Capitalism and Freedom

Rating:
Summary: Good
Review: Milton Friedman is a great economist and a good man. His books, especially his Monetary History, have been a great contribution to 20th century thought. In this book he presents a strong case for liberty. For the most part, he is very consistent. However, his stance on education is a bit weak. He seems to miss that public education is a horrible and ultimately destructive institution. Despite this, I would recommend this book to anyone who is interested in capitalism. But, I would also have to recommend Sheldon Richman's "Separating School and State" as a supplement.

Rating:
Summary: Badly written, garbled ideas, but important historically.
Review: This book gets 3 stars because of its historical importance, not its contents. It consists of an introduction plus the first two chapters stating his political credo and argument (sort of) and then applies the principles in a number of different areas. These latter chapters are essentially reworked from a series of lectures on those principles.

Obviously, he's very pro capitalism (without explaining what he thinks capitalism is or its benefits are), which is contradictory as he is also explicitly against concentration of power (mainly because of the dangers of the powers abuse). His political philosophy and notion of freedom is shallow, and if you have read original works on and the history of libertarianism may appear laughable. As I understand it, the work was originally not thought much of at the time of release but acquired respectability over time with the acceptance of chicago-school economics in the political domain.

The work is full of non-sequitors and sta! tements of ideological position without substantiation. It is useful however historically, as an important statement of where Freidman and the Chicago school of economic thought are coming from,and would be useful to read for perspective before his better written later books such as Free to Choose.

His basic position is that the government should be limited in scope to protection of freedom (from socialist forces), making and enforcing laws and ensuring private contracts are honoured, and to foster competitive markets. Furthermore, political power should be decentralised from federal to state and state to local. He doesn't think substantive issues can be resolved at the ballot box, and so advocates the free market over democracy for deciding substantive issues. He focuses on his notion of freedom and the preeminence of market forces in facilitating it.

Rating:
Summary: Important foundation text - should be studied and considered
Review: 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.

Rating:
Summary: Insight for those who wish to be free
Review: Nobel laureate Milton Friedman is quite possibly the most brilliant economist in the world today and a man on the cutting edge of libertarian (classical liberal) thought. And in "Capitalism and Freedom" he lays out a basic political philosophy in the classical liberal tradition in the first two chapters of the book and alternately defends and expands upon that premise for the remainder of the work. In much the same way that F. A. Hayek - an ideological predecessor - spelled out his basic thesis in one concise book and then fleshed it out in another, Friedman provides the basics here and fleshes them out in the larger (and somewhat better written) "Free to Choose". In addition, while not wishing to rehash some of the detailed support for his assertions, he does - through footnotes - provide the reader with opportunity to delve deeper.

Given the nature of the subject matter and the expertise of the author, the writing can be dry and may appear difficult to approach, particularly in the initial chapters, but the reader who sticks with it will be well rewarded. Subsequent chapters, largely adapted from lectures by the author, are easier reads. And Friedman avoids, for the most part, the economic jargon that can make works such as this hopelessly confusing to the layman.

Friedman is often tagged with the "monetarist" or "supply-side" labels (if you don't believe me, read some of the other reviews), largely because he believes that these methods of economic manipulation are infinitely preferable to the fiscal manipulation that has been the norm in this country. Those who actually READ this book will find that he advocates intervention by neither means, preferring instead stable monetary growth removed from the hands of either fiscal or monetary interventionists.

He provides one of the most succinct explanations of the monetary actions (of the Fed) that created and worsened the Great Depression that I have ever come across, though mentioning only briefly the fiscal policies that subsequently lengthened it considerably: the New Deal and, to a much lesser extent, Smoot-Hawley. This alone makes the work valuable.

He goes on to examine a number of things that are now taken for granted in this country (the Welfare State, Social Security, public education, licensing requirements) and asks the question, "Have these government actions made things better or worse?" The record is less than stellar (especially in the subsequent 40 years since this was written). And he proposes some alternatives such as the negative income tax and other alternative roles for government that are, arguably, less intrusive on the liberty of the citizenry.

And he uses examples that are easy to follow and understand including one about men stranded on desert isles that is NOT as presented in another review.

As an economist, I would say that this work has aged remarkably well. The analysis has clearly not become dated as have those of Galbraith and, to a certain extent Keynes. [Keynes WAS a genius, providing the mathematical and econometric bases for much of current economic thought, but, contrary to the assertion by another reviewer, much of what he proposed should be done by the state has been discredited.] Friedman, for example, was one of the first to advocate a school voucher system, which is only now receiving serious attention.

It is noteworthy that a number of economists from the left have criticized Friedman in general and this work in particular. But those attacks (by Krugman, Herman and Diesing, among others) have proven to be, for the most part, without merit.

If you accept the basic premise that freedom is vitally important and that the actions of the state should be viewed from that point of view, you will find this work to be invaluable. If not, you will certainly not be pleased. And if you believe the utter nonsense that capitalism is in any way "oppressive", well, if you can't see reality...

