Milton Friedman, recently deceased yet world-renowned economist, championed the free market by advocating limited government and free enterprise in a time when intellectuals trusted the state to regulate the economy, provided jobs, and ensure equal access. My interest in this initially elusive intellectual began after reading his four-page obituary in the LA Times early last November.
Despite his pedestrian and academic exterior, I was struck by the values that we shared, including his opposition to the war on drugs because it feeds the federal government’s addiction to money instead of preventing man’s addiction to controlled substances. He also wanted to cut taxes and slow the encroachment of the welfare state. Most importantly, he believed in the preeminence of the individual and choice, which included offering school vouchers instead of forcing children to attend schools in a common zip code. Capitalism and Freedom encapsulates all of Friedman’s main ideas in a humorous anecdotal styles, not that he takes lightly the plight of burgeoning government. More important, Friedman expounds not only on the central theme of freedom, but its proper manifestations in the community, tempered by the role of limited government.
In the first two chapters of his book, Friedman elaborates on his views of classical liberalism, competitive capitalism, and the preeminence of individual liberty. Eschewing the label of anarchist, he delineates the proper role of government in the sphere of human activity: “Government modifies the rules, mediates differences over the meaning of the rules, and enforces compliance of the rules.” For this economist, the brilliance of a market economy lies in free discussion and the proliferation of trial and error, versus the government’s imposition of one monolithic standard. The market better regulates the needs of the community, for if one private agency does not meet the needs of the consumer, then he can choose another, or start an agency of his own. On the other hand, government agencies force one line of action to satisfy needs, thus failing to meet the diverse concerns of extended communities.
Through seven chapters Milton Friedman offers viable free market alternatives to the devastating effects of state-run socialistic policies: from welfare, in which he suggests that it would be less costly for the government to give money directly to struggling families instead of bolstering the enormous welfare system; to the school educational system, in which teachers’ pay raises are locked into a sclerotic system of incremental wage increases based on higher education, not merit. Even worse, despite families’ ability can petition for their children to enroll in different schools, students have little choice in what school they attend because they do not have to compete for the students, unlike in the private sector.
In order to bolster accountability and quality in the state educational system, Friedman advocates giving vouchers to each child, which would allow students to enroll in any school, public or private. In this free market system, schools either have to shape up, or close down, for students and families will have the opportunity to choose the best school, rather than settle for the one closest to them.
Among the many enlightening passages in his book, Friedman responds to the disparity in property among individuals using two extended metaphors. In the first example, he asks the reader to imagine three Robinson Crusoes shipwrecked on separate islands: the first one lands on a naturally rich territory, while the other two land on separate clods of dirt, forced to eke out a bare existence. Friedman poses the question: “Is it just to compel the first Robinson Crusoe to share what he has with the other two less-fortunate ones? Before you answer yes, consider another scenario . . .” And he elaborates another thought experiment, in which the reader (the writer makes this anecdote more personal) is walking down the street with two friends, when the reader discovers a twenty dollar bill. In this case, Friedman continues, would it be just for the two friends to compel the reader to share his new-found wealth?
My answer is no. Selfish, but a testimony within each of us that property means something, whether we were born into it, achieved it, or it was thrust upon us by happenstance. Of course, Friedman does not disparage charity, but compulsory giving, especially when the compelling force is the state. Scenarios and thought experiments such as these, practical and fanciful, demonstrate the accessibility of his insights in Capitalism and Freedom.
Yet Friedman does not merely validate every person’s right to property, whether they have more or less than someone else. The outrage, he contends, that liberals and state advocates have about these two scenarios is that one person gets more than another for no other reason than chance. However, Friedman counters that people are more outraged when others receive more praise, power, or property by merit. Citing the plight of a professor who receives a promotion instead of his colleagues, Friedman argues that fellow faculty members simmer with envy to see another professor achieve more. It’s not chance disparity, but merit disparity that causes dissension among groups.
In addition to undercutting the criticism of inequality and access, Friedman counters other criticisms of private enterprise capitalism:
1)The rich will use the system to gouge the poor.
Response: As mentioned before, government plays a role in ensuring that everyone plays fair. Friedman is a staunch defender of the Sherman Anti-Trust act, which prevents monopolies and protects consumers. Moreover, many monopolies are the result of collusion between private interests and the state.
2)Capitalism invites discrimination.
Response: Discrimination hurts the vendor by alienating potential consumers and workers. Racists lose a source of revenue. At the end of the Birmingham, Alabama bus boycotts of 1955, the city finally gave in to the demands of the black riders because the bus line was about to go out of business and local shops were losing black customers. Not only did the principles of private capitalism work to the advantage of a persecuted minority, it is all the more noteworthy that the primary instigator of racism in Birmingham was not the private companies, but the state in the form of the city manager and the commissioner of Public Safety, Bull Connor, and the city segregation ordinances. Later on, Friedman writes, “The beauty of the market is that a consumer will buy a loaf of bread, not caring whether it was made by a Chinese person, a black person, or a Jew.” When a consumer has a need, his first priority is to fill that need. The market in itself does not hate on other groups of people.
3)The cause of multiculturalism will be frustrated as a community pursues private capitalism.
Response: Friedman writes emphatically, “We need to foster diversity.” He then argues that state-intervention has increased segregation, whether in the ghettoized school system or the affirmative action programs which in principle practice the same discrimination as the Committee of Public Safety in Birmingham.
4)People will make mistakes in a system more devoted to private enterprise. Most people do not know their best interests.
Response: Friedman stresses repeatedly that the market allows for free discussion and offers, where if one purveyor disappoints or defrauds, then the consumer may chose to fulfill his needs elsewhere. A system of trial and error also permits a community not only to explore possibilities, but reach better decisions. In an almost pastoral plea, Friedman implores people to have faith in human freedom, admitting his dismay in mankind’s cynical skepticism in his own innate capacities: “The state helps kill self-help,” the economist warns. Then later on he laments, “People do not believe in Freedom,” but they should.
Throughout his treatise, Friedman encourages every man to be a free man in a free market society, where government is merely a means to secure the rights of all; where the powers of human persuasion instead of bureaucratic imposition dissuade others from racist practices and the crippling mindset that inequality mandates redistribution; where equality of opportunity defines true liberty, refined by the regression of state influence and control in the daily lives of its citizens.
Despite the long and consistent appeal of the socialistic model and sociological inquiry in universities and elite think-tanks, I believe that merit and individual capacity make the greatest difference, that freedom as an active reality, supernatural and super-rational, plays a far greater role within individuals and throughout their communities. For free market advocates debating confirmed academics and civil establishments, Milton Friedman’s classic Capitalism and Freedom provides simple, witty, and thorough explanations to induce readers to relinquish the short-term promises of a state-run economy, embrace freedom in the marketplace, and thus enhance his political liberty.
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