|Capitalism and Freedom: Fortieth Anniversary Edition
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Selected by the Times Literary Supplement as one of the "hundred most influential books since the war"
How can we benefit from the promise of government while avoiding the threat it poses to individual freedom? In this classic book, Milton Friedman provides the definitive statement of his immensely influential economic philosophy—one in which competitive capitalism serves as both a device for achieving economic freedom and a necessary condition for political freedom. The result is an accessible text that has sold well over half a million copies in English, has been translated into eighteen languages, and shows every sign of becoming more and more influential as time goes on.
- Rightwing hack spouts economic drivel
The only thing Milton Friedman has going for himself is that he says out loud what other reactionaries will only whisper.
Ayn Rand would have loved Friedman's disdain for the poor--for anyone, in fact, lacking the "initiative" famously shown in a 1963 cartoon in which Barry Goldwater stands in front of a poor person in a Southwest ghetto and says, "Why don't you show some initiative? Why don't you go out and inherit a department store like I did."
If you think the status quo was ordained by God, or that capitalism is the best that humanity can come up with, this book is for you. If not, start reading Trotsky, Lenin, and all the people with vision, compassion, and utter disgust for the sad mess that the fat cats have made of this planet.
- considering current events, he left something out!!!!
the title above says it all.
something missing in his considerations.
perhaps should include a chapter on human character and the greed that appears to run rampant in the higher levels of the economic ladder....more info
- Flawed from the beginning
If you accept Friedman's underlying assumptions his arguments seem logical. If you open your mind it's easy to take apart some of his suppositions and the rest of the book becomes a joke. It's important to examine this first point carefully because many of his assumptions later in the book rest on this point.
-One of my favorite arguments in this book (because it is so ridiculous) is the idea that capitalism is free because all exchanges or relationships made through the market are voluntary and benefit all parties involved.
As an example Friedman claims that if you work for a corporation it is a voluntary contract because if you didn't want to work for a corporation, you can just produce directly for yourself. Almost no one has the resources to do this. 90% of small businesses fail within the first few years. And why do 90% of small businesses fail? Because they have to compete with gigantic corporations who have 100,000's of times more resources (money, productive facilites, etc) and so can produce goods and services at a much cheaper rate and therefore put small businesses under. So what happens to that 90%, that tried to produce for themselves but failed? They are forced to sell their lives away, 8 (or more) hours a day.
Clearly, most people don't have a choice. If I don't work for a corporation (where I'll have to take orders and abuse from my bosses, do repetitve mind numbing tasks or physical labor that will end up shortening my life), then my family and I starve to death. So when I work for a corporation, it's not because that's where I want to work, its because i'm forced to. I'll be faced with a form of physical violence (starvation) if I choose otherwise.
Some of you may be saying 'so what?', we're forced by violence to work for a corporation? Even if a corporation was a wonderful place to work where you didn't have to take orders and abuse from your boss, capitalism still restricts freedom because it FORCES us to work there. It forces us to take orders from other people.
There are alternative ways of running an economy that allow for democracy and freedom, and that resemble neither Capitalism nor Communism. For more info, google "Participatory Economy" or "ParEcon".
-Friedman compares how both Capitalism and Communism can take away political liberty. He uses McCarthyism and the Blacklisting in the movie industry to demonstrate how capitalism will preserve freedom. He claims that even though these people had to go into hiding and weren't allowed to publish their work, at least they could find other jobs, which couldn't happen if there was no market. He then argues that eventually these people were allowed to make films again, and thus he says, when capitalism takes away freedom, at least it is not prohibitive.
Freidman misses the point here. Freedom to Friedman, only means economic freedom. Note that he claims that even though their political freedom to express themselves was taken away, at least they had the economic freedom to find a job. Here he is arguing that econmic and political freedom are one in the same, and they are obviously not. I'm sure the directors of these films felt very much prohibited. How elitist of Friedman to claim otherwise: he does not know how it feels to be severely censored as they were.
Capitalism does allow for political freedom at times. But when there is a crisis, when the capitalist system is threatened by a competing ideology, it will always use force to restrict speech. McCarthyism is just one example of this. Around the world, capitalism has always restricted free speech, but only when the elites in any country have been threatened. You could look at any Latin American country's history for an example (Pinochet's coup, as one example- when an attempt at socialism AND democracy was being made). ...more info
- Friedman's first book on the link between freedom and economics
This book is the first I had ever read by the late great economist Milton Friedman. I had first heard about him in an article by Ben Buranke I had to read for my economics class that had to do with monetary factors and the Great Depression. I had little idea that as I read more of what he wrote that he would have such a great impact on my way of thinking. It would be a stretch for me to see he changed my way of thinking. I have always been for free markets. However, I had always thought of capitalism as simply a means toward material prosperity while it was democratic political institutions and certain rights such as freedom of speech and of the press that were the sole means of measuring how free a society was.
In this book, Friedman explains that while democracy and civil rights are necessary for a free society, they aren't sufficient. This is especially true for the democracy part. He explains using many examples how capitalism is the best means available for achieving both material prosperity and human freedom.
The most striking example from this book is the hollywood blacklist case. Here were people that were discriminated against by the government because they were communists yet it was the economic system they seeked to destroy that allowed them to find work and continue to live free. Communists also were able to publish their works since the publisher only cared about making profit. He then asks how someone favoring capitalism could have published their views given the state is dominant over every aspect of life in a communist country. The book has some flaws but these are corrected in his more mature work Free to Choose....more info
- A fantastic book!
I picked up this book because I wanted to learn about Milton Friedman and also some economics. Most of the information I have gotten about Friedman were usually from third sources. And depending on a person's political persuasion, the critique was either laudable or damning. We live in a very politically polarized time.
What I discovered was a marvel. Friedman's writing and ideas were convincing and logical. There was no tinge of political right-wing rhetoric as I expected and his views were very well explained. Friedman came across as very reasonable and clear. I believe that he would have advocated an economic idea even if it strayed from his own beliefs as long as it worked.
One of his ideas that I did not know much about was school vouchers. One of the ways of understanding school vouchers is to use the G.I. Bill as an example: Soldiers returning from WW2 service were given higher education vouchers so that they could attend any university or college that they wanted to. The G.I. Bill helped educate a generation of Americans. Everyone benefited because having an educated workforce is to everyone's best interest. A skilled and educated workforce means better jobs and a better standard of living. School vouchers would work exactly like the G.I. Bill would have. Like G.I.'s, parents would receive vouchers and they could then decide where to send their children. Interestingly, many of my progressive friends get fired up against vouchers. But I believe it is because they think that it means that all schools would be privatized. Not so. Taxes would still be collected for public education but instead of funds going to a bureaucracy, it would go to parents instead.
Another piece of information that I found fascinating was Friedman explaining the cause of the Great Depression. I always thought that it was due to the stock market crash but this is only half the story. The stock market crash was bad but the biggest problem was the lack of action by the Fed. It constricted the amount of money in the economy and it also failed to act when banks started to fail: A role that it is supposed to take up and the reason that it was created in the first place.
The last big point that sticks out about this book is Friedman's careful warning about the dangers of crony capitalism. Friedman advises against government subsidies or tax breaks for select industries. Inevitably, these sorts of practices are not only unfair and onerous to taxpayers but they encourage monopoly and are always harmful to free-market forces and to consumers.
There are many, many subjects covered in this small book. Friedman packs more erudite learning into 200 pages than most others could in 500 pages. I feel like I have really learned something after reading this book. I highly recommend that you pick up and read this book if you are interested in economics and Milton Friedman. Don't depend on other sources when it comes to Friedman because as I have found out, they tend not to know about his ideas or are skewered by their political viewpoints.
- a must read for liberal progressives??
I'm a capitalist at heart. Capitalism is a wonderful thing. However, I do not believe in a laissez faire economy. I believe in the appropriate amount of regulations to keep the capitalist machine running at a healthy pace, but certainly not to the point of a state-run economy like the fairy town dreamed up by that crazy Marx and his cohort. With that being said, it is clear that I'm not in total agreement with Friedman's vision of libertarian government. Nonetheless, I do agree with his assessment on the relationship between freedom and capitalism.
My understanding of freedom and capitalism is that the two form a symbiotic relationship, as brilliantly and succinctly pointed out by Friedman. No true freedom and liberties can be achieved without the rewards from a capitalist socioeconomic structure. Similarly, capitalism cannot survive in a society where personal freedom and liberties are being oppressed. The intricate balance must be kept. If voracious capitalist practices are encroaching on freedom and liberties, eventually the capitalist socioeconomic structure will not sustain and will inevitably disintegrate and give way to the delusional communist tendencies and the collective madness that inescapably follows. So the protection of freedom and liberties must be paramount, not as a hurdle for the progress of capitalism, but as a fundamental arsenal for the very survival of capitalism.
This book should be read by all the progressives in the country. In a world where the religious rights are abusing the true meanings and intends of capitalism, the liberal minded should turn to the fundamentals of capitalism, and not slipping into the abyss of a communist quagmire. ...more info
- Friedman is best on Economics this is a must read
excellent read and should be a must for all college freshmen also should read "free to choose" by milton and rose friedman...more info
- Freedom's Torch and a Libertarian master
"A government big enough to give you everything you want, is strong enough to take everything you have." Thomas Jefferson (1743-1826)
(There are many topics to comment on in this book. First, I will comment on one general idea and one relevant issue: The stimulus package.)
