It feels like the passing of an era this morning, with the death in San Francisco of Nobel prize-winning economist Milton Friedman, at the age of 94.

Friedman will be remembered for many things: he developed key policy concepts such as indexation, school vouchers and the negative income tax, and popularised truisms like “there’s no such thing as a free lunch”. But his great achievement was to rehabilitate the notion, now accepted almost universally, that inflation is primarily a monetary phenomenon.

It’s hard to understand now what a lonely figure Friedman once was. In the words of Ben Bernanke, chairman of the US federal reserve board, “the worst pitfall in reading him today is to fail to appreciate the originality and even revolutionary character of his ideas”.

Thirty years ago, however, Keynesianism still held sway, and apologists for state power told us that omnipotent government could guarantee prosperity. In the intellectual chaos that was the Whitlam government, one of the worst insults that could be flung at Bill Hayden was that he was a “Friedmanite”.

But reality has a way of reasserting itself, and the tide ultimately turned. If you ever wonder why, for more than a decade now, inflation has been no more than a minor annoyance in Australia and across the western world, the single greatest share of credit should go to Milton Friedman.

Although he was feted by conservatives, Friedman was never really one of them. In the 1960s he was a prominent opponent of conscription, alongside his friend and intellectual rival John Kenneth Galbraith.

Later he spoke out strongly against drug prohibition, as both wrong in principle and disastrous in practice. In old age he was featured sympathetically in the left-wing documentary The Corporation.

Friedman’s core commitment was to individual liberty. The whole of his long obituary in The New York Times is worth reading, but the key message is in one sentence: “you have to have economic freedom in order to have political freedom.”