Is capitalism the cause of differences or the reason why those differences are so small?
Influential Nobel Prize-winning economist Milton Friedman (1912-2006), who is a champion or a scourge depending on your political persuasion, long argued the latter. First published at the height of the Cold War in 1962, Friedman argued in “Capitalism and Freedom” that economic freedom is an essential component of political freedom, and that a capitalist system is the best way to promote both. This book serves as essentially the foundation of his status as a kind of public intellectual, though even his critics must acknowledge he went beyond punditry — he won the 1976 Nobel Prize in economics due to his scholarly work on monetary policy.
Attacks of capitalism often confuse what that economic system causes with what it exposes. As Adam Smith wrote and Friedman quotes: “There is much ruin in a nation.”
I read a 2002 edition, but when it was originally published the book was the beginning of a movement that led to Friedman’s bestselling Free to Choose (first published in 1980 alongside a PBS series of the same name) and is often associated with the Reagan Revolution. Friedman’s work heavily influenced conservative American politics.
In this earlier book, Friedman argues that government intervention in the economy, such as through regulation and redistribution, is detrimental to individual freedom and economic prosperity. He also advocates for the privatization of certain government services, such as education and healthcare.
The book was published during a time of Cold War tensions and the rise of socialist and interventionist economic policies in the United States and around the world. Friedman has lasting influence. For one, his description of monetary policy having “long and variable lags” has been often referenced to this pandemic era. In 1970, his ‘Friedman doctrine’ that companies existed to maximize profit for shareholders came to define the modern era, and experienced a revival 50 yers later.
Read my notes from the book below.
Continue reading Capitalism & Freedom