Friedman, like many of our country's founders, did not trust the collective ability of government to avoid building concentrated power for itself. It is in its nature to aggrandize power by limiting the liberty of those that it is meant to serve. "Economic power is joined to political power, concentration seems inevitable...if economic power is kept in separate hands from political power, it can serve as a check and a counter to political power." (Page16) It is in governments political will to strengthen its power by pandering to populist sentiment and convincing enough of the people to forgo their liberties for guarantees and safety nets. "Underlying most arguments against the free market is a lack of belief in freedom itself." (Page 15) Playing on the misconception that large collective power is great enough to surmount all obstacles economic and otherwise. Or that government can take on a paternalistic role, treating citizens like lost children needing a strong hand to guide. Big and unwieldy governments inevitably give way to crony capitalism as it attempts to choose and favor some industries over others; an imbalance is struck that distorts the market making it unfavorable for those who do not have the resources to exploit the discrepancies: "Monopoly...arises from government support or from collusive agreements among individuals...the problem is either to avoid governmental fostering of monopoly or to stimulate the effective enforcement of rules such as those embodied in our anti-trust laws." (Page 28)
Therefore, government should remain as rule maker and umpire. Its role should be limited to overseeing that all elements should have the same rules applied appropriately across the economy. No favorites. Government should stick to enforcing laws and not using it as political patronage. In the long run, those groups and industries that allow its intervention and coercive tendencies will be undermining their own economic well-being for a short period of favoritism or paternalism.
Although this book was written decades ago, it still highlights issues that are relevant to us today. Our congress passed a stimulus package in the amount of $168 billion dollars several weeks ago. Many of our citizens believe that this "stimulus package" will ease the financial duress due to the slowing economy. The politicians that pushed for this package either really believe in its benefits or are simply buying populist votes: "Each recession, however minor, sends a shudder through politically sensitive legislators and administrators with their ever present fear that perhaps it is the harbinger of another 1929-33. They hasten to enact federal spending programs of one kind or another." (Page 76) Friedman addresses the issue of government "priming the pump" or attempting to serve as a "balance wheel" to offset reduced private expenditure: Reduce unemployment and get the economy going again by temporarily increasing government expenditures. By resorting to such poor measures, Friedman offers us a glimpse of our own likely economic outcome. More public debt and less likelihood of reduced taxes with no real long term solutions.
Throughout this book, Friedman details his observations on just how efficient a free private enterprise exchange economy can be. The subjects touched upon are free-trade, the role of government in education, social welfare, fiscal policy and other still relevant topics.
Milton Friedman's economic philosophy of free-markets, free-trade, and capitalism naturally extends itself into a more piercing discourse of the philosophy of freedom. Of course, Friedman is an economist and he sees, feels, and analyzes freedom through the devices that the discipline provides him. Except for a few notable exceptions there have been very few economists in the 20th century (and into the 21st) that have been able to use these tools with such magnificent skill and insight as Milton Friedman.
- The Hobo Philosopher
I hate to be so outspoken on a review of a book. But I find this gentleman elemental, childish and silly. On top of all of that I do not believe that he is entirely sincere. This man was a statistician and "accountant" not a theoretician. He actually won the Nobel Prize. This I find very hard to believe. I have not given up on him though. But I have yet to find anything that he has written that I can get past the introduction. The more I read of what he has to say the worse it gets.
PS - It does seem that the current state of affairs substantiates the above attitude. This guy was a puppet for the crooked establishment and an overall bad economic joke....more info
Friedman was America's preeminent economists that explained the connection between Political and Economic freedom without the signature econo-techno-babble that is the vernacular of lesser economists. This book should be REQUIRED reading for all high school, or at the very least, college students. I enjoyed it immensely and will be wary of "too many dollars chasing too few goods"! ...more info
- Milton Friedman, Capitalism and Freedom
At a current time of cynicism towards Democracy, (especially within the U.S. , with its liberal left wing professors teaching our college students to criticize capitalism, instead of helping them to understand how ideally it functions in preserving our individual freedoms), this book is a brilliant reminder that if we veer towards Socialism, as the Democratic party always does, it will lead to less incentive and less personal freedom, to create ones own life and successes, rather than having the government (strangers) redistribute our wealth. If strangers in the government decide for us how to regulate our wealth (sound like China with the starving farmers, or Russia with an undeveloped economy, comrades?), then we are less free to do with it as we please, or to develop freely and invest it in our own interests. Hence, less freedom, more servitude to a centralized government.
College students who are struggling to keep communist/socialist (left wing democrat) professors from turning them into weak, mindless,conformists and altruists, should read this book in their own spare time (as well as Ayn Rand) to continue to think for themselves and allow our system to reward and elevate those who do so, without taxing them more than those who do not....more info
- Boring and boring...Now I understand...
Now I understand how this illustrious liberal writer must have won so many people to his cause. The book is so boring, so repetitive, with such a bad writing, that maybe people agree with him fast, just for the sake of having his mouth shut up!
I see some points he tries to make, but mos of them are silly and naive. Maybe he would not have written this kind of thing had he wrote in our century......more info
- Capitalism and Freedom: A Free Market Perspective
Milton Friedman, the most influential economist of the 20th century, writing on the economic fundamentals of a free market economy in his book, "Capitalism and Freedom", demonstrates that government should be limited. Not only were his ideas relevant for his day, but they are remarkably relevant in today's deficit spending/ever growing government take over of the American free enterprise system. Milton Friedman shows you why a free market capitalist approach leads to the optimal balance between government involvement in the private sector and our individual liberties....more info
- Must have if you are interested in social science
This book is extremely important! Together with another classical von Hayek's "Road to Serfdom" and Amartya Sen's "Development as Freedom" it gives a basic argument for thinking about politics and economics.
In today's Russia both common people and scientists/politicians are involved in post-planned economy discourse. They look at the free markets as something chaotic, uncotrolled and therefore - bad. They are thinking in terms of state intervention and paternalism and that's a big mistake.
This book won't give concrete recipies for recovey in transitional or developing countries. But it will give a framework for thinking about resource allocation, taxation and spending, monetary policy and other stuff from the right point. A point where free society stands....more info
- Highly Recommended!
This is a new edition of Milton Friedman's classic 1962 capitalist manifesto. As such, it was ignored, spurned and hated for decades by the intellectual, post-Keynesian establishment. In the 60s, Friedman once found himself debating a liberal who attacked him by simply reciting Friedman's views of the proper role of government. This was working rather well with the audience of college students until he quoted Friedman's opposition to the military draft. Friedman suddenly found himself awash in the unexpected cheers of students. Perhaps it was a foreshadowing of his career. Friedman won the Nobel Prize in Economics in 1976, and his ideas gained some degree of mainstream acceptance in the Reagan years - although many of his thoughts remain controversial. To the extent that Friedman debunks myths about the Great Depression that are widely accepted as fact, perhaps he has a point about the semi-privatization of education. We strongly recommend this volume to those who seek a deeper understanding of government's role in a free-market economy....more info
- Unanimity Without Conformity
I received Capitalism and Freedom as a gift from an admissions officer at the University of Chicago. At the time, I was a 17 year-old kid in high school applying to U of C, which of course, is the University where Milton Friedman taught. After several failed attempts to read it, I left the book to gather dust in my bookshelf for several years, and only recently picked it back up. What I found is a book that I should have read many years ago. Mr. Friedman's philosophy is essentially the philosophy of free-market advocates even today, almost fifty years after Capitalism and Freedom was first published.
The author provides a list of fourteen activities that the U.S. government was engaged in the early 1960's, and which it should immediately stop performing in order to allow the country to become a true Capitalist nation. This list of activities includes trade restrictions, public education, and agricultural subsidies among others. In fact, the later chapters of the book are mostly devoted to explaining why the American government should seize to perform the aforementioned activities.
I believe that the first two chapters are by far the most interesting and insightful in the book. Here are a few of my thoughts on the first couple of chapters of Capitalism and Freedom:
Chapter 1 - Relation between Economic Freedom and Political Freedom
Friedman contends that the primary function of government in fiscal matters is to coordinate the economic activities of its citizens. There are two fundamental methods in which a government can achieve this. The first is through central direction, that is, through big government and/or military efforts. The second, which is of course the more desirable of the two, is to identify and enforce the rules of engagement by private citizens in a free market. Moreover, the latter method would allow individuals to acquire economic power (i.e. wealth), which in turn offsets political power. It is this essential relationship between economic and political powers which allows for the maximum freedom of a nation and its people.
Chapter 2 - The Role of Government in a Free Society
In Chapter 2, the author further expands on the principles laid out in Chapter 1 and lays out perhaps the most insightful notion of the entire book, which is, that "...the role of the market...is that it permits unanimity without conformity." In essence, Friedman is arguing that only a free market, and not the government, allows individuals to achieve the maximum amount of freedom. This is obviously an indispensable role in a society where freedom is the most desired quality of life value.
The remaining chapters in the book break down as follow:
Chapter 3 - The Control of Money
Chapter 4 - International Financial and Trade Arrangements
Chapter 5 - Fiscal Policy
Chapter 6 - The Role of Government in Education
Chapter 7 - Capitalism and Discrimination
Chapter 8 - Monopoly and the Social Responsibility of Business and Labor
Chapter 9 - Occupational Licensure
Chapter 10 - The Distribution of Income
Chapter 11 - Social Welfare Measures
"Humility is the distinguishing virtue of the believer in freedom; arrogance, of the paternalist."
