Speech
22 September 2022,
5.30 pm
Sixth Karl Brunner Distinguished Lecture
Introduction of Benjamin M. Friedman, ETH Zurich
Thomas J. Jordan
Chairman of the Governing Board
Swiss National Bank
Zurich, 22 September 2022
© Swiss National Bank
Ladies and Gentlemen
I am very pleased to welcome you all to the sixth Karl Brunner Distinguished Lecture. The
Swiss National Bank established this annual lecture series in honour of the Swiss economist
Karl Brunner, one of the leading monetary economists of the last century. Our aim with these
lectures is to reach a broad audience, and to contribute to the public debate on issues related to
central banking and economics more broadly.
This year's Karl Brunner Distinguished Lecture is special for several reasons. After a
threeyear break caused by the pandemic, the lecture finally returns to ETH Zurich. I am delighted
to see so many of you here. I also want to thank Joël Mesot, President of ETH Zurich, for
making these fantastic premises available to us yet again. Above all, this year's event is
special because of the person giving the lecture. Benjamin Friedman is the William Joseph
Maier Professor of Political Economy at Harvard University. He is one of the world's
foremost thinkers on monetary policy and an outstanding public intellectual. In addition, he is
among the few still active economists who knew Karl Brunner well. Even though they did not
always agree on economic matters, the two maintained a close personal relationship
characterised by mutual respect.
The highest respect - coupled with a fair dose of nervousness - is also what I felt while sitting
in the waiting room outside Ben's office, having just arrived at Harvard as a young post-doc. I
will never forget the moment when I first entered Ben's office, with its traditional furniture
and its walls packed with majestic books staring down at me. I could truly feel the vast
amount of knowledge present in that room. Fortunately, Ben welcomed me warmly and my
anxiety quickly dissipated. Indeed, I could not have hoped for a better mentor for my stay at
Harvard. I have learned a great deal from Ben, not only as an economist, but also as a person.
Benjamin Friedman is an unusual scholar in many respects. His research is extraordinarily
broad and deep, as demonstrated by the topic of today's lecture, namely the influence of
religious thinking on economic thinking. Some of you may ask what this has to do with the
Swiss National Bank. While people's faith in the currency is an essential precondition for
successful monetary policy, organising public lectures on religion may seem a little
farfetched. However, allow me to reassure you that Ben has also published over 150 academic
articles on monetary policy, macroeconomics and financial markets. He is therefore a most
logical candidate to give the Karl Brunner Distinguished Lecture, even on a topic that may
seem unusual at first sight.
Born in Louisville, Kentucky, Benjamin Friedman went to Harvard University with the
intention of studying law, but soon realised that economics suited him better. He pursued his
studies at Harvard and at Cambridge University in England. Early in his career, Ben worked
for various entities of the Federal Reserve System and at Morgan Stanley. In 1972, at the age
of 25, he was appointed assistant professor of economics at Harvard University. Ben has
remained a loyal faculty member at Harvard for five decades, including a three-year spell as
the chairman of the economics department.
When Ben recently celebrated 50 years as a professor at Harvard, many of his former students
travelled from all around the world to attend the occasion. The interaction with his students
has been of utmost importance to Ben, and he would remain in contact with them for decades
following their graduation. A number of these former students today occupy leading positions
in academia, central banking and government. This shows that Ben has been not only an
outstanding researcher, but also an influential teacher of economics.
Spending 50 years in the same place is not as unusual as one might think, at least not when we
consider some of the great Enlightenment thinkers Ben so deeply admires. Take Immanuel
Kant, who developed his philosophy without ever leaving his hometown of Königsberg.
According to legend, Kant became such an integral part of the city that people would set their
watch by the time he left his house for his afternoon walk. Whether Ben's daily routines have
the same effect on the people in Cambridge, Massachusetts, we do not know. What we do
know is that, fortunately for us, Ben is not quite as averse to travelling as Kant was. Most
importantly, he lets his mind travel, exploring not only the world of economics but many
other disciplines as well.
But let me say a few more words about Ben's contributions to monetary economics. His
research covers all aspects of monetary policy. It spans everything from the technical details
of how central banks steer short-term interest rates in money markets to fundamental
questions about the mandate lawmakers should give to central banks. Doing justice to this
vast body of work in a few sentences is impossible. I will therefore limit myself to a few key
elements.
Characteristic of Ben's work is the critical analysis of ideas that have become fashionable in
the profession. In the 1970s and 80s, when monetary targeting was in its heyday, Ben argued
that central banks were too focused on the money supply and did not pay enough attention to
other variables. In a number of influential papers, he showed that the amount of outstanding
credit in the economy may be a useful predictor of future output and prices. Ben concluded
that credit should play an important role in central banks' decision making. The extent to
which central banks should pay attention to credit aggregates remains a hotly debated
question to this day. Ben was among the first to highlight their potential significance for
monetary policy.
Another example of Ben's tendency to go against the mainstream is his critique of the use of
rational expectations in macroeconomic models. When the rational expectations revolution
transformed the field of macroeconomics in the late 1970s, Ben remained sceptical. He
criticised the assumption that economic agents form their expectations based on a perfect
understanding of how the economy works. These models did not address the question of how
economic agents derive this knowledge in the first place. More recently, the literature has
begun to develop models with forward-looking agents that have a limited understanding of
how the economy works. This research programme is very much in the spirit of Ben's early
criticism.
A final example of Ben's willingness to challenge the accepted wisdom of the day is his
reservations about inflation targeting. When one central bank after another started to adopt
inflation targeting in the 1990s, Ben became one of the most prominent critics of this new
monetary policy strategy. His concern was that inflation targeting would lead central banks to
focus single-mindedly on price stability. In doing so, Ben feared, they might lose sight of their
ultimate goal of promoting economic well-being more broadly.
Ben is widely recognised as one of the world's leading macroeconomists. However, his
research interests go far beyond that. Ben is a polymath, something that has become rare in
modern academia. His writings cross academic boundaries between economics, philosophy,
history and religion. An excellent example of Ben's interdisciplinary work is his book 'The
Moral Consequences of Economic Growth', published in 2005. Economists have written
countless papers on how to increase growth. But very few have addressed the question of why
growth is desirable in the first place, in particular for societies that are already rich. Ben's
book fills this gap. It argues that economic growth improves the moral character of society.
People tend to be more generous and tolerant towards each other when the economy grows.
Economic stagnation, on the other hand, is associated with repression and bigotry.
Ben's latest book, 'Religion and the Rise of Capitalism', was published last year. It describes
how religion has shaped economic thinking since the beginning of our discipline. The early
economic thinkers of the European Enlightenment, such as Adam Smith, were not committed
to religion. Ben argues, however, that their world view was profoundly influenced by
developments in religious thinking. There is therefore a close connection between religion and
the beginning of modern capitalism. With this I would like to conclude my remarks, since you
are surely eager to learn more about this fascinating topic from Ben himself.
Ladies and gentlemen, please join me in welcoming Benjamin Friedman with a big round of
applause.