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Capitalism and Freedom: Fortieth Anniversary Edition (Paperback)
by Milton Friedman
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| Market price: ¥ 148.00
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| MSL Pointer Review:
A timeless classic that should be required reading for anyone interested in the American economic system. |
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Author: Milton Friedman
Publisher: University Of Chicago Press
Pub. in: November, 2002
ISBN: 0226264211
Pages: 230
Measurements: 8.2 x 5.2 x 0.5 inches
Origin of product: USA
Order code: BA00441
Other information: 40th Anv edition
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- Awards & Credential -
Selected by the Times Literary Supplement as one of the "hundred most influential books since the war". More than half a million copies sold to date. Milton Friedman is a Nobel Prize winner in economics. |
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- MSL Picks -
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.
Target readers:
General readers
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- Better with -
Better with
Tocqueville: Democracy in America (Library of America)
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Milton Friedman is a senior research fellow at the Hoover Institution, Stanford University, and the Paul Snowden Distinguished Service Professor Emeritus of Economics at the University of Chicago. In 1976 he was awarded the Nobel Prize in economics. He has written a number of books, including two with his wife, Rose D. Friedman - the bestselling Free to Choose and Two Lucky People: Memoirs, the latter published by the University of Chicago Press.
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From the Publisher:
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.
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| View all 11 comments |
Lemas Mitchell (MSL quote), China
<2007-01-09 00:00>
This book is much better than Road to Serfdom by F. A. 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! |
An American reader (MSL quote), USA
<2007-01-09 00:00>
Friedman's critics and fellow travelers in the libertarian fold rightfully viewed Capitalism and Freedom as a landmark book in 1962. The author brilliantly, if albeit briefly, articulated his theories of human behavior, which stood in contrast to the prevailing Keynesian ideology. The book has stood the test of time, and has become a classic part of libertarian literature. Like Marx's Das Kapital, the book has become a common point of reference for review in many college courses for members of the Left and the Right.
Some quick notes. The book was not written as an exhaustive economics treatise that purported to evaluate every single possible component of economics. Friedman did not present every single ideological permutation's view of price supports for farm products, as an example. Anyone looking for Every Possible Libertarian Opinion on a Given Economic Question, much less the contrasting viewpoints of Marxists/Neo-Keynesians/Flat Earth Society proponents, will need to look elsewhere (Keynesian Paul Samuelson's classic work, "Economics", is recommended for as a starting point). Friedman's reputation in the economics profession was not earned from this book, but his other works, especially his Monetary History of the United States.
As for Paul Krugman's criticisms of Milton Friedman, the potential reader should heed the old axiom, "consider the source". Krugman is a brilliant economist, who after being exposed for decades to a mass of information on the failings of government meddling in the economy, persistently recommends a watered down version of the same failed policies that didn't work in the past. Interestingly enough, he belongs to that peculiar breed of economist who stridently defends "free" trade between nations, but somehow believes that individual entrepreneurs in a national economy require "guidance" from Big Brother (regulate, baby, regulate).
Krugman, like many economists of all political preferences, carefully chooses data that conforms to his preconceived opinions (monetarism under Thatcher and the early Volker years in the US), while excluding any information that might challenge his assumptions. Krugman fails to mention that in 1979, with 21% interest rates and 13.5% CPI in the US, his fellow Keynesians were recommending as a "cure" an increase in inflationary spending, higher marginal tax rates, and increased spending by the government. Some cure. Which is exactly why so many people anxiously embraced the monetarist creed at the time. Equally bogus is his claim that Volker's altered policies in the mid-1980s were a reversion to Keynesian monetary doctrine. Krugman's analysis of supply-side economics, which Friedman never supported, contains many of the same "ignore the facts" approach.
Final note. Many of the same economists who criticize Friedman for his lack of intellectual rigor slam Robert Lucas, another University of Chicago Nobel Prize Winner, for being too rigorous and dependent on advanced mathematical models that don't reflect the "real world." |
David Swan (MSL quote), USA
<2007-01-09 00:00>
Although he never uses the term, Milton Friedman would probably be considered a libertarian with his view of a very limited Federal government. The main responsibilities of the Fed would be establishment and enforcement of laws, resolving property rights and maintaining the monetary system. Mr. Friedman considers himself a defender of `classical' liberalism which is essentially the liberalism of the 17th century that concerned itself with the distribution of power, protection of property rights and freedom of individuals.
As the heir apparent to Fredrick A. Hayek, Mr. Friedman takes up the battle against socialism, central planning and the concentration of power. Unlike his predecessor, however, Milton Friedman is extremely specific about the changes he would like to see in the way the U.S. government governs. He would like to see the elimination of rent control, minimum wage, the FCC, Social Security, most business regulations, tariffs on imports, public housing and national parks. Friedman was also an early proponent of school vouchers. In fact he goes so far as to call for the complete `denationalization' (privatization) of public education. The main thrust of Mr. Friedman's argument is that when the government attempts to solve social problems through central planning it invariably causes more problems than it solves, restricts individual freedoms and consolidating power in central planners.
There is an almost mystical reverence in this book for market forces and their ability, if left alone, to solve practically any social ill including racism. The problem is that Friedman presupposes that business will be forced to act in a rational and benevolent manner in order to maximize profits and survive in a competitive marketplace. Unfortunately this is often not the case. Businesses in the south were more than willing to forgo money offered by blacks. As a pro-business liberal Mr. Friedman sees regulations that force shops to hire blacks as unfair and damaging to those businesses that "[serve] a neighborhood inhabited by people who have a strong aversion to being waited on by a Negro clerk". However, Mr. Friedman's argument can be turned around as unfair and anti-capitalistic to blacks who offer their services and are denied based on race. This would apply to anyone barred from the marketplace, not just blacks.
Milton Friedman is so pro-business that he advocates a complete elimination of corporate taxes. In his mind business owes nothing to society and even says, "there is one and only one social responsibility of business - to use its resources and engage in activities to increase its profits". He then goes even further stating that, "Few trends could so thoroughly undermine the very foundation of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible". Not only does Friedman encourage unbridled greed he makes it the number one corporate responsibility in order to protect "free society". Once a person accepts that the relentless pursuit of self interest is the best thing a person can do for society he or she can justify just about anything.
One part of the book that seems particularly dated is Friedman's claim that Capitalism reduces wealth disparity. In fact he holds up the United States as a model for wealth equality. If only this were true. He completely ignores the real and growing threat to freedom brought on by the concentration of wealth because he doesn't see it as a problem. The average voting age citizen is welcome to vote for whichever party they choose at which point the parties in power will adjust policy to the needs of wealthy donors. The Bush administration has turned this it into an art form. Friedman also expresses concern that, "a large fraction of the public scrimps in their productive years to provide themselves with a higher standard of living in old age than they ever enjoyed in the prime of life". Mr. Friedman should be pleased to know that 40+ years after the books publication a large percentage of American's have more debt than assets. |
Eric Walde (MSL quote), USA
<2007-01-09 00:00>
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. |
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