On Capitalism And Freedom By Milton Friedman – Book Review


I have just read the anniversary edition of Milton Friedman’s, Capitalism & Freedom. I thought it was about time I delved into the theoretical source of the Free-marketeers self-serving ideology. To be honest I was quite nervous – what if Friedman is right? What if after all these years, this book was to reverse my political views through the logical and moral power of its argument?

I needn’t have worried. I don’t think I’ve read such a load of nonsense since Richard Dawkins, The God Delusion; another piece of badly argued polemic that undermines its own logical foundations.

But to be honest Capitalism & Freedom is worse. The first 2 chapters in which Friedman outlines his theory are frankly laughable. At one point he claims that the McCarthy blacklist in the USA was ended because of the free market! The case he refers to (though not by name) is recognisable as that of Dalton Trumbo, who was imprisoned and blacklisted for 15 years because of his political beliefs while living in the strongest capitalist state in the world and who only came off the blacklist through the efforts of Kirk Douglas – the free market had nothing to do with it, except that Douglas had power because of his popularity in the market, which is not the argument Friedman is making anyway. It really is outrageous stuff.

However, this attempt by Friedman to get the Land Of The Free off the hook with regard to McCarthyism does illustrate just how central the values and perspectives of the Cold War are to the thesis of the book. I would go so far as to argue that the principle reason the book now seems so shallow and incoherent is because it so clearly takes it moral high ground from being an alternative to the tyrannical communist regime of Stalin’s USSR. It is as if Friedman thinks he doesn’t have to make solid arguments or justify the oppressive and monopolistic tendencies of capitalism because everyone only has to look behind the Iron Curtain to see what the alternative is.

But I’m afraid that today this is simply not good enough. I’ve just been judging a school debating competition, Debating Matters, run by The Institute Of Ideas, and to be frank I’ve heard more coherent arguments from sixth formers than are to be found in Capitalism & Freedom. The fact that this text has been so central in dismantling the post war consensus around the mixed economy and welfare state beggars belief.

The central claim of the book is of course that free markets maximise personal freedom for individuals. Friedman identifies three kinds of freedom (i) Personal (ii) Civic (iii) Political. He spends very little time on exploring Civic or Political freedom even going as far as suggesting that Civic activity and Politics are in fact a problem because they inevitably lead to the imposition of majority views on minorities. So under Friedman’s definition the principal and only meaningful mechanism through which free citizens can express this narrow definition of “freedom” is choosing how to spend their money.

This surely leads to the inevitable conclusion that the more money you have the more opportunity you have to express your freedom; that rich people have more freedom than poor people.

The Free-marketeers might try and avoid this conclusion by claiming that the poor man with only £1 is just as free to spend that pound on what he likes as the rich man is to spend his £10,000. But if the poor man only has £1 he has to spend it on bread and milk, he has no choice if he is to live. The rich man on the other hand can buy a steak for £10 and still have £9,990 left with which to express his freedom. So while it may be technically true that the poor man is equally as free as the rich man to spend his money as he wishes in reality the poor man’s choices are severely limited because all his income is taken in simply providing the basics of food, clothing and shelter.

Thus by definition freedom under this free -market capitalist conception is not universal; it is contingent upon an individuals level of spending power.

But surely universality is central to the concept of freedom. Not even Friedman would claim that a society is free if the only person with autonomy is an all-powerful ruler. Such a society would be called an Absolute Monarchy or Dictatorship in which all the population are subject to the whim of one. Even if we moved on to an Oligarchy in which a small ruling elite had a certain level of autonomy under the ultimate authority of a King or Despot we could not claim such a society was “free” in any modern sense of the word. This is because the modern concept of “freedom” carries with it an expectation of Universality – the idea that none of us are free if one of us is oppressed.

But for Friedman capitalist businesses operating in a free market operate as an independent power-base that helps prevent abuses of political and civic power and therefore is a force for freedom. Someone like myself might ask who elected the owners of capitalist businesses as watchmen of the political system? Where on earth do they acquire political authority? As an ordinary citizen my own experience has also shown me that a capitalist business is just as capable of exploiting and oppressing me, as is the government or civic society. It has also had to be asked when exactly it was in the recent history of the West that business and government were mutually moderating power-bases? Certainly since 1979 business and government have not acted as a brake on each other’s power – on the contrary they have combined to completely overwhelm all other forms of community, political or Civic power.

And indeed Old Labour, mixed economy, Socialists like myself see this as one of the main moral justifications of the Welfare State. For us the Welfare State is a way of maximising the freedom of citizens within a capitalist economy by protecting citizens from the exploitative, oppressive and monopolistic logic of business and by providing the poor with services and opportunities that they could not afford in a free-market. These services are those which we collectively deem vital to any universal conception of freedom and include access to high quality education, access to a safety net benefit system for those unable to provide for themselves, health care free at the point of use, equality of opportunity based on talent not race, creed or social class and equality before the law. A Welfare State provides these basic underlying services not out of some paternalistic or charitable instinct to “help the poor”, but because without these things the “freedoms” Milton Friedman claims he values so highly are meaningless for vast swathes of our population.

