Economist Milton Friedman died on November 16 and the age of 94. For his decades of work on economic analysis and championing the cause of liberty, he was probably the world's best-known economist. His colleagues awarded him of the John Bates Clark Medal (1951) and the Nobel Memorial Prize (1976), the two most prestigious distinctions in the profession.

Friedman's reputation rests on two major contributions. The first is his theory of permanent consumption. This basically holds that individuals rationally plan ahead and attempt to smooth out income fluctuations. Simple as it is, this idea has proved very useful in understanding a variety of phenomena. For example, in the past few decades income inequality has increased very rapidly in the United States. However, the level of inequality in consumption levels has not increased nearly as much. One possible interpretation for this disparity is that what really has taken place is an increase in income variability, not in income inequality.

His second important contribution is his monetary theory. Friedman’s idea is that the best -- in fact the only -- way to stabilise prices is to limit the growth of the money supply. Although a Keynesian in his early years, Friedman became adamantly opposed to government policies attempting to increase growth by increasing the money supply. All you get by doing so, he maintained, is an increase in prices. Years of stagflation in the 1970s provided one of the better proofs of this contention. Central bankers around the world -- Paul Volker and Alan Greenspan in particular -- owe a lot to Friedman.

To the public at large, Friedman was known for his indefatigable defence of free markets and, more generally, freedom. Appropriately for someone with such a name, Friedman was a leading figure in the libertarian movement. Applying his economic principles to social policies, he advocated school vouchers, decriminalisation of drugs, the repeal of laws favouring unions, a volunteer army, a negative income tax, and so on. Thanks to him, everyone understands the meaning of "There is no such thing as a free lunch.”

Economists have always believed that the free market is (generally) an efficient way of organising the production and distribution of goods and services. But libertarians go much further than this -- they see freedom as an ultimate good.

If Friedman’s economic theories are generally accepted, his political and philosophical ideas are rather controversial. I for one believe that the libertarian notion of freedom is rather partial and in fact misses the point. Suppose I own a piano, a beautiful Steinway which I am keeping in my living room. A libertarian will insist that I am free to play the piano. It’s my piano. (Private property is one of the libertarian's fundamental rights.) As long as I don’t harm anyone (eg, playing it loudly during the wee hours) then everyone should respect my freedom to play the piano.

It’s hard to disagree with this logic. But in the process of insisting so much on external conditions for the freedom to play the piano, the libertarian forgets two important and necessary conditions for fine piano-playing: (a) the ability to play the piano and (b) knowledge of good music.

The first point of my analogy is that, in addition to the absence of external coercion, true freedom requires some level of self-determination, self-mastery (which I, alas, lack when it comes to piano playing). Without that basic self-mastery, I can randomly hit white and black keys, but I will not be playing the piano. I can say that I’m acting freely, but this would be freedom of a rather poor grade.

The second point of my analogy is that freedom cannot be separated from a good that it is aimed at. Ultimately, true freedom must be directed to what is good and what is true. In fact, the relation between freedom and truth is at the centre of one of the great intellectual debates of our day. Is moral relativism a necessary implication of freedom? Many libertarians would agree. On the opposite side are those who fear the effects of a “dictatorship of relativism” -- by insisting on the principle that “if you don’t harm others than anything goes” we risk losing our moral purpose altogether.

Milton Friedman has left us, but the debate carries on.

Luís Cabral is professor of economics at Leonard Stern School of Business at New York University