Chapter 12 - The Alleviation of Poverty
Chapter 13 - Conclusion
I do not give Capitalism and Freedom a rating of five stars, because of two major factors. First, the book is definitely outdated to the point that it is hard to ignore in some chapters. Moreover, as has been stated by other reviewers, Capitalism and Freedom does not go in depth on many of the key issues of interest in the book. It appears that Mr. Friedman provides a more comprehensive evaluation in Free to Choose, but I have yet to read that book.
I do, however, rate the book as 4+ stars and recommend it as necessary reading to any person interested in Economics, Politics and/or Philosophy. It is also a good book to read and own for the casual reader. ...more info
- Not laissez-faire enough
"Personally I'm in favor of democracy, which means that the central institutions in the society have to be under popular control. A democracy where people have a say over decisions TO THE EXTENT they are affected by those decisions.
Now, under capitalism we can't have democracy by definition. Capitalism is a system in which the central institutions of society are in principle under autocratic control. Thus, a corporation or an industry is, if we were to think of it in political terms, fascist; that is, it has tight control at the top and strict obedience has to be established at every level -- there's a little bargaining, a little give and take, but the line of authority is perfectly straightforward.
Just as I'm opposed to political fascism, I'm opposed to economic fascism. I think that until major institutions of society are under the popular control of participants and communities, it's pointless to talk about democracy. Participatory economics (PARECON) is the way to go.I'd love to see centralized power eliminated, whether it's the state or the economy, and have it diffused and ultimately under direct control of the participants. Moreover, I think that's entirely realistic. Every bit of evidence that exists (there isn't much) seems to show, for example, that workers' control increases efficiency.
A corporation is a form of private tyranny. Its directors have a responsibility to increase profit and market share, not to do good works. If they fail that responsibility, they will be removed. They have some latitude for public relations purposes, and the talk about corporate responsibility falls within that territory. But it makes no sense to regard them as benevolent institutions, freed from their institutional role. It is a public responsibility to enforce decent behavior.
What is called "globalization" is a specific form of international integration, designed and instituted for particular purposes. There are many possible alternatives. This particular form happens to be geared to the interests of private power, manufacturing corporations and financial institutions, closely linked to powerful states. Effects on others are incidental. Sometimes they happen to be beneficial, often not.
What is called "free trade" has highly protectionist elements. What is at issue are investor rights agreements, not free trade. The protestors, including the AFL-CIO, have good reasons to oppose investor rights agreements that insist on very high protection for property rights (often resulting, in fact, from taxpayer subsidy), but little or no protection for the rights of flesh-and-blood people, including rights of working people -- both in the US and in other countries. That's not oppostion to "free trade." It is worth remembering that the press has refused even to permit the official positions of the labor movement to appear. Thus during the NAFTA debate, the labor movement had a clearly developed position, not opposed to a NAFTA, but opposed to this particular version. Its analysis and proposals happened to be rather similar to those of Congress's own research bureau, the Office of Technology Assessment. But while the labor movement was constantly berated on false grounds, its actual position was never reported. The observation generalizes.
There was a brief experiment, a very brief experiment, with something more or less like capitalism, not really but partially, really free markets, and it was such a total catastrophe that business called it off because it couldn't survive, and there were moves in the late 19th century to overcome these radical market failures and they led to various forms of concentration of capital: trusts, cartels, and others, and the one that emerged was the corporation in its modern form. Soon after corporations were granted rights by the courts. They gave them the rights of persons, meaning they have the right of freedom of speech, they can propagandize freely, advertise, they run elections and so on, and they have the protection from inspection by the state authorities which means that just as the police technically can't go into your apartment and read your papers, the public can't find out what's going on inside these totalitarian entities.
They're mostly unaccountable to the public. Of course they are not real persons, they are immortal, they are collectivist legal entities. In fact they are very similar to other organizational forms we know and are one of the forms of totalitarianism that developed in the 20th century. The others were destroyed, these still exist, and later they were required by law to be what we would call pathological in the case of real human beings.So they are required legally to maximize power and profit no matter what effect that has on anyone else. They are required to externalize costs, so if they can get the public or future generations to pay their costs, they are required to do that. It would be illegal for corporate executives to do anything else.
By now, in what are called trade agreements, which have nothing much to do with trade, corporations are granted rights that go way beyond the rights of persons. They are granted the right of what's called "national treatment." Persons don't have that right. Like if a Mexican comes to New York, he can't claim national treatment, but if General Motors goes to Mexico, it can claim national treatment. In fact corporations can even sue states, which you and I can't do.So they're granted rights way beyond persons.
They are immortal, they are extraordinarily powerful, they are pathological by legal requirement, and that's the contemporary form of totalitarianism. They are not truly competitive, they are linked to one another. So Siemens and IBM and Toshiba carry out joint projects. They rely heavily on state power; the dynamism of the modern economy comes mostly out of the state sector, inot the private sector. Almost every aspect of what's called the "New Economy" is developed and designed at public cost and public risk: computers, electronics generally, telecommunications, the internet, lasers, whatever...Take radio. Radio was designed by the US Navy.
Mass production, modern mass production was developed in armories. If you go back to a century ago, the major problems of electrical and mechanical engineering had to do with how to place a huge gun on a moving platform, namely a ship, designing it to be able to hit a moving object, another ship, so naval gunnery.
That was the most advanced problem in metallurgy, electrical and mechanical engineering, and so on. England and Germany put huge efforts into it, the United States less so. Out of associated innovations comes the automotive industry, and so on and so forth. In fact, it's very hard to find anything in the economy that doesn't rely critically on the state sector.
People like Friedman often talk about how "things have improved" under capitalism. One could say the same thing about slavery. A slave in 1850 was better off than a slave in 1750.Is that a justification for slavery?
After 1917 Russia underwent very significant economic growth, is that a justification for bolshevism?
Throughout the 30's Hitler was probably the most popular leader in German history. He understood (like the US during WW2) that massive state expenditures can rescue a morbid capital economy from collapse. The economy was booming and Germans were living a lot better. Is that a justification for fascism?"
It's obvious that you know very little about economic facts. In a free market with private property rights (which themselves are nothing more than a natural extension of personal property and individual rights), businesses and all individuals only make a profit from providing people's wants and needs. Corporations may have a duty to shareholders, but that duty is ultimately to create good products that people will actually buy with their own hard-earned money. Capitalism (which itself is nothing more than a system of individual rights) as a result is democratic, because those companies that help the most people are the ones that get a profit. Compare this to all other forms where people are forced to pay and work for someone or something irregardless of whether hold up their end of the bargain (like how Americans are forced to huge taxes to public school systems despite a constantly iferior performance when compared to private "capitalist" schools that spend far less on each student, yet perform a superior job). Capitalism works by trade and consumer demand. Not the other way around. And businesses can't drive a competitor out who may provide for consumers more, unless it has the government impose regulations and other such things upon the competitors.
You're right that many free trade agreements aren't really "free trade", but this is the fault of the state the those that often do democratically elect them (kind of like how people democratically elected Bill Clinton twice, who actually signed the NAFTA), not of the actual free market. Consumers acting freely often have greater control over the economy than participants in a democracy. Plus, participants in a democracy aren't often aware of the things that a business has to cope with, such as the actual transaction costs, scarcity, and other things. If workers' directly controlling a business actually was more efficient, then they would be far more successful and famous than Wal-Mart, Ford, and others (due to consumer demand), but the simple fact is that all humans aren't created equal. Sure we should have equal treatment under the law, but we all have different skills, abilities, knowledge of certain costs that relate to decisions, different ways of organizing our time, etc.
Also, fascism (an offshoot of socialism) destroyed much of the German economy during the 1930's and 40's. The reason Hitler was so popular was because he was able to find a scapegoat in many groups, including Jews (many of whom were capitalist businessmen) rather than the State itself. Also, while Milton Friedman is right in many respects, it was largely incomplete. The Austrians tended to fare better though as one of Mland those of you decrying things like the WTO, IMF, and other such things that have caused economic instability the world over, those things are State, not market institutions. They are a result of interventionism, not laissez-faire.
As for not having democracy in capitalism. Full, unfettered economic democracy results in the absolute loss of civil liberties as well as the loss of a distribution of responsibility and power, thus creating a plutocracy. The people cannot control and run a government that they have given the power to control and run them instead. Pure social democracy is inherently illogical and impossible.
Friedman isn't without his faults though. His school-voucher scheme is just plain market-socialism really that has helped destroy the independence of many private schools and he has nothing but kind words to say about the Federal Reserve and the banking industry as all Chicagoites do. This is where the Austrian school of economics fares much better. Ron Paul himself, a presidential candidate has gained immense popularity for pointing out he destructive nature of the Federal Reserve on the poor and middle classes. Let us also not forget that it was the Chicagoites that gave us the witholding tax, so that us workers can't see how much of each of our pay check is actually taken out each month. Sadly, much of Milton Friedman's ideas have been somewhat distrous to say the least. A much better treatise to read on capitalism is would be one of the following:
Man, Economy, and State with Power and Market by Murray N. Rothbard
Human Action by Ludwig von Mises
Healing our World in an Age of Aggression by Dr. Mary J. Ruwart...more info
- Enemy of Left-Wing Hacks Wrote Classic!