Health care and education illustrate the argument most succinctly; how can any person suffering from rickets or malnutrition be said to free? Free to die certainly. Similarly a good level of education is crucial to any meaningful concept of freedom (see my blog On Meritocracy And Private Education just as are equality before the law and equality of opportunity.

Friedman seems to forget that free-market capitalism left to it’s own devices gave us Dickensian London and Blake’s Dark Satanic Mills. A world in which workers with jobs were often close to starving and living in appalling conditions, a world in which 6 year old children were sent to work in factories and sent up chimney’s to clean them, a world in which men could be imprisoned or transported to the penal colonies for talking to each other about their working conditions, a world in which the capitalist class accrued wealth unimaginable even to the Aristocracy of the previous generation and who lived lives of such luxurious excess it would impress even a City Broker today. Incidentally, it is just this Dickensian version of a workers hell that globalisation is now exporting from the West to the Third World. The slums of Delhi and Rio are exactly comparable to 19th Century London, have arisen for the same reasons, (i.e. urbanisation of vast numbers of rural poor, below subsistence wages and no affordable housing) and are justified by big business using the same Malthusian argument that starvation wages are better than no wages – which is of course true but also an appalling way to regard our fellow human beings.

The free-marketeers love to re-write history, they love to suggest that the progressive changes in our society in the last 200 years were brought about not by the sacrifices of trade unionists, socialists and suffragettes but as an inevitable consequence of Adam Smith’s invisible hand; that universal suffrage, free health care, compulsory state education up to 16, a living wage and a 40 hour week were the inevitable successes of capitalism! They forget that most of these things only came about after WWII and were put in place by a Labour Government following a Keynesian economic policy within the framework of a planned, mixed economy. While I am sure there are many members of the capitalist class who would love to go back to the conditions of the 1930’s, or even the 1830’s, I’m bloody sure you won’t find many working men and women who would think it was a good idea!

But there is another idea that Friedman fails to deal with and that is whether most of the poor deserve to be poor, or that the rich deserve to be rich. The truth is that in the vast majority of cases your level of prosperity throughout your life is determined not by your talent or application in a free market but by the socio-economic group you were born into. In which case how can we possibly make any universal claims that the free market will create a free society, when through no fault of their own the children of the poor are left to live their lives with severe limits upon their freedom – let alone the social injustice of the debased conditions in which many must live.

The other problem I have with Friedman’s Free-market ideology is that it suffers from exactly the same fundamental weakness they criticise other unifying theories (such as Socialism and Marxism) for promoting; namely an attempt to create an overarching technical theory of everything, a meta-theory that takes away the need for human beings to make moral or political decisions.

The free-marketeers theory rests on Adam Smith’s claim that human beings are rational self-seekers who will always act in their own interests but that their own interests often include cooperating with others and that thus through the invisible hand of free markets the interests of everyone will be maximised.

The first thing to say is that Smith’s assertion is not an economic one, although most modern economics is entirely built on it, it is in fact an assertion about the nature of human motivation and psychology, a theory that has now been completely undermined by the advances in the study of the human brain and in Ethnoarchaeology, Socio-biology and Anthropology that have clearly defined the primacy of the social over the individual in the human psyche.

Moreover, Smith’s followers have attempted to restrict the discussion of human motivation to the realm of the commercial exchange of goods and services and in so doing attempted to ignore other more complex human motivations such as romantic love, love of one’s family and children, loyalty to country and/or community.

Even if the psychological ideas underpinning the free-market theory were true and could ever be universally applied, it would result in a sort of social anarchy, in which politics, as we know it, would become moribund and government’s only role would be to provide and maintain the legal institutions that allowed the free-market to function successfully. Amazingly, this is the world Friedman and the Free-marketeers explicitly look forward to.

But while simultaneously claiming the truth and universality of his own theory Friedman and his followers sneer at all other conceptions of human nature and society as idealistic, unrealistic and euphuistic. Indeed, the free-marketeers go further, often opposing theorising itself as a pointless and indulgent waste of time – that is of course all theorising about things other than the free-market.

So if you’ve not read Capitalism & Freedom rest assured that it represents no intellectual threat to those who believe that, contrary to Thatcher’s declaration, there are alternatives to Friedman’s vision of free-market hyper capitalism. In fact how we ever let them get away with such rhetoric when there are so many alternatives within the theory of capitalism itself (Quaker Capitalism, mixed-economy capitalism, owner-managed capitalism, worker-owned capitalism to name but a few), let alone the more radical alternatives such as socialism, remains one of the great indictments of our so-called free press and our supposedly independent intellectual class.

I Am Not A Number

Political and Philosophical Dispatches From An Individual Living In A Society

corporate democracy economics freedom left-wing libertarian managerialism moral philosophy politics radical socialist society

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