After reading two quite good posts on the Left Solutions blog against Ayn Rand, I decided that my next book reviews will be about some classics of libertarianism.  I expect to review Friedman, Rand, some Hayek, Nozick, maybe even some Rothbard.

Today’s book review is a classic of Libertarian thought, and a very influential defense of capitalism, Milton Friedman’s Capitalism and Freedom.  It’s major theme is, in the words of Friedman, “the role of competitive capitalism . . . as a system of economic freedom and a necessary condition for political freedom” (4) and its minor theme “is the role that government should play in a society dedicated to freedom and relying primarily on the market to organize economic activity” (ibid).  As the first two chapters lay out his theoretical position most explicitly, and contain the bulk of his arguments, I will concern myself most explicitly with these chapters, and draw from the last four chapters, The Distribution of Income, Social Welfare Measures, and Alleviation of Poverty, as well as the Conclusion, where appropriate.

Friedman begins through asserting that “only certain combinations of political and economic arrangements are possible” (8), and that “a society which is socialist cannot also be democratic, in the sense of guaranteeing individual freedom” (ibid).  He specifies that capitalist economic systems are not necessarily democratic, but that capitalism is a necessary prerequisite for democracy.  Friedman continues by arguing that (1) “freedom in economic arrangements is itself a component of freedom broadly understood” (8) and thus an end in itself, and (2) “economic freedom is also an indispensable means toward the achievement of political freedom” (ibid).

Economic freedom, to Friedman, essentially means freedom of exchange, i.e. the ability to buy or sell without legal restriction.  He considers it a necessary component of freedom because a restriction of it is a restriction of a range of choices and actions.  Political freedom means “the absence of coercion of a man by his fellow men” (15).  Friedman considers economic freedom as a means to political freedom because “it separates economic power from political power and in this way enables the one to offset the other” (9).  Markets more specifically secure political freedom because they remove “the organization of economic activity from the control of political authority, [and thus] the market eliminates this source of coercive power. . . [enabling] economic strength to be a check to political power rather than a reinforcement” (ibid).  Concentration of power, he argues, is most dangerous to freedom, and there is no zero sum law of economic power or fixed quantity of total economic power, whereas he sees the quantity of political power being essentially finite and thus more prone to concentration. He notes a general correspondence with the emergence of democracy and the emergence of capitalism, and a short time later argues that “collectivist economic planning has indeed interfered with individual freedom” (11).

After that partial digression, Friedman elaborates on the connection between economic and political freedom.  He argues that “the basic problem of social organization is how to co-ordinate the economic activities of large numbers of people” (12) and that there are two ways of doing so, either (1) “central direction involving the use of coercion” or (2) “voluntary co-operation of individuals” (13).  The latter, he claims, is based on the premise that “both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed” (ibid).  Consequently, he deduces, competitive capitalism brings co-ordination without coercion.  It is worthy to note here that his elaboration that “co-operation is strictly individual and voluntary provided: (a) that enterprises are private, so that the ultimate contracting parties are individuals and (b) that individuals are effectively free to enter or not to enter into any particular exchange, so that every transaction is strictly voluntary” (14).  In his model, viewing all ‘economic freedom’ in terms of exchanges, the buying and selling of goods and labor power are always mutually beneficial, never the product of coercion, and necessary components of freedom.  In fact, he claims that “the central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect of most of his activities” (ibid).  The selling of labor power is uncoerced in that “the employee is protected from coercion by the employer because of other employers for whom he can work” (14-15).

This voluntary model of organization by markets is contrasted against “action through political channels,” which “tends to require or enforce substantial conformity” (15). Here he claims that the market is “a system of proportional representation” where “each man can vote [for his consumption choices]” (ibid).