One of my faves. Friedman was one of the best. Also read THE ROAD TO SERFDOM by F. A. Hayek.
As for Reviewer T.A. Turner: the good news is that your lobotomy IS reversible. There are a lot of brilliant ex-Marxists about these days. Reading Thomas Sowell for starters just may restore your mind. Of course, if it's your heart that's the problem....
Putting forth a man like V.I. Lenin who said:
"It would not matter if 3/4 of the human race perished; the important thing is that the remaining 1/4 be communist"
---as an paragon of "compassion" is truly pathetic!
Yeah, the "compassionate" followers of Marx, Trotsky, Lenin, Mao & Pol Pot have thus far "liberated" by mass murder between 95 and 150 million souls. Purges, Pogroms and Killing Fields! No other political party in human history has shed so much blood in the space of a single century. And Mr. Turner's colon is is knots over a Goldwater cartoon! Give me a break....more info
- Challenge what you *know* about government and economics
I purchased this book because I wanted to know more about economics, but other than a few rudimentary courses, I did not know much and I had heard Milton Friedman was good at explaining economic concepts to non-economists. Indeed, Friedman is very good at explaining the concepts he discusses at a level for lay people. That does not mean you will easily get all the concept in this book, I did need to reread passages to understand some of his points. What I found surprising and refreshing in this book is that the ideas are opposite of what I've been taught throughout my schooling (like the great depression was caused by the stock market crash). Whether you think his ideas are good or not, or whether you agree with him, I think the truly intellectual mind should be able to consider his ideas - and the basic tenet that capitalism, even though it has a number of problems, insures the greatest freedom and that government reduces freedom. I would have, until reading this book, assumed without thinking too hard, that public schooling was necessary and that doctors need to be liscensed. This book challenges you to think about what government's purpose is, and whether it regulations are helpful or hurtful and how best to achieve freedom. I found this book so interesting I purchased Free to Choose, which is basically and expansion of the ideas in this book, with a few extra topics and easier to understand examples. I would recommend this book strongly and intend to purchase more books by Milton Friedman in the future....more info
- The case for capitalism by one of the brightest economists of modern times
I picked up this book as a beginning of an attempt to self-educate myself on the topic of economics. Maybe it is not the best place to start for a novice, but I did thoroughly enjoy the book. Dr. Friedman makes a compelling case for capitalism, which has been under so much assault by academia, popular culture and the media. Friedman explains why capitalism works, as opposed to government intervention in the economy, in a compelling and concise book. At times, some of the concepts went over my head, but for the most part this was attainable for the beginner. I strongly recommend this book and intend to take a shot at more of Friedman's books. ...more info
- Fifty years old and still truly refreshing
Five decades on, Friedmans thoughts of the functioning of the economic and political life, are still mind-blowing. Written in a clear and powerful language, the points are well made after logical discussions of some important issues facing all societies.
The main theme in the book is the close link between democracy and capitalism, or political freedom and economic freedom. Without the latter the former is very difficult. The Hollywood blacklist threatened the freedom of many film workers. However, the movie companies desires to make money gave them incentives to hire the blacklisted writers, producers and actors, and the workers got to work because of capitalism. Conversely, Winston Churchill never got to speak against Hitler on the government owned BBC between 1933 and the outbreak of WWII.
Throughout the book, Friedmans belief in the individual and his abilities to take care of himself stands as a lighthouse. However, because man is imperfect, and cares mostly of himself and the closest ones, often disregarding others, power should be dispersed as much as possible. Those two propositions are the bedrock of the conservative ideology (Friedman calls it liberal, furious that the left has stolen the term), and of this book and its attacks on ICC (a regulating body turning into a lobby organization), Social Security (why is the government monopolizing saving), counter-cyclical economic policy (impossible), corporate social responsibility (not a corporate issue), the Medical Association (modern guild restricting the education of doctors) and a range of other organizations and institutions.
In general, I think Friedman is giving to little weight on neighborhood effects, or public goods as it is called now. Nor is the fact that most human beings are irrational shortsighted, and therefore better off forced to save for later, touched upon. At last, information problems make several markets, among them education, far from perfect. Still, its one of my best reads of the year....more info
- Brilliant writing from Friedman
This book really needs no introduction. Should be recommended reading for all university students. ...more info
- Like him or not - important to know
Overview / Review: Milton Friedman, like him or hate him, is an essential economic theorist to tackle if one is interested in that field or in theories of economic justice. Having a progressive bias, I disagree strongly with many Friedman's theories. Having said that, for anyone interested in getting the essentials of his "liberal" (used in the older, more classic sense) economic views would do well to read this book. Friedman is opposed to state intervention in individual freedom, so many see Friedman as a modern counterpart to Adam Smith. Friedman advocates a free-market economy, with minimal taxation and government interference, because he believes the free market approach assures the greatest measure of freedom, justice, and overall affluence. Many modern conservatives have echoed the arguments he makes herein.
Friedman is actually convincing in his review on a few counts - the abuse of licensure, the problems of tax loopholes, and the fact that there are frequent shortcomings of the well-intended social welfare state. Having said that, however, Friedman does seem unduly biased in favor of a society so individualistic it is therefore almost atomistic, with little to no social cohesion. Some of his arguments are more assertions and claims than full-blown arguments, and one wishes he had addressed major issues in more detail (perhaps he does elsewhere). The book's virtue is that it is brief, but its weakness is also that its arguments are often too brief, and too compact. Karl Marx for example, has many faults in his theory that can be found, but Friedman too casually blows off Marx in about one page of analysis (Chapter 10, p. 167-8). Friedman's argument for a very limited government, and against socialism/communism, would have been more convincing if he had devoted a full chapter to Marx for one, and more attention to other matters of social justice, inequality, and oppression.
In a nutshell: this book encapsulates Friedman's "liberal" or laissez-faire approach to a wide range of issues on economics, government, and capitalism. The free individual is given utmost importance, and government that governs best is that which governs (or interferes) least in his Friedman's view. Not convincing from the standpoint of those interested in progressive social justice (Niebuhr's views on selfishness and power are more cogent), but essential to read and analyze if one is interested in economics and ethics....more info
- Free to Choose is a better read.
While I believe Milton Friedman was an intelligent person with some views that are highly intellectually stimulating even when I disagree with them, this is definitely not his best work. Capitalism and Freedom is unnecessarily brief and therefore, the arguments Friedman makes come off as overly simplistic and lacking any real depth. If you're looking for a better read by Milton Friedman, read Free to Choose. The arguments in Free to Choose are much more detailed and therefore, more convincing....more info
- An Important Political Philosophy in Need of Updating
Milton Friedman, Capitalism and Freedom (University of Chicago Press, 1962 ).
Capitalism and Freedom is the product of a lecture series given by Milton Friedman in 1956 and published in book form in 1962. It is Friedman's greatest work in political philosophy, and it may take its place in history beside side the works of Hobbes, Hume, Locke, and Mill. The past half-century has produced nothing else of its caliber in the realm of political economy. Friedman's intellectual mentor, Friedrich von Hayek, wrote important works in this area in an earlier period, but his writings are today mostly of historical interest except to the expert. Capitalism and Freedom vibrates with life and relevance, and may do so for a very long time.
Friedman has some difficulty in applying a name to his brand of political philosophy. He does not like `conservative' because he advocates change, not a return to the past. He balks at `liberal,' because he might be confused with his greatest enemy, American big-government social democracy, which calls itself `liberal.' In the end, he opts to call his position `liberal' because of its affinity to and inspiration by the classical English liberals, Locke, Smith, and Mill. I think a better term might be `classical liberal.' I am told that in his later years, Friedman identified with the libertarian movement, and indeed several of his policy suggestions have a distinctly libertarian flavor. But he is no libertarian.
In this review, I will sketch the most sophisticated social democratic (i.e., modern liberal) position that Friedman so cogently criticizes in this book, ably represented by the classic statement of Robert Dahl and Charles Lindblom', Politics, Economics and Welfare, 1953. I will then outline and assess Friedman's position, and finally present what I believe to be the correct position, which we have the privilege to formulate on the basis of the above brilliant contributions and some sixty years of historical experience.
According to contemporary economic theory, under the appropriate conditions, a decentralized market economy is the "best of all possible worlds" in the sense that every market equilibrium is economically efficient and any feasible distribution of income and wealth can be attained by a suitable initial distribution of the ownership of resources, followed by market competition. This is called the Fundamental Theorem of Welfare Economics. There are two practical problems with this theorem. First, in practice in a private property society, we cannot simply redistribute ownership by arbitrary fiat to achieve egalitarian goals, however democratically constituted. Thus, a private property market economy may inexorably generate social inequalities, and there may be legitimate successful mechanisms for achieving egalitarian ends through means other than the wholesale redistribution of private wealth (e.g., progressive income taxation and estate taxation). Second, real economies have certain "market failures," causing the Fundamental Theorem to fail. Among these are externalities, such as pollution and atmospheric warming, caused by the fact that unregulated firms do not pay for the damages they cause to the environment. Other sources of market failures include natural monopolies based on increasing returns to plant size or the public good nature of the product, such as national defense and power generation, that undermine the competitive process, because unregulated markets lead either to no production at all, or to a single firm driving out all others in the industry. The modern liberal position, supported by contemporary economic theory, is that the state should step in to correct these market failures, and thereby maximize social welfare.