Rating:
Summary: Contains both theory and factual evidence
Review: This book is much better than "Road to Serfdom" (Hayek) because Friedman offers more specific details and writes in a much lighter fashion. Though the reading is lighter than it was of the aforementioned Hayek book, it is still not all that light. The book, though only 200 pages, should probably be read at least twice--either by the chapters read and then reread before moving onto the next or by reading the whole thing all the way through twice.

Good points (not a complete listing):

1. Discussion of what keeps the number of physicians in the country artificially low as well as a discussion of how licensure requirments in any given profession can end up creating a defacto labor union.

2. Separation between what are the intended results of any given social program versus what actually happens when these ideas are put into practice. So, this could be the Housing and Urban Development board being responsible for the creation of ghettos--none of which existed before they were created. Or it could the creation of the Federal Reserve, which has a lot of power in the domestic economy, and therefore a lot more power to ruin something on a large scale.

3. Follow up of almost every single concept with specific examples to show what he is arguing

4. Extrapolation of certain arguments to their logical extreme. So, how is it different from 4 people walking along the street and one picking up a $20 bill and being forced to share it by the other three than redistibutive mechanisms imposed by the government on income? How does it make sense for the government to extract subsidies from taxpayers to support higher prices on agricultural products that its taxpayers are going to buy later?

5. Discussion of some of the logical consequences of pursuing "equal distribution of income" as well as some of the reasons that income/ wealth would be unequal no matter what any one does.

This book obviously influences a number of other writers that entered the discussion on Libertarianism (i.e., Thomas Sowell). It's also interesting to note that this book was written at the time when the Soviet Union was thought to still be a threat. The collapse of that Empire, almost 30 years after this book was written is its ultimate vindication.

Well worth the time it takes to read it!


Rating:
Summary: Flawed from the beginning
Review: 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).