Finally, Friedman argues that competitive capitalist societies have an easier time accommodating the avocation of socialism than socialist societies have allowed the avocation of capitalism. First, he argues that “in order for men to advocate anything, they must be in the first place able to earn a living” (16), which is problematic under socialism, he claims, because of governmental control of the job market.  Whereas in socialist societies, the state would have to subsidize subversive literature, Friedman argues that in competitive capitalism all one has to do is find a rich benefactor, or prove that one’s literature will make the publisher (or other media source) money.  The ability in competitive capitalism to find rich benefactors, Friedman argues, shows “a role of inequality of wealth in preserving political freedom that is seldom noted–the role of the patron” (17).  He further defends the costs borne in capitalist society to advocate radical change, arguing that “no society could be stable if advocacy of radical change were costless . . . [and that] it is important to preserve freedom only for people who are willing to practice self-denial” (18).  His only caveat is that “what is essential is that the cost of advocating unpopular causes be tolerable and not prohibitive” (ibid).

The role of government, then, is to provide “for the maintenance of law and order to prevent coercion of one individual by another, the enforcement of contracts voluntarily entered into, the definition of the meaning of property rights, the interpretation and enforcement of such rights, and the provision of a monetary framework” (27).  These questions are large, and Friedman places a notable caveat on what he believes to be the extent of democratic determination.  He writes that “the use of political channels, while inevitable, tends to strain the social cohesion essential for a stable society.  The strain is least if agreement for joint action need be reached only on a limited range of issues on which people in any event have common views” (23).  In other words, the more important the issue, the more Friedman sees it being destructive of democratic unity, and thus “fundamental differences in basic values can seldom if ever be resolved at the ballot box” (24) and inevitably result in conflict.  Here, again, he embraces the market for not requiring conformity on these base issues.

Now that we have laid out Friedman’s basic stance on the relationship between economic and political freedom, let us back up and consider his arguments as a whole. To recap, Friedman considers (1) ‘economic freedom’ as the freedom to engages in exchange independent of political authority or coercion, and (2) ‘political freedom’ as, more generally, freedom from coercion. Viewing freedom, generally speaking, as the overriding moral and political value, Friedman argues that the freedom to exchange, i.e. buy and sell in a competitive market, is a necessary component of freedom in that it is a subset of choices and actions that one ought to be able to engage in without experiencing coercion. Economic freedom is thus and end in itself. He also argues that economic freedom is central to political freedom because of (a) its controlling the means to politically determined ends, limiting governmental power, and (b) the ability for unpopular and radical perspectives to find voice in the market.


Friedman’s case rests on a number of assumptions, any of which would undermine his argument, but taken as a whole entirely demolish his case. Friedman’s conception of freedom is the absence of physical coercion. Friedman is right in his overarching perspective that governmental action involves or implies the use of coercion by necessity; the background of governmental laws is their ability to enforce them, and the concept of legitimate government implies its legitimate monopoly on the use of force within its boundaries. He simply sees the range of legitimate coercion extending only to protect the rules and preconditions of free market capitalism—contract enforcement and the definition and enforcement of property rights. He claims that the scope and definition of property rights is a question taken for granted, and properly subject to democratic debate, while simultaneously arguing for the inability for democracy to work in substantial value discussion (like debate over property rights) and presupposes the legitimacy of private property rights throughout his argument. Without the presupposed legitimacy of private property (or at least private property in the means of production) no individual would have the right to produce independent of social agreement, or for that matter restrict distribution of goods; his conception of economic freedom, which he claims to be a necessary component of freedom, is contingent upon the legitimacy of private property in the means of production. He further continually emphasizes that the ability to exchange, economic freedom, is an individual freedom, and thus placing constraints on individual exchange opportunities seems as though it would inherently violate his account of freedom. Thus, while he overtly recognizes that definitions of appropriate property rights are subject to democratic determination, his argument for economic freedom, and thus his argument that competitive capitalism supports freedom and is thus desirable, depends upon private property in the means of production being legitimate. If private property is not legitimate, then the coercion with which the government protects it is illegitimate, and economic freedom in the sense that Friedman intents violates political freedom. So the question becomes “Do we, as individuals, have a right to private property in the means of production?”



This review is continued at:

Left Solutions: Ayn Rand, sociopathic politics –