Because there are in fact many varied forms of market failure, the modern liberal political philosophy offers no protection against the emergence of a huge state sector with its power reaching deep into the system of private production, consumption, and exchange. Moreover, correcting market failures is much more difficult that it appears at first light, and there are often "state failures" prevent effective intervention. Thus, it is often is better to endure the market failures we have than to apply state interventions that aggravate rather the mitigate the market failures (e.g., state regulatory commissions are often captured by the industry itself and used to private advantage). It is this possibility of pervasive state failure that motivates Milton Friedman's critique and alternative.
Friedman's major thesis is that there is an "inescapable connection between capitalism and democracy" in the sense that not only do the two forms of decentralized popular control have an elective affinity as forms of democratic empowerment, but also unconstrained governmental power to supplant the market undermines political democracy and ultimately leads to dictatorship. Capitalism, then, is a prerequisite for freedom.
Friedman's minor thesis is that the role of government in a free society is properly limited to maintaining law and order, preventing coercion of one individual by another, enforcing private property and contracts, and providing for the common defense and a common monetary system. Friedman is not an unwavering ideologue on these points, and freely admits that when a society has social goals that cannot reasonably be satisfied through decentralized market activity but can be accomplished through government intervention, then it is legitimate to attempt a solution through political channels. He counsels, however, that when the unintended consequences of market interference are taken into account, there will be few cases in which such intervention will be indicated. Moreover, when it is indicated, the most effective intervention is likely to be one that maximally depends upon the market and decentralized decision-making for its implementation.
Friedman gives several arguments in favor of his major thesis. The first is that economic freedom, the ability of consumers to buy and sell whatever they think best meets their needs and furthers their goals, is a "component of freedom properly understood," (p. 8) and hence its abrogation is a curb on freedom. For instance, if the government imposes a quota on a good that I would like to purchase but cannot because its price has become prohibitive, my personal freedom is curtailed. Similarly, if the government forces people to use the government-provided postal service, then my freedom to set up a competitive business in competition with the government service is curtailed.
This argument has been criticized on the grounds that an interventionist government that increases the purchasing power of the less-well-off increases the economic freedom of the overwhelming majority of citizens, so the only individuals hurt by such an intervention are the relatively well-off, who are least damaged by restrictions on their economic freedom. This is a be a manifestly reasonable counter-argument, so Friedman's position is plausible only if government interventions are unlikely to improve the purchasing power of the less well-off, which is a clearly empirical matter. While there is some dispute over the matter, it appears that that, at least for some period of time after WWII, European social democracies effectively redistributed income away from the rich. Thus Friedman's "economic freedom" argument is tenuous. Nevertheless, some state interventions, such as prohibiting private mail delivery services, do fall clearly under Friedman's critique of illegitimate state interference.
Friedman's second argument is that the ability of government to intervene at will in the market economy directly threatens political democracy by limiting the ability of citizens to assess government behavior and to dissent from the practices of the current regime. For instance, if the government controls who can and cannot be hired, this power can be used to impose penalties on its political enemies. For instance, the US government after WWII forced the movie industry to blackball writers and actors who were considered political enemies, thus curtailing the political freedom of American Communists and their "sympathizers." This may seem reasonable given the threat Communism posed to liberal democracy (I actually do not agree with this position), but the same methods were used to criticize and smear opponents to the Vietnam War and many other legitimate political groupings. A sufficiently powerful government can also refuse to allow citizens access to the communications media by closing down oppositional newspapers, radio, and TV stations, thus effectively threatening those who disseminate information to conform to the current regime's preferences.
Friedman also argues that a strong market economy creates a powerful basis for the decentralization of power, as the wealthy on the one hand, and masses of citizens on the other, have the means in a market economy to mount an effective opposition to arbitrary state power.
I believe Friedman's argument here is very strong. Some would argue that the tendency for state economic power to undermine political democracy can be adequately curbed by an effective system of civil liberties and a secure separation of powers between executive, judicial, and legislative branches of government. This is a speculative argument with little in the form of supporting empirical evidence. I would argue that the threat that the government monopoly of economic power has to erode civil liberties and the separation of powers is too great to entertain any economic-political system that includes massive undermining of the private market economy.
Friedman has rendered plausible that the diversification of economic power away from the state is an integral element of political and civil freedom. This is Friedman's most important contribution to political theory, and it rivals the pronouncements of the great political philosophers of the past. Of course, one can find echoes of Friedman's position in the classical literature (e.g., Locke's critique of Hobbes' defense of monarchy), but I have found nothing as persuasive as Friedman's argument.
Of course, capitalism is not the only economic system that places economic power outside the all-powerful state. A system of worker controlled firms, each the owner of its own capital stock, is an obvious alternative, as is a system in which local communities own the capital stock and control local industries is another. However, after having spent several years attempting to implement such alternatives, I have come to the conclusion that these are not viable alternatives to capitalism (Samuel Bowles and Herbert Gintis, Recasting Egalitarianism: New Rules for Communities, States, and Markets, 1999). It is worth continuing to explore alternative effective mechanisms for the separation of economic and political power. However, until such an alternative is found, capitalism, accompanied by strong constitutional limitations on the government to intervene in the economy, and accompanied by a separation of powers and a healthy federalism that confers upon local regions fundamental and inalienable powers, all qualities of the US system of government, is the most conducive to human freedom among the forms of government that we know.
Friedman support his minor thesis by arguing that the consumer sovereignty promoted by the market economy allows all individuals to achieve their preferred outcomes at the same time, without the need for all to submit to the same allocations through political fiat. In other words, the market "permits unanimity without conformity." (p. 23) Friedman's argument, based on the efficacy of the market system rather than a notion of the "inalienable rights" of citizens to unrestricted voluntary exchange, is both flexible and defensible. It allows the government to intervene, for instance, when market failures render market allocations socially costly, and it allows the government to outlaw markets in, say, body parts, recreational drugs, sexually exploitative literature and videos, and the like.
The most important fact about Friedman's minor thesis is that the general notion that the free enterprise system, as opposed to economies where the economy is basically run by the state (e.g., state socialism) has proven to be absolutely, incontrovertably correct. For an extended empirical argument to this effect, see Andre Schleifer, "The Age of Milton Friedman," Journal of Economic Literature 47,1 (2009), pp. 123-135.
The free-market era really began on a world scale in about 1980, coinciding with the election of Margaret Thatcher in England, Ronald Regan in the US, and the Deng Xiao Ping market reforms in China. World per capita economic growth, which had been very slow in the post-WWII period, began to rise at a 2% rate in 1985, continuing through to receont years. Moreover, this growth was confined to countries with free market ecconomies, which excluded most of Africa and the Middle East. Russian economic growth accelerated about a decade later, coincident with its era of market reform. Ireland's spectacular economic growth, for instance, can be completely attributed to its free-market reforms.
However, Friedman is not content to criticize state socialism and traditional non-market economies. He uses his political philosophy, in particular his minor thesis, to make quite specific policy recommendations within a fundamentally market-oriented economy (pp. 35--36). The remainder of the book is an elaboration upon these recommendations. The most serious indictment of Friedman's political philosophy is that many, if not most, of these recommendation, have been systematically violated in the USA in recent decades, and the results have be overwhelmingly positive and supported by the vast majority of Americans. This indicates that Friedman's minor thesis is in need of serious recasting if we are to accept it at all.
The first four of Friedman's fourteen explicit recommendations are largely valid and supported by our experience in the past sixty years. These express opposition to (a) price supports; (b) quotas in international trade; (c) government control of output; and (d) rent control. Similarly, his thirteenth proposal, which would allow competition in the delivery of the mail, seems eminently reasonable, as does the eleventh, which advises against conscription into the military in peacetime. However, the remaining eight recommendations are prohibitions on measures that in fact have proven to be strong contributors to the well-being of citizens, and enjoy widespread popularity.
Some of Friedman's recommendations seem doctrinaire to the point of being frivolous. These include his opposition (point seven) to regulation of radio and television speech by the FCC, his critique of state licensing of professionals (point 9), and of state control of National Parks (point 12) and toll roads (point 14). Of course, these state practices can be misused and overused, but they surely have a legitimate place in the good society.
Perhaps the most dramatic of Friedman's recommendation in the current environment, which in 2009 characterized by severe economic instability set off by a massive financial failure in the housing sector, is Friedman's sixth point: prohibition against the "detailed regulation of banking." There has been a large general increase in the amount of financial regulation since Friedman wrote in the 1950's, and most students of the subject believe that this body of regulation has contributed critically to the stability and efficiency of the financial sector. Virtually all experts today, fairly independent of location in the political spectrum, hold that to avoid a reoccurrence of our current crisis, there must be increased financial regulation, and many believe the current financial failure was caused by loosening of financial regulation in the preceding period., Of course, another part of Friedman's sixth point is the inadvisability of detailed regulation of industry, especially by the Interstate Commerce Commission. Here Friedman appears to be correct: the loosening of Federal restriction on trucking, aviation, and communication has been salutary.
