Milton Friedman, the grandmaster of free-market economic theory in the postwar era and a prime force in the movement of nations toward less government and greater reliance on individual responsibility, died Thursday in San Francisco, where he lived. He was 94.

                 Prof. Milton Friedman, dead at 94.

His death was confirmed by Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis.

Conservative and liberal colleagues alike viewed Friedman, a Nobel laureate, as one of the leading economic scholars of the 20th century, on a par with giants like John Maynard Keynes and Paul Samuelson.

Flying the flag of economic conservatism, Friedman led the postwar challenge to the hallowed theories of Keynes, the British economist who maintained that governments had a duty to help capitalistic economies through periods of recession and to prevent boom times from exploding into high inflation.

In Friedman's view, government had the opposite obligation: to keep its hands off the economy, to let the free market do its work.

The only economic lever that Friedman would allow government to use was the one that controlled the supply of money - a monetarist view that had gone out of favor when he embraced it in the 1950s. He went on to record a signal achievement, predicting the unprecedented combination of rising unemployment and rising inflation that came to be called stagflation. His work earned him the Nobel Memorial Prize in Economic Science in 1976.

Rarely, colleagues said, did anyone have such impact on his own profession and on government. Though he never served officially in the halls of power, he was around them, as an adviser and theorist.

"Among economic scholars, Milton Friedman had no peer," Ben Bernanke, the Federal Reserve chairman, said Thursday. "The direct and indirect influences of his thinking on contemporary monetary economics would be difficult to overstate."

Friedman also fueled the rise of the Chicago School of economics, a conservative group within the department of economics at the University of Chicago. He and his colleagues became a counterforce to their liberal peers at the Massachusetts Institute of Technology and Harvard, influencing close to a dozen American winners of the Nobel prize in economics.

It was not only Friedman's anti-statist and free-market views that held sway over his colleagues. There was also his willingness to create a place where independent thinkers could be encouraged to take unconventional stands as long as they were prepared to do battle to support them.

"Most economics departments are like country clubs," said James Heckman, a Chicago faculty member and Nobel laureate who earned his doctorate at Princeton. "But at Chicago you are only as good as your last paper."

Alan Greenspan, the former Federal Reserve chairman, said Tuesday: "From a longer-term point of view, it's his academic achievements which will have lasting import. But I would not dismiss the profound impact he has already had on the American public's view."

To Greenspan, Friedman came along at an opportune time. The Keynesian consensus among economists, he said - one that had worked well from the 1930s - could not explain the stagflation of the 1970s. But he also said that Friedman had made a broader political argument: that you have to have economic freedom to have political freedom.

Friedman had a gift for communicating complicated ideas in simple and lucid ways, and it served him well as the author or co-author of more than a dozen books, as a columnist for Newsweek and even as the star of a public TV series.

He was a bridge between the academic and popular worlds, and his broader impact stemmed in large part from the fact that he was preaching a gospel of capitalism that fit neatly into U.S. self- perceptions.

Louis Uchitelle and Edmund L. Andrews contributed reporting.