Milton Friedman is one of the most famous economists that ever lived, yet reading his most famous book, Capitalism And Freedom; it is hard to see why. The book is surprisingly basic and doesn’t offer much of an argument. Friedman merely states things (such as the minimum wage causes unemployment) without offering any supporting evidence. It is as though simply saying it was enough to make it true. There are hardly any references or citations in the book, which makes it very difficult to know if any of what he says is actually true. There is no reference to history or current affairs or if any of his ideas have worked before or if his criticisms reflect reality.
As the title of the book suggests, Friedman believes Capitalism and Freedom are intrinsically linked and even goes as far to claim that capitalism causes freedom. He believes that as countries become more capitalist they become freer. As this is the central claim of the book, you would think he would offer a detailed argument for it. Friedman does nothing of the sort. He merely states his opinion in a few throwaway remarks and leaves it at that. Brief mention is made of Fascist countries that were capitalist yet repressive, but Friedman does not view this as a contradiction of his thesis. The later example of capitalist South American dictators and East Asian countries that grew rapidly without being free societies, also dent his thesis. He also ignores the common saying that correlation is not causation. Sure Western countries have grown freer over time but they have also grown less religious. Might this be a bigger driving force than capitalism? The state has also grown in size over the last two centuries as freedom grew; drawing a link between these two is no more spurious than Friedman’s thesis.
Considering the topic, it is unusual that Friedman pays little attention to economic freedoms but merely restricts himself to personal freedoms. So he stoutly defends the right to property and contracts but says nothing of the right to housing, employment, education or healthcare. Friedman uses the example of capital controls preventing a British citizen from travelling as no different from restrictions on travel in Communist countries. Hyperbole aside, he seems to suggest that if the end result is the same than there is little difference in the means. But what if poverty prevents ethnic minority students from attending college, is that the same as laws preventing them? Is there a difference between schools that are all-white due to racist laws and ones that are due to socio-economic factors? Are the poor minority students not unfree in both cases? These are important questions to grapple with, yet Friedman ignores them for a simplistic capitalism-is-super-for-everyone argument.
Friedman has had a massive influence on libertarians that continues to this day. His arguments and style of writing is the model for libertarian authors and bloggers whether they realise it or not. For example, he never uses references, sources, history or any real life examples apart from the occasional anecdote. Merely stating unions or minimum wages are bad is enough, no evidence is necessary. Likewise he never cites any opponents or the people he criticises and as a result debates arguments that government advocates don’t actually make, while ignoring the ones they do. He subscribes the belief that democracy is a means of the poor voting to rob the rich and other such 19th century views. He has a naive and unwavering belief in the market as the solution to every possible problem without exception; a dogmatic stance modern libertarians have inherited. He also seems to be the source of common misconceptions among libertarians such as the belief that big government mainly benefits big business. This is regularly stated by libertarians despite the fact that reality suggests otherwise. If this was true why would business groups oppose the expansion of government, support right wing parties and call for deregulation? If government regulation really helped business as much as libertarians claim, wouldn’t the top businessmen all be avid socialists? Likewise it is claimed that progressive taxation makes the poor poorer and forces them to pay more than they receive in welfare, a position that defies logic.
All of which is rather annoying, but it is not until chapter 8 that I reached what has to be one of the worst written discussions of discrimination in my life. The book was written in 1962 at the height of the Civil Rights Era and right as Martin Luther King was leading marches and protests. In response Friedman throws all sense of reality, common sense and intelligence out the window. He turns into a mindless ideologue spouting his mantra of market-good-government-bad regardless of ridiculous it sounds in this situation. He argues that racist employers harm themselves by refusing to hire qualified black employees. He states that these firms will be driven out of business by non-racist firms who hire based on talent. Now this sounds nice on paper but he gives no consideration at all to the fact that this obviously had not happened and racist businesses were still rife in America.
However, it gets worse. Much worse. Friedman writes that racist consumers who only shop at white-only stores are merely buying a specific product (and one they would have to pay more for). He writes that: “It is hard to see that discrimination can have any other meaning than a “taste” of others that one does not share.” (page 110) He says that preferring to be served by white rather than black staff is no different than preferring to listen to blues music over opera. My jaw dropped at the mind-numbing stupidity of this. How could anyone in their right mind think this? Here, at the same time that segregation is being challenged, Friedman is offering a justification and apology for discrimination.
He furthermore criticises fair employment legislation (you know, the ones with the crazy requirement that you cannot hire people on the basis of race) as interfering with “the freedom of individuals to enter into voluntary contracts”. (page 111) So if employers insist on paying black workers less than white workers and the black workers are compelled by poverty to accept, then Friedman sees no problem. Friedman’s perverse notion of freedom seems to include the freedom to discriminate but not the freedom to earn the same as people of a different skin colour doing the same work. He then decides to leave his brain at the door and claim (on page 113) that fair employment laws are no different than Jim Crow laws or Nuremburg Laws as they both involve imposing certain beliefs about race by the majority onto individuals. It defies all logic how a man who many consider to be intelligent (though I certainly don’t after reading his book) could be an apologist for blatant discrimination.
Friedman is also flippant, naive and ridiculous when discussing inequality. He firstly claims that a society where everyone had exactly the same income is not feasible, a point obvious to every egalitarian who ever existed. He then claims inequality is due to people’s choices, namely some people choosing to work hard and others choosing to have more leisure time. The fact that this in no way represents the working world does not cross his mind nor the fact that it is usually the lowest paid who work the longest hours in the most physical jobs. He further scrapes the bottom of the barrel by claiming that life is like a lottery and that we cannot begrudge those who win or redistribute the winnings (he ran out of arguments pretty quickly). Not content with absurd arguments, he moves on to downright untruths. He claims that the more capitalist a country is, the less inequality there is and that the US has less inequality than Britain which has less than France. This completely untrue and in fact it is the other way around. Likewise, countries with large welfare states (which Friedman considers converse to capitalism) have the least amount of inequality. These points should be obvious to a professional economist who has done to most basic of research and it is strange that Friedman missed them.
Before I read the book, I knew I would not agree with it. Even still, I was shocked at how poor an argument Friedman makes and his complete aversion to using evidence to support his claims. His defence of discrimination is disgraceful and unbelievable. The book consists less of arguments than of mere statements of belief as though ‘thus Friedman said, so it must be’. It makes me wonder how he came to be regarded as such an eminent and well respected economist considering he writes at the level of a standard blogger. Make no mistake about it; Friedman is only concerned about the freedom of some.