Friedman's eighth point is that the social security system should be eliminated. This has not happened either in the USA or in any other industrial democracy. Social security programs, in which individuals are obligated to save for their retirement years, are popular among electorates, and modern behavioral game theoretic empirical results explain clearly that excessively short time horizons (excessive in the sense that individuals later would prefer to have saved more earlier) lead most individuals to undersave for the future, thus justifying public social security systems (justify in the sense that individuals will vote to have this system, even though it restricts their own personal saving decisions).
Another of Friedman's proposal in the same vein is number ten which says that the government should not promote home ownership. Most students of the subject believe that the high frequency of home ownership achieved through mortgage availability and preferential tax provisions have contributed positively to the health of communities and a high level of local community political and social activity. Home ownership is a positive externality for local communities because individuals are more active in community affairs when they are home owners, if only because the value of their property is strongly affected by the quality of community life.
Surprisingly missing from Friedman's list is the prohibition of laws creating artificial monopolies in general. I assume this is an oversight, because Friedman devotes the whole of Chapter 8 to this issue. I believe the classical liberal opposition to collusion in the restraint of trade is one of its most powerful principles. Concerning business, it was Adam Smith who said "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices..." Friedman's position on labor unions (pp. 121ff) is that they are a similarly undesirable monopoly, but they have limited power in a competitive economy.
It is clear, then, that Friedman's minor premise is wrong. It is not systematically wrong, but rather, somewhat like the proverbial broken clock that is correct exactly two times a day, it is randomly right and randomly wrong.
What, then, is the proper framework for assessing the proper role of government in liberal capitalist society? I believe that the following issues are central. First, the comparative advantage of the state is its monopoly of the means of law-making and coercion, so the state should fix and regulate the rules of the game according to which the private economy operates. This implies that the government should not enjoy a monopoly in the production of anything that could not be produced through the competitive market process. This means, for instance, that the government can legitimately provide universal health insurance, but it cannot monopolize the delivery of health care. Similarly, the government can guaranteed the funding of the educational system, but it should not run schools unless these schools are forced to compete on an equal footing with privately run, for-profit or non-profit schools. This implies that voucher school systems should be the rule.
Second, the state should not interfere in the competitive market system unless there are clear and recognized market failures, of the sort that are fully analyzed in standard economic theory. In particular, the state should not create natural monopolies that favor particular groups at the cost of the general public. This means, for instance, that laws favoring labor unions' ability to collude in the restraint of trade should not be countenanced. This does not imply the abolition of labor unions, but rather prohibits them from colluding across individual firms. The general protection of the rights of workers can be adequately addressed through general laws, including minimum wage and occupational safety and health laws, that apply across the board to all workers. Most important, public sector unions with bargaining rights should be prohibited.
Third, when there are market failures, such as externalities, creating problems of urban zoning, environmental pollution, and the like, and natural monopolies, such as national defense and power generation, there is a prima facie case for active government intervention. However, what has been called "state failure," meaning the tendency for the state to act on behalf of special interest groups rather than the public as a whole, can render such interventions undesirable in many cases.
Finally, the state has the right and the duty to intervene in the private economy to protect and enhance the rights of those who are incapable of protecting themselves. This includes the young, the elderly, and individuals with physical or mental incapacities, although only when laws enhancing the power of private charitable interventions prove insufficient. In particular, the state should have great power to eliminate poverty, which I define roughly as a situation in which a fraction of the population are born into situations in which they lack the means for full self-development and healthy participation in social life.
I suspect that I am missing some central principles for a defensible alternative to Friedman's irreparably flawed minor premise, and I invite other readers to offer additions and corrections.
- The More Things Change the More they Stay the same
It is amazing how little has changed in our political dialogue in the 40+ years since this book was written. Friedman had chapters about social responsibility of business, taxes and incentives, free trade, vouchers and the role of government in the education system, and "fair" distributions of income, and trade protectionism to protect domestic industries and workers from "unfair foreign competition."
Friedman compellingly argues that Capitalism is the best means of promoting freedom man has yet devised. He observes that "underlying most arguements against the free market is a lack of belief in freedom itself." People who speak of failures of the market are generally actually referring to market outcomes that are inconsistent with their views of propriety.
He makes the telling point that politics forces conformity in decision making. Some form of majority decides issues, making that decision binding on all. Market forces "reduce strain on the social fabric by rendering conformity unecessary." It seems obvious then that the more decisions we leave to individuals, the more free we will be as a society.
I found it interesting that much that Friedman is criticized for is done on fallacious grounds. He very clearly sees a role for government. Government should do the things the market can not do for itself. The most important of which is enforce the rules of the game and adjudicate disputes over the interpretation of those rules. Further, government can be profitably involved when neighboorhood effects, or externalities are present. He rightly cautions against the continued extension of neighboorhood effects, often just an excuse for a group looking for a special dispensation.
He cautions us that one of the things we should fear most is the concentration of power. This is especially relevant today, given the continuing expansion of our Federal Government.
He makes the interesting point that high marginal tax rates are impediments to becoming wealthy rather than a tax on being wealthy. This is right on the money and may help to explain why Americans of all income groups are opposed to very high marginal tax rates on income groups above their own. This is something the left should take note of. I also found his point that very high tax rates caused the wealthy to be much more risk averse to be quite revealing. The wealthy of the time properly perceived that with high marginal tax rates the wealth they had was all the wealth they would ever have. When Washington took 91% of your marginal income the odds were low that you would ever recoup a significant capital loss. I don't think it is a coincidence that as those rates have dropped the American economy has grown faster and become the premier innovator and new business developer in the world.
Finally he has some interesting observations on the motivations of the egalitarians in society. He draws a great distinction between equality of rights and equality of outcome. The left insists on the latter, he feels the focus should be on the former. The conversion of the American intellectuals to communism/socialism has always puzzled me. How could people seemingly so intelligent espouse a system that has never been effective anywhere it has been tried. Friedman suggest that the "conversion of the intellectuals was achieved by a comparison between the existing state of affairs, with all its injustices and defects, and a HYPOTHETICAL state of affairs as it might be (emphasis mine). The actual was compared with the ideal." It now seems fairly well proven that the ideal is unattainable and also undesirable.
For those of a libertarian bent this will be a great read. For those of a collectivist bent but an open mind this is well worth the time and may change your mind just a bit.
- Required Reading for All Voters and Citizens
Whether you are a liberal or conservative, Democrat or Republican, this is a fundamental popular "textbook" of required reading, if you care about your family and this (or any) country.
It's timeless: the book sounds like it was written this year, even though it was written in the early 1960s....more info
- parecon? this is directed to Mr. J. D. Shockley
About an hour away from san francisco, in the towns of the central valley a way is going on right now. A war between the union grocery stores and the non-union grocery stores. Guess who's winning the war?
Save mart, A union grocery store, has shut down 5 stores in the stockton and is going to shut down even more in the central valey and in the south bay, while a whopping 40+ non-union big box stores have opened shop.
Savemart, safeway and the like will continue to lose this war because they are paying an overwhelmingly high cost of 35 dollars in wages and health benefits to their workers. Wall-mart, food-for-less, and winco on the other hand, pay all their workers 9-13 dollars maximum.
The people of the central valley, mostly low income, are offering a signal to the grocery industry. You see, the people have decided that union workers aren't worth the cost of paying 2 dollars for a loaf of bread (as opposed to wal-mart's 79cents). They'd rather wait in long lines at non-union big box super centers than pay an extra 30% more on groceries. This leaves only a select few to now shop at union stores, and they include the rich or the bourgeoisie as your ilk like to call them. very soon there won't be many union grocery stores.
Those on the left will be quick to blame wal-mart or "evil" corporations for this "wiping away" of inefficient firms, but it is complete and utter idoitic ignorace to so blindly fail to see that the consumer created this "evil". The consumer's desire to purchase more for less created wal-mart, food-4-less and winco foods. Big box stores only exists because union labor created large scale inefficiencies in the grocery industry--inefficiencies that led to higher prices.
I don't have an economics degree. i'm just casual observer of politcal and social events. In fact, I'm pretty low on the social ladder because I work as a grocery clerk for a union Grocery store; One that is about to shut-down for good. It's sad, and It's hard to see why our store would close. Everyone at my store is nice, and all of the costumers like us. However, over the years I saw many of customers disapear. I see them at outside of work, and i'm constantly told, from the customers themselves, that they just can't afford to shop at our store anymore. That's a nice excuse , but their incomes hadn't changed; prices had changed, and it just didn't make anymore sense to shop at our noticably more expensive store. Automatically, I always repond to them, "shop at are store! we're union!", but Instead of the reaction that hope for, I always a get silent apologetic smile in return indicating that their shopping habits will not change.
this might seem like a messy rant but What i'm trying to say is this: Parecon, or anything remotely like it is built on a idealogy that refuses to deal with the reality of human nature. That refuese to ultimately concede that corporations exist because PEOPLE want them and the products they make to exist. The people don't care about how the products are made. If two people can bring a product to the market and offer a price cheaper than a company owned by 1000 workers, then, in the end, two people will be working and 1000 people will be unemployed. In order for something like parecon to work, not only would the government control how firms chose to make products, but it would also have to control what the people chose to buy, and This takes governmental powers to an alarming level. A level that few people are willing to accept. I think this is why free-trade is becoming an easy target in the mainstream media. Free-trade gives consumers more choices, and these chioces could lead to union workers like myself losing our jobs. This is very bad for me. I'm old and I can't go back to school. America, however, is built on a ideal of freedom, and i don't think I could ever be so selfish as to put my personal well-being above other people's rights to pursue happiness--something that this country was built on. ...more info
- Response to JD Shockley
J.D. Shockley wrote:
"NO, CORPORATIONS HAVE A LEGAL OBLIGATION, A DUTY TO MAXIMIZE PROFIT. THAT'S IT. CREATING GOOD PRODUCTS, OR PRODUCT THAT ARE GOOD FOR THE ENVIRONMENT, OR PROVIDING PEOPLE'S WANTS, OR WHTEVER IS INCIDENTAL, NOT NECESSARILY A CONCOMITANT."
