Book Review: Capitalism and Freedom

The following was initially posted on Yi! News on April 20, 2013

Capitalism and Freedom – – Milton Friedman (University of Chicago Press, 1962)

Milton Friedman was a Nobel Prize-winning economist whose influence cannot be overstated. If you’ve read a single op-ed in the Wall Street Journal; if you’ve read a single economics textbook; if you’ve listened to a single elected officeholder extol the virtues of the free market, then you’ve seen Friedman at work.

 In modern America, for a “classical liberal” to attain such a commonplace role in our political discussions and education is a remarkable achievement. Even Friedman’s contemporaries and allies will admit that we live in a society mostly antithetical to his ideas. Yet Friedman was able to convince large swaths of academia and the American citizenry that, maybe, excessive top-down regulation of the economy isn’t such a good idea.

Capitalism and Freedom provides us with a clue as to how he was able to do so. In only 230 pages, Friedman uses plainly-worded, comprehensible prose to advance a number of controversial arguments, and he does so convincingly.

Each chapter of the book focuses on a different policy topic. The chapters often seem disjointed or unconnected, because they are; they’re based on separate lectures delivered by Friedman and pieced together by his wife, Rose, with only minor edits. In this respect, the book lacks the sort of narrative power of, say, Hayek’s Road to Serfdom. But there are some common themes throughout: that government is a necessary evil, but that its power should be extended only when absolutely necessary; that government is subject to the same outside influences and failures that the market is; that freedom is an inherent good worth protecting; and finally, that economic and political liberties are inseparable (the main thesis behind Road to Serfdom).

These themes underlie Friedman’s analyses of various policies, yet do not appear to obscure his objectivity. When discussing occupational licensure, for example, he notes how it harms liberty, but the crux of his critique is pointed at its practical effects, like how it raises prices and lowers overall employment. Similarly, his argument against excessive antitrust regulations is based on the condition of society and technology, not on a philosophical dislike of such laws.

Friedman guides the reader through the stated goals of many laws that we’ve come to accept as a given, summarizes the results of these laws, and then discusses alternatives (both market and government oriented) that could accomplish more while costing less. One does not have to be a libertarian to agree with him on many of the issues.

On some topics, particularly education, Friedman’s familiarity and creativity in solutions are mind boggling. Friedman specialized in monetary policy, was writing in 1962, and yet proposes ideas like the creation of charter schools and school vouchers, concepts that have only gained steam in the past ten years.

For all the practical policy prescriptions, however, Friedman is at his best when discussing political philosophy. (Only three of the book’s 13 chapters focus on philosophy as opposed to issues; if the reader gets nothing out of this review, they should absolutely read chapters 1, 2, and 13.) The very first paragraph of the book contains one of the best summaries of modern libertarian thought ever written:

 “To the free man, the country is the collection of individuals who compose it, not something over and above them. He is proud of a common heritage and loyal to common traditions. But he regards government as a means, an instrumentality, neither a grantor of favor and gifts, nor a master or god to be blindly worshiped and served.”

The strength of “Capitalism”, thus, isn’t necessarily that it will convert people who disagree with him, or even that its analyses are without error. It is in its capacity to encourage the reader to question conventional wisdom, and to think about important issues more critically.

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