profited from speculation.

China looms large in a recent Fortune magazine interview of Paulson (along with “reform” of Social Security and Medicare). Paulson says, “As I talk with the Chinese on currency, I encourage them to move much more quickly with opening up their capital markets to competition … they’re going to need to have a currency that is flexible.” “Flexible” is a code word for speculation, just as “flexible labor” is a code word meaning to brutally exploit workers 20 hours one day, then lay them off the next.

If Friedman’s warning on currency instability strengthens China’s resistance to Wall Street demands, great! The professional anti-communist would flip in his grave. Too late.

economics @ cpusa.org