JD, you got it wrong. Here's why.
You're separating "maximizing profits" from "creating good products" and "providing people's wants." The latter are NOT incidental...they are one and the same with maximizing profits. If "people's wants" are not satisfied by the company's products, (and they won't be satisfied if the products are not good) the company can't sell its products, and the company can't make a profit.
As to being "good for the environment," that means something different to everybody.
- The Hidden Conundrum
This book well deserves to be a classic, but it does not present any of the problems with Capitalism, so don't expect a balanced view. Via capitalism, we are like a bacterial colony on a dead squirrel. Bacteria metabolize all of the useful nutrients, and then there is a mass die-off. This works for the bacterial genetics because some of the bacteria will be blown or otherwise transported to another dead squirrel or such, and the cycle will continue. We, on the other hand, only have one "dead squirrel" (planet Earth), and no alternative ecosystems are within reach. So capitalism is betting all of our marbles that science will save our collective butts. For the science of rational selection that is economics, the end-game dependency on hope shows its non-rational weakness.
- Friedman is an advocate for freedom!!
This is not the most readable book that Friedman wrote (Read "Free to Choose") but it still highlights his passion for freedom.
In this book Friedman warns us of the dangers of corporations and industries aided by governments: the social ills and the displacement of workers that will always arise from too much concentrated central power. Friedman warns us of letting Capitalists operate in an environment without sufficient rule of law or in an environment where the state favors (with subsidies or mandates) one group over another: Friedman is very clear that government does have a role to play in a free economy:
"The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the `rules of the game' and as an umpire to interpret and enforce the rules decided on."
Friedman was not an anarchist. He understood that anti-trust law enforcement is a principle role of government. Otherwise, monopolies would sprout and lessen choices, diversity and freedom. This wonderful book is still relevant after all these years. Today, we still face many of the challenges that Friedman worked so hard to address in a clear and concise manner. If only we would heed his call.
Highly recommended...more info
- Important foundation text - should be studied and considered
This is a foundation text that should be widely read and studied. Whether you agree with Friedman or not is not the point. These are ideas you need to actually consider and wrestle with. If you end up disagreeing with him and can state why, you will be the stronger for it. It is not enough to rail against them emotionally or call them lies. They are not lies; they are ideas and arguments that ask for debate. Personally, I have always been a fan of Friedman and am ever grateful that he stood against the tide of the postwar political movements with these powerful arguments for freedom.
People often caricature Friedman to their own discredit. His arguments here are not simply that government is bad, but that using government is often a poor way to get at a desirable social end. He certainly does not need me to speak for him, but if you think he is for huge corporations and letting the poor without help to fend for themselves, you misunderstand him and should read this work carefully. Big corporations, he argues several places in this book, are the result of taxation schemes that encourage the retention and reinvestment of earnings that would otherwise have gone to the shareholders to reinvest as they see fit - in other enterprises, consumption, or charity (as well as in taxes). This is only one example among many of popular prejudices against Friedman that do him real injustice.
The book is only a couple of hundred pages, is not hard to read, but does pay off the most dividends if you take your time reading it and consider what he has to say rather than jumping to conclusions without wrestling with your own thoughts (whether you agree with the author or not). It was written in 1962, so some of the context of the book will require some understanding on the part of the reader. It was a very different time than today. However, the arguments remain solid and strong to the benefit of anyone who will spend time thinking about why they agree or disagree with this Nobel Laureate.
Oh, and he uses the word LIBERAL for his philosophy and explains the word in it classic sense rather than in the modern US re-definition of the word....more info
- An iconic classic...
This book is a terrific presentation of economic truths. As a minor note, this book was written many decades ago in the post WWII era and there is a bit of content that addresses the ridiculous laws that were in effect at that time. Specifically, it was against the law for private citizens to own gold bullion at that time. Friedman does take liberty with the notion of how counterproductive such laws are from an economic point of view. As someone that wasn't alive during that era (I was born in 61), it was a bit strange reading a book that referenced so much that was so alien to me.
Excellent read and certainly a true classic in economic understanding....more info
- how a little book can help to build a better tomorrow
This book is the apotheosis of freedom. Friedman should be studied not only by economists but also by politicians.
Definitely a must....more info
- Friedman on Freedom
Milton Friedman has been one of the most effective advocates of free enterprise in the U.S. for many years. Although often called a "conservative," he is perhaps best described as a moderate libertarian; that is, he supports more intervention into the economy than the typical libertarian. In addition, his school of theoretical economics (monetarism) differs sharply from the Austrianism embraced by many in the libertarian movement. He has also advocated schemes that tacitly accept a substantial role for government in society, such as the voucher system, the "negative" income tax, and the flat tax.
CAPITALISM AND FREEDOM discusses many of the basic issues of the role of government in the economy, such as monetary policy, monopolies, licensing and the like. The work came out in 1962 and I particularly enjoyed the discussion of education. Friedman noted even then that teachers' salaries had been rising, but inflexible (i.e, union negotiated) contracts prevented schools from rewarding good teachers. This system, which is almost inevitable with government schooling, virtually insures that schools will stay mediocre. It shouldn't be surprising, then, that the marginal changes in the past few years (magnet schools and some incentives for good teachers) have done little to increase the quality of education. (For more on this, see Brimelow's book on teachers unions, THE WORM IN THE APPLE.)
Other introductory works on the role of government in a free society from a similar perspective are LIBERALISM by L. von Mises and FOR A NEW LIBERTY by M. Rothbard.
- Good read of capitalism and freedom
I have seen some old interviews with Milton Friedman and read a couple of his books; including this one.
Not only is the content of this book interesting and enlightening, but the presentation is well done too.
There have been very few authors and public speakers that have caught my attention as thoroughly as Milton Friedman. I highly recommend this book....more info
- Capitalism and Freedom
A strong case for limited government and for reducing government's place in a free market economy. Even though 50 years old, it remains timely and thought-provoking....more info
- I am at disagreement on your opinions
Respectfully Dr. Friedman, you are a world known scholar and an intellect, and I lay claim to neither. But nonetheless I find myself in disagreement to some of your opinions; perhaps a result from my limited knowledge. In the first chapter you meticulously detail the direct relation between increased economic prosperity to greater personal freedom. This view certainly holds true to the western world; but a broader look into Asian countries show a contrary picture. At first United Arab Emirates (GNP per capita $20,000),
Kuwait (GNP per capita $24,000), Singapore (GNP per capita $27,000) have strict restrictions on personal freedom and are ruled by an absolute monarch. The said countries have economic indicators comparable to the countries in the west as United States of America (GNP per capita $30,000), United Kingdom (GNP per capita $20,883) and Spain (GNP per capita $16,700). On the other spectrum India with an instilled democratic state for the last 50 years has its economic indicators comparable to a third world nation (GNP per capita $2140).
Further along the reading you profess the need for smaller governments; with lesser intrusion from the government into the workings of a free market. But I feel disheartened that even with the government interventions there have been cases of utmost corruption in the corporate arena e.g. Enron, Martha Stewart. In the same breath I feel that with minimal government intervention we would eliminate the spirit of a free market; as corporations like Microsoft and Intel would in a flash wipe out their smaller competitors and create a monopoly.
In your suggestion for the elimination of minimal wages; are guarantees that the workers at the lower end of the scale are not left further in poverty. With no such barriers there would be a greater glut of cheap labor ready to work at lower wages. This creates an endemic of poverty and social/society ill-will. In addition I believe in the utter greed of capitalist who would pressurize the congress to allow more cheap labor for them to fatten their pockets. At present the economic divide is significant; I feel with the elimination of minimum wages would create a greater disparity.
The concept of providing parents with the vouchers is a great idea; at present being adapted by President Bush with the program "No child left behind"; but steps need to be ensured that the vouchers are only provided to lower income families. As the system can be abused by kids already going to private schools getting subsides for their education.
I find it difficult to comprehend your belief to unilaterally eliminate trade barriers. This gives a great edge to foreign competitors to move in their products. This would be comforting for the consumers; but placed at the expense of increased trade deficits. I believe the elimination of trade barriers not unilaterally but in a multilateral approach....more info
- M.F. is brilliant to a fault.
This is a wonderful and timeless book that I recommend to any person interested in politics, economics, finance, ethics or current events. Friedman possessed a brilliant mind and the world is better off for having him. That being said, one must read this book with skepticism. In general, I identify with the fundamentals of the libertarian stance as applied in both a fiscal and social viewpoint. In a liberally structured utopia the philosophy of Friedman is magically flawless. Anybody who appreciates the absolute balance of risk to reward, credit to debit, or right to wrong would certainly appreciate the rational of Friedman. Unfortunately we do not live in such a world. The world we live in as a whole is messy. Nothing is as precise as we'd ideally like it to be. So, although I appreciate Friedman's philosophy, I find it hard to imagine its application - in entirety - on a macro level. Nevertheless it is a goal worth striving to achieve....more info
- An interesting economic perspective !
