12 December 2017

Revisiting Milton Friedman’s masterpiece

By Peter Lewin

I first read the following paragraph as a nerdy college student sometime between 1966 and 1968:

In a much quoted passage in his inaugural address, President Kennedy said, “Ask not what your country can do for you – ask what you can do for your country.” It is a striking sign of the temper of our times that the controversy about this passage centered on its origin and not on its content. Neither half of the statement expresses a relation between citizen and his government that is worthy of the ideals of free men in a free society.

This is the first paragraph of chapter one of Milton Friedman’s classic little book Capitalism and Freedom (C&F), first published by the University of Chicago Press in 1962, and since republished numerous times unaltered. The italics are mine.

I can still recall, after half a century, the shock that this paragraph produced in me as I read it. I could scarcely believe that Friedman had the temerity to so brazenly criticise that most admirable and dynamic of world leaders, the young, charismatic prince of the free world, the prophet of a new tolerant age, John Fitzgerald Kennedy. What could he possibly mean?

Capitalism and Freedom

I had to read the book to find out. It was a uniquely transformative experience. I credit this book, more than any other work, with transforming my thinking about the meaning of freedom and the character of a free society. It was the beginning of my life’s journey as an economist dedicated to the mission of spreading the essential message that Friedman articulated in this work.

Fifty years later, in preparation for a new academic program to engage a select group of undergraduate business students, I am rereading Friedman’s C&F. At the same time, I am dipping into F. A. Hayek’s The Road to Serfdom (RS) by way of comparison. Hayek’s work was first published in England in March of 1944 and in America by the University of Chicago Press in September of that same year. The two books are historically and philosophically connected.

Perhaps not surprisingly, rereading C&F, I see so many things now that I did not see as a young reader that add to my immense appreciation of the book – especially the introductory foundational chapters (this notwithstanding that I take issue with some of its claims – as Friedman himself would certainly appreciate).

Clearly, Friedman, by his own admission, was much influenced by Hayek (as evidenced by his forwards to the 1976 and 1994 editions of RS and his numerous references to it in C&F). Looking at the two books together one gets a sense of how the “climate of opinion” changed over the years. Both works help the reader to understand the nature of the classical western liberal tradition and the development of ideas marshalled against it. But for Friedman’s readers, these ideas are different from those faced by Hayek’s readers.

Hayek and Friedman

For example, the meaning of “socialism” changed from one focused on central planning to one dealing with the role of government in redistributing income and micromanaging commerce by way of regulation. And reading C&F in 2017 I realise how, once again, the nature of the anti-capitalist arguments have changed to suit the contemporary intellectual anxieties and agendas.

This makes the book a valuable source for discerning the history of ideas in relation to contemporary policies, over the broad sweep of Western civilization, in addition to whatever enduring value it retains as both a tract for evaluation of the policies of its time and today’s.

Something else I noticed was Friedman’s careful choice of words. He speaks not so much of “capitalism” as of competitive capitalism”- thus distinguishing it from “crony capitalism” – which, as Randall Holcombe has taught us, should be referred to simply as “cronyism” – but given its reliance on the alliance between big business and government, is naturally confused with capitalism.

Of course, the two works are very different. Friedman’s book is much more accessible to intelligent undergraduates than Hayek’s, which was intentionally addressed to intellectuals. Friedman’s book underscores his talent as perhaps the best communicator of the political-economic ideas of the classical liberal tradition of the last century. We may never know the full extent of his achievements in spreading the cause of liberty and helping to lift untold millions out of the grip of poverty and deprivation.

He travelled the globe talking to important people wherever he went, uncompromisingly articulating his message. This book is but a glimpse of the force for change that he was to become. Certainly, Friedman could not be accused of effecting a humble tone or a retiring demeanour, yet there is nothing in this book, or in his work on political-economy generally to suggest that he claimed any originality in this area.

He was an economist, not a political philosopher, but he arguably did as much good in advancing an understanding of the latter than of the former. Reading the text carefully provides one a very useful springboard for the discussion of Hayek’s deeper RS and of other important works. I plan to use it that way.

This article was originally published on FEE.org. Read the original article.

Peter Lewin is Clinical Professor of Finance and Managerial Economics at UT Dallas and a member of the FEE Faculty Network.