Despite their differences they had in fact been on friendly terms since both worked in Washington during the second world war — and Friedman claimed credit for the origin of Galbraith’s connection with India. Some years earlier Galbraith had encountered an Indian government official who told him that Friedman — then one of a tiny, Chicagobased academic minority who dared to challenge the Keynesian orthodoxies embraced by Galbraith — had been proposed by the Eisenhower administration as an adviser on India’s economic planning. Galbraith responded that such an appointment would be ‘like asking the Holy Father to advise on the operations of a birth control clinic’, and found himself invited in Friedman’s place.

When Friedman and his wife Rose visited India in 1963, their invitation to lunch came with a gracious note from the ambassador:

‘As you know, I do not agree with your ideas, but they will do less harm in India than anywhere else I can think of.’ But Rose recorded that lunch was ‘delightful’, and Milton sought cheerful revenge in due course by opposing Galbraith’s candidacy for president of the American Economic Association.
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Now Friedman, who is coming up to 94, has outlived his lanky sparring partner, who died last weekend aged 97, and it would be easy to conclude that he has also won the debate. But has he? Galbraith spent his last quarter-century offering eloquent explanations why his case for ‘affirmative government’ had gone so conclusively out of fashion: it was, he said, all down to a rationalisation of self-interest by a comfortable elite.

Friedman, by contrast, has spent the same period complaining that although many governments may now salute his ideas, few have been brave enough to practise them to the full by taking a big axe to welfare, regulation and public-sector jobs. Gordon Brown was quick to eulogise Galbraith as a ‘brilliant economist . . . and a great friend of the United Kingdom [whose] books will be widely read in generations to come’. But it is difficult to imagine David Cameron summoning Friedman to Downing Street for his advice, as Margaret Thatcher once did. Meanwhile in the academic world, studies such as Avner Offer’s The Challenge of Affluence — which I reviewed here recently — indicate a deep reexamination of free-market values. Ken Galbraith has gone, but the argument he and Milton Friedman aired over the ambassadorial silverware is far from over yet.

My theory that high oil prices are good for us, developed here last year and restated in the Daily Telegraph last week, has been causing quite a stir. A prior engagement prevented me from defending myself on Newsnight, but I did submit to a ‘drive-time’ grilling on Dublin’s NewsTalk 106 radio station. In answer to my pitch that an era of relatively expensive fuel will focus all our minds on using less of it and accelerate the search for abundant, clean alternatives, the interviewer took the wind out of my sails by cataloguing George W. Bush’s response to the current oil price spike. So far the President has released extra fuel from strategic reserves, repeated his call for oil-drilling in the Alaska National Wildlife Reserve and temporarily eased federal requirements for fuel additives to reduce air pollution. And he has declined to impose anti-gas-guzzler standards on the US motor industry which might raise the performance of new cars from 21 miles per gallon towards the European average of 35.

Well, there’s no accounting for George W.

Bush. The best we can hope is that he will be dissuaded from starting any more wars in places rich with oil reserves before he leaves office at the end of 2008 — and he has at least talked of offering new tax breaks for makers and buyers of hybrid cars such as the Toyota Prius. In the long run, what any politician says or does on this subject is less important than what happens in company planning departments and research laboratories around the world to combat squeezed profit margins, and in the minds of consumers faced with soaring fuel bills.

A new book by Charles Fishman, The WalMart Effect (Penguin), details how skylights are being installed in the retail chain’s otherwise windowless and soulless superstores in order to save electricity, and how its delivery trucks are re-routed so that they never travel empty.

Another striking example is Union Pacific, America’s biggest railroad operator, which uses 1.4 billion gallons of diesel a year and takes a $13 million hit for every one-cent rise in the fuel price; it is now replacing the shunting locomotives in its vast yards with ‘Green Goat’ hybrids which combine diesel and battery power to reduce fuel consumption by up to 60 per cent and emissions by even more.