Friedman has written a classic book on capitalism that has sold over half a million copy. The most interesting element of his book is that Friedman has accused the Federal Reserve Bank to be responsible for the depression of the 1930s due to their lack of interference by not helping the failed banks and by contracting the money supply. The Federal Reserve Bank is in charge of creating money whenever it is needed, in order to prevent such occurences as major recessions and depression.(The Federal Reserve Bank is embodied in five to six privately owned banks in Europe and America that took over the central financing of the United States in 1913 during the Woodrow wilson presidency when the Federal Reserve act was passed, which marked the beginning of the privatization of American financial and political institutions into the hands of the global corporate world).
Friedman has borrowed most of his concepts on capitalism and freedom from the father of free market economy the brilliant Austrian economist Friedrich Von Hayek, and made them his own.
This book will provide the reader with an interesting perspective on free market economy and the elusive concept of freedom....more info
- Timeless exposition of libertarian economics and politics
As the other book reviews here suggest, there are plenty of what on the television series The West Wing were called "Milton Friedman worshippers" out there. For those who are not, it may be instructive that his ideological rival, Paul A. Samuelson, calls Friedman an "eminent scholar" and Capitalism and Freedom a "classic book...All thoughtful economists should study his arguments carefully" (Economics, 17th ed., pp. 41-42). Enough said.
If your intent is to read only one book by Milton Friedman, you should pick Free to Choose. Arguably, Capitalism and Freedom is slightly more theoretical, while Free to Choose is more practical and more recent. But the books don't duplicate in contents, and it's a most worthwhile use of time to read both: first Capitalism and Freedom and then Free to Choose.
- Friedman at His Best
I read "Free to Choose" many years ago and loved it. I was unaware of this book until I heard about it on "Free Markets With Dr. Mike Beitler," a libertarian internet-radio talk show. Beitler also summarize many of these ideas in his book Rational Individualism: A Moral Argument for Limited Government & Capitalism. I highly recommend it....more info
- A claasic by Milton Friedman
This book expouses the classic liberalist economic policy that modern government could well take note of, even though this book was written some 40 years ago. If they did, they would see that the knee-jerk reaction by many governments around the world, of raising barriers to free trade in response to the world financial and economic crisis,is a step in the wrong direction. ...more info
- Great book on economic theory
One of the "readers" complained about the failures of the free market...I say 'readers' in quotations because the free market has never failed. There has never been a 100% free market in America, but instead a Mixed Economy...just as there has never been a free market in Africa or anywhere else. There have always been elements of Government control.
The perceived failures of the free market have always come from special favors given by Government to businessmen...thankfully this book does Capitalism justice by refuting the very notion that Socialism resembles a valid political/economic system....more info
- Fantastic Examples of "Freedom!"
Yes, there's nothing quite like reading about the Absence of Freedom written by a privileged white male because, really, who else in American society is less free than white men? Funny, isn't it, how the very same people who rally their readers with calls for "Freedom!" are the very same people advocating for a return to the most inhibiting form of capitalism available. How is this relevant, given its monumental failures throughout South America during the 70's and across the world in the past two decades?
Cut taxes? Trickle-down economics? Deregulate and let the rich create more jobs with their excessive wealth? Why didn't it work after Reagan cut the highest tax bracket by a whopping 20 percent? Why did the number of charitable contributions by the wealthiest Americans drop during this time? Why did the middle class begin dropping out? Why are free market capitalists so unwilling to relate any of these questions to the exact same occurances in Chile during the 70's when Pinochet put Friedman's disciples in charge of his economic policy?
Do yourself a favor and pick up a copy of Naomi Klein's "Shock Doctrine." Educate yourself on the massive failures of the free market system that have already occurred. This is nothing new. Free Market capitalism is a tired re-tread of laissez-faire capitalism, with the exact same results....more info
- This man is a piece of garbage.
I literally almost vomitted reading this book for class. This father of Neoliberalism, the murderer Pinochet's pal, has caused immense suffering and destruction in the world with his proven-to-fail free market capitalism. Thank goodness he's dead. Lets pray there won't be another one as evil as him around for a while....more info
- Short, concise and to the point
Milton Friedman is one of the great economic thinkers of the 20th century. Based out of the University of Chicago, this Nobel Prize winner in Economics has consistently and cogently argued for the benefits of capitalism over any other form of economic organization. This, along with "Free to Choose" are his two major works establishing and explaining his beliefs. Within it, he argues against many established policies in the US federal government such as the minimum wage, subsidies, rent controls, and licensing requirements for practice in fields such as medicine and law. Likewise, he argues for many market-orientated alternatives to today's arrangements, such as increasing the use of school vouchers.
The author argues that the concepts of capitalism are very similar to the concepts of democracy, and that the spread of one helps the spread of the other, and hence both should go hand-in-hand in terms of public policy. This book, along with his other writings, are the bedrock of modern-day economic conservatism and its creations such as health-care savings accounts, school vouchers, tradeable pollution emission allowances, etc... By reading this book, one gains a very thorough understanding of modern-day American conservatism.
Unfortunately, the book minimizes the power of corporations and financial markets - speculators. The book also does not pay enough attention to the mining and energy industries, two sectors of the economy which often produce scandal and disasters when given over to the rule of free-market forces; i.e. Enron... Last, the author misses one key difference between democracy and capitalism. In democracy, one person gets one vote. In capitalism, this is rarely the case; some individuals will end up having more dollars (more votes) than other individuals.
Overall, a good book, though not a great one. The book's arguments are well made and warrant understanding, though they are by no means universally correct. ...more info
- Great book, life changing reading!
Reading this book gave me a whole new perspective about life, economics and individual responsibility. It's a must for everyone, even if you are not a student of economics....more info
- Read it twice
A fantastic piece of literature. The concise nature of the book belies the depth of knowledge and purpose of Friedman's writings, but then that is what he intended. I find I take more out of the book each time I read it. A must for any serious economist and to any one willing to gain a clearer picture of the political economy and the forces at play.
Do yourself a big favour and read this and if are a socialist then be warned, the truth will hurt! (If Mises's work has not already done that)...more info
- Capitalism and Freedom book highly over-rated
Milton Friedman's book entitled 'Capitalism and Freedom' presents the ideological foundations of the prevailing greed-driven ethos of Corporate Globalization. According to Friedman, and his disciples, 'capitalism' complements democracy. As Capitalism is Not Democracy critically presents, 'capitalism' in fact, undermines democracy. Capitalism promotes the development of 'capitalistocracy', rather than democracy.
I would respectfully recommend 'Capitalism is Not Democracy' for readers who are seeking progressive alternatives to the prevailing context of so-called "economic progress", which creates mass poverty on a global scale, and ensuing social malaise, crime, and conditions for political extremism which promotes terrorism.
According to the author of 'Capitalism is Not Democracy', we need to re-think and reconstruct the economic system in order to serve the quality-of-living of all human beings, with prejudice, rather than the mercenary commercial profit interests of elite 'owners of capitalism', in Friedman's corporate capitalist dystopia.
The 'Capitalism is Not Democracy' book, ISBN: 1894934636, presents a comprehensive critique of capitalistocracy that is associated with Corporate Globalization. Indeed, the Big Business-oriented "Globalization" context is systematically undermining vital human rights, social justice, and environmental protection. This book also presents a progressive alternative economic system to the current context of Corporate Globalization, which is destroying the quality of human survival internationally...more info
- CLASSIC ECONOMICS, FRIEDMAN'S BEST
Milton Friedman is one fo the strongest proponents of freedom in society as the only way towards development (a concept later expanded by Amartya Sen). This book is not an economics textbook, since he does not spend much time on the basic concepts of economics such as price theory. He assumes a bit of knowledge and uses it to make the case for many different economic ideas ranging from macroeconomics (monetarism) to microeconomics (school vouchers).
For a book that was written in the 60s, it is amazing how current his ideas remain. It is perhaps the most important book on the libertarian philosophy, focusing on preventing the accumulation of power by any individual or group of individuals in society.
Overall, it is a great read for someone familiar with economics and social sciences, it will definitely expand your horizons of thought. However, if you are looking for an introduction to interesting eocnomic ideas, I would suggest you read Free to Choose, which Friedman wrote a dozen years later to reach a more general audience. ...more info
- A Program For Change
I was just re-reading this book and find Friedman's arguments to be rigorous and logical. Friedman mercilessly questions the assumptions of the rigid ideologues of the left and of progressive-liberalism, and offers a program for change. When Friedman wrote this book in the 1960s, his ideas were ridiculed. Today, they are widely known and respected, but sadly still ignored by both major political parties. Were every prescription Friedman offers adopted, there would be much less income inequality; the country would be several times wealthier; there would be much more innovation; and the country have much greater economic stability. There would be far more job opportunities for the young, and far greater economic security for the old. It is truly a tragedy that Friedman's ideas have been read, misunderstood and largely ignored in favor of the rigidly ideological opinions of our reactionary progressive-liberals....more info
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