53 pages • 1 hour read
Milton FriedmanCapitalism And Freedom
Nonfiction | Book | Adult | Published in 1962A modern alternative to SparkNotes and CliffsNotes, SuperSummary offers high-quality Study Guides with detailed chapter summaries and analysis of major themes, characters, and more.
Symbols & Motifs
The Free Market as Savior
According to Friedman, the market is capable of addressing many problems that might exist in a capitalist society. When used properly, it can save a society from a host of ills. Friedman describes how a free market supports individual autonomy, gives consumers a variety of products to choose from, and raises the quality of these products through competition. He notes how the economic freedom of the free market facilitates political freedom while economic systems of the past made “the typical state of mankind [...] tyranny, servitude, and misery” (9). Friedman also argues that the free market prevents coercion, regardless of a person’s beliefs, personality, and other characteristics unrelated to trade.
Friedman believes the free market and systems that embrace it—namely competitive capitalism—deserve credit for the most important advances of the last several centuries, including the end of serfdom and the growth of the middle class, innovations such as cars and central heating, and reductions in prejudicial treatment of minorities. He also thinks it encourages individual talent to flourish, raises the average standard of living, and minimizes inequality. Of particular importance is the free market’s role in supporting social environments that allow political freedom, dissent, and open debate. As Friedman puts it, “I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity” (9).
When the market is not addressing a society’s problems sufficiently, Friedman tends to think the cause is government intervention or another source of restriction or inefficiency. There are also a few issues many people view as problems—unequal distribution of income, for example—that Friedman doesn’t find overly problematic.
The Government as Meddlesome Monster
In the Introduction to Capitalism and Freedom, Friedman asks, “How can we keep the government we create from becoming a Frankenstein that will destroy the very freedom we establish it to protect?” (2). He probably chose the monster from Mary Shelley’s novel Frankenstein because it is a manmade creation that spirals out of control, leaving disaster in its wake. Friedman fears that the government poses a similar danger if it grows too large or gains too much power. He also worries that the government may award too much control to a small group of decision-makers. A prime example of this is the concentrated power the Fed received soon after its formation. According to Friedman, mismanagement of this power led to the frightening effects of the Great Depression.
Friedman also shares many other examples of the government meddling in areas it ought to avoid, noting that this intervention impedes the pursuit of freedom, liberals’ most cherished value. At the end of Chapter 2, he shares a lengthy list of them that includes import quotas, rent control, minimum wage requirements, military conscription during peacetime, and censorship by the Federal Communications Commission. Friedman describes several reasons for this meddling, which range from paternalistic concerns about citizens’ ability to make suitable choices for themselves, to doubts about the free market’s ability to produce socially-desirable results, to weaknesses inherent to human nature. Despite all of this, he acknowledges that government tends to have a combination of good and bad effects.
Robinson Crusoe
Friedman references Robinson Crusoe, the novel by Daniel Defoe, to illustrate several concepts in Capitalism and Freedom. He uses the title character, a castaway living on an isolated island, in his discussion of households and their economic activities. He says a society that uses voluntary exchange in a free, private-enterprise economy “consists of a number of independent households—a collection of Robinson Crusoes” (13). Here, he uses Crusoe to stress that households have the option of producing goods for themselves, thereby avoiding exchange with others. Alternatively, households may take an indirect approach, producing the goods they are best able to produce and trading with other households for the rest. In the latter situation, each Crusoe must form a voluntary agreement with another Crusoe, and both must agree on the terms of the exchange. Friedman says both situations are free of coercion and thus preserve the type of freedom liberals are keen to protect.
Crusoe reappears in Chapter 10, in Friedman’s discussion about distributing income and wealth. He invents a scenario involving four Crusoes stranded on four different islands in the same neighborhood. One of these islands is full of resources and easy to live on, while the other three are not. Friedman asks the reader if it would be justifiable for the struggling Crusoes to gang up and force the lucky Crusoe to share his wealth, if they had asked him for help and he refused. He thinks many will say yes in this situation but no if the Crusoes were replaced by the reader and three of his friends, all of whom are eager to pick up a single $20 bill they found on the sidewalk. In Friedman’s view, coercion is not warranted in either case. He shares these scenarios to show that a person’s perspective shapes how he answers questions about distribution of wealth. When the reader becomes one of the characters in the scenario—the lucky Crusoe—his interests shift, and his conclusion is likely to do the same.