Rating:
Summary: Terribly biased and ammoral
Review: Friedman doesn't mention that indignity, disempowerment, and hunger accompany capitalism worldwide. No one sensibly denies this, yet even among those who despise capitalism, most fear that suffering would increase without it. While some certainly find capitalism odious, few celebrate an alternative and those who do generally favor "market socialism," But there's a great alternative. To transcend capitalism, we can advocate equity, solidarity, diversity, self-management, and ecological balance. What institutions can propel these values in domestic economics, as well as get economic functions done well?
To start, we should advocate public/social property relations in place of privatized capitalist property relations. In the new system, each workplace is owned in equal part by all citizens. This ownership conveys no special right or income. Bill Gates doesn't own a massive proportion of the means by which software is produced. Instead, we all do--or symmetrically, if you prefer, no one does. At any rate, ownership of productive property becomes moot regarding distribution of income, wealth, or power. In this way the ills of private ownership such as personal accrual of profits yielding huge wealth, disappear. But that's it. We haven't accomplished anything more than that, only a removal. We must go much further.
Next, workers and consumers are organized into democratic councils with the norm for decisions being that methods of dispersing information to decision-makers and at arriving at preferences and tallying them into decisions should be such as to convey to each actor about each decision, to the extent possible, influence over the decision in proportion to the degree they will be affected by it. Councils exist at many levels, and have subunits such as work groups and teams and individuals, as well as supra units such as workplaces and whole industries. Councils are the seat of decision making power. Actors in councils are the decision-makers. Votes could be majority rule, three quarters, two-thirds, consensus, etc., and would be taken at different levels, with fewer or more participants, all as appropriate depending on the particular implications of the decisions in question. Sometimes a team or individual would make a decision pretty much on its own, though within a rubric of other encompassing decisions that were made more broadly. Sometimes a whole workplace or even industry would be the decision body. Different voting and tallying methods would be employed, as needed for different decisions. There is no a priori single correct choice. There is, however, a right norm to try to efficiently and sensibly implement: decision-making input should be in proportion as one is affected by decisions.
Next, what about the organization of work? Who does what tasks in what combinations? Each actor does a job, of course, and each job is composed of a variety of tasks, of course. What changes from current corporate divisions of labor to a preferred future division of labor is that the variety of tasks each actor does is balanced for its empowerment and quality of life implications. Every person participating in creating new products is a worker. Each and every worker has a balanced job complex. The combination of tasks and responsibilities you have accords you the same empowerment and quality of life as the combination I have accords me, and likewise for each other worker and their balanced job complex. We do not have some people overwhelmingly monopolizing empowering, fulfilling, and engaging tasks and circumstances. We do not have other people overwhelmingly saddled with only rote, obedient, and dangerous things to do. For reasons of equity and especially to create the conditions of democratic participation and self-management, we establish that when we each participate in our workplace and industry (and consumer) decision-making, we each have been comparably prepared by our work with confidence, skills, and knowledge to do so. The typical situation now is that some people who produce have great confidence, social skills, decision-making skills, and relevant knowledge imbued by their daily work, and other people are only tired, de-skilled, and lacking relevant knowledge due to their daily work. Balanced job complexes do away with this division of circumstances. They complete the task of removing the root basis for class divisions that is begun by eliminating private ownership of capital. They eliminate not only the role of owner/capitalist and its disproportionate power and wealth, but also the role of intellectual/decision making producer who exists over and above all others,. They retain the needed tasks, but they apportion them and also rote and unempowering responsibilities more equitably and in tune with true democracy and classlessness.
But how much are people paid? We work. This entitles us to a share of the product of work. But how much? This new vision says that we ought to receive for our labors an amount in tune with how hard we have worked, how long we have worked, and with what sacrifices we have worked. We shouldn't get more by virtue of being more productive due to having better tools, more skills, or greater inborn talent, much less by virtue of having more power or owning more property. We should be entitled to more consumption from society's product only by virtue of expending more of our effort or otherwise enduring more sacrifice in its creation. This is morally appropriate and also provides proper incentives due to rewarding only what we can affect, not what we can't. With balanced job complexes, for eight hours of normally paced work Sally and Sam will receive the same income,. This is so if they have the same job, or any job at all. That is, no matter what their particular job may be, no matter what workplaces they are in and how different their mix of tasks is, and no matter how talented they are, if they at a balanced job complex, their total work load will be similar in its quality of life implications and empowerment effects, so the only difference specifically relevant to reward for their labors is going to be length and intensity of work done, and with these equal as well, the share of output earned will be equal. If length of time working or intensity of working differ somewhat, so will share of output earned. And who mediates decisions about the definition of job complexes and about what rates and intensities people are working? Workers do, of course, in their councils and with appropriate decision-making say using information culled by methods consistent with employing balanced job complexes and just remuneration.
There is one very large step left to proposing an alternative to capitalism, even in broad outline. How are the actions of workers and consumers connected? How do decisions made in one workplace and all others, and by collective consumer councils, as well as by individual consumers, all come into accord? What causes the total that is produced by workplaces to match the total consumed collectively by neighborhoods and other groups and privately by individuals? For that matter, what determines the relative social valuation of different products and choices? What decides how many workers will be in which industry producing how much? What determines whether some product should be made or not, and how much? What determines what investments in new productive means and methods should be undertaken and which others delayed or rejected? These are all matters of allocation, among others that are too numerous to list in their entirety here. Existing options for dealing with allocation are central planning (as was used in the old Soviet Union) and markets (as is used in all capitalist economies with minor or greater variations). In central planning a bureaucracy culls information, formulates instructions, sends these instructions to workers and consumers, gets some feedback, refines the instructions a bit, sends them again, and gets back obedience. In a market each actor in isolation from concern for other actors well being competitively pursues its own agenda by buying and selling labor (or the ability to do it) and buying and selling products and resources at prices determined by competitive bidding. Each actor seeks to gain more than other parties in their exchanges. The problem is, each of these two modes of connecting actors and units imposes on the rest of the economy pressures that subvert the values and structures we favor. Markets, for example, even without private capitalization of property, distort valuations to favor private over public benefits and to channel personalities in anti-social directions diminishing and even destroying solidarity. They reward primarily output and power and not only effort and sacrifice. They divide economic actors into a class that is saddled with rote and obedient labor and another that enjoys empowering circumstances and determines economic outcomes, also accruing most income. They isolate buyers and sellers as decision-makers who have no choice but to competitively ignore the wider implications of their choices, including effects on the ecology. Central planning, in contrast, is authoritarian. It denies self management and produces the same class division and hierarchy as markets built first around the distinction between planners and those who implement their plans, and extending outward to incorporate empowered and disempowered workers more generally. Both these allocation systems subvert the values we hold dear, rather than propelling them. What is the alternative to markets and central planning.
In place of top-down imposition of centrally planned choices and in place of competitive market exchange by atomized buyers and sellers, we opt for cooperative, informed choosing by organizationally and socially entwined actors each having a say in proportion as choices impact them and each able to access needed accurate information and valuations and having appropriate training and confidence to develop and communicate their preferences. This choice is consistent with council centered participatory self-management, with remuneration for effort and sacrifice, with balanced job complexes, with proper valuations of collective and ecological impacts, and with classlessness. To these ends, activists favor participatory planning, a system in which worker and consumer councils propose their work activities and consumer preferences in light of accurate knowledge of local and global implications and true valuations of the full social benefits and costs their choices will impose and garner. The system utilizes a back and forth cooperative communication of mutually informed preferences via a variety of simple communicative and organizing principles and vehicles including indicative prices, facilitation boards, rounds of accommodation to new information, and so on - all permitting actors to express their desires and to mediate and refine them in light of feedback about other's desires, arriving at compatible choices consistent with remuneration for effort and sacrifice, balanced job complexes, and participatory self managing influence.



Rating:
Summary: Friedman on Freedom
Review: 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.


Rating:
Summary: Timeless exposition of libertarian economics and politics
Review: 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.


Rating:
Summary: a must read for liberal progressives??
Review: 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.