Capitalism and Freedom Part Two – Friedman

In part one of this hard hitting series, I reviewed the 1982 Preface, the 2002 Preface, the original 1962 Preface, and the Introduction to Milton Friedman’s Capitalism and Freedom. It’s been 53 years since the book came out. It started out from a position of obscurity before taking the world by storm in the 80s. How does it fare today? This second instalment looks at Chapter 1: The Relation Between Economic Freedom and Political Freedom.

Friedman, The Relation Between Economic Freedom and Political Freedom

In chapter one, Friedman outlines what he is for and what he is against. Here is what he is for: competitive capitalism, laissez faire, economic freedom, political freedom, Jeremy Bentham, Benthamite liberalism and the Philosophical Radicals, the descendants of the Philosophical Radicals (Dicey, Mises, Hayek, Simons), liberals (in the 18th century meaning of ‘liberal’ meaning supporting the freedom of the individual and free trade), division of labour, and decentralized and/or small governments.

Here is what he is against: democratic socialism, totalitarian socialism, nationally mandated retirement plans (think Canada Pension Plan), fair trade laws, communism, Fabian socialism, Labour party, the BBC, centralized authority, rich magnates backing radical movements within capitalist societies (Field, Blaine, Lamont, and Engels).

How Could Anyone Not Like the BBC?

If you’re going to be against the BBC, you’d better be going against it on good authority. Friedman cites Churchill’s experience with the BBC leading up to WWII:

From 1988 to the outbreak of World War II, Churchill was not permitted to talk over the British radio, which was, of course, a government monopoly administered by the British Broadcasting Corporation. Here was a leading cities of his country, a Member of Parliament, a former cabinet minister, a man who was desperately trying by every device possible to persuade his countrymen to take steps to ward off the menace of Hitler’s Germany. He was not permitted to talk over the radio to the British people because his position was too “controversial”.

The larger point is that dissent is difficult in socialist and communist societies because of government interference. To be able to express dissent is a function of free societies. Government censorship and regulation of Google or Facebook in Communist China today would be analogous to Churchill’s experience with the BBC. To express dissent is not possible without danger to friends, family, job security, and perhaps life and limb. Look what happens to Putin’s enemies: 15 billion could not save liberal Yukos CEO Mikhail Khodorkovsky from being sent to jail on trumped up charges.

But what about dissent in democratic capitalist societies? Friedman turns to McCarthyism. During the McCarthy era, communist sympathizers or alleged communist and socialist sympathizers were routinely blacklisted by the government. Now, if you are blacklisted in a country where the government controls the job market, you are hooped. But in a country such as the USA where a large private and free market exists, you can dissent and be blacklisted and still be gainfully employed. Friedman uses 1950s Hollywood as an example. 15% of Hollywood movies in the 50s were written by blacklisted writers working under pseudonyms. Because you can dissent and still be gainfully employed, you remain free. Dissenting on an empty stomach in the middle of Siberia is a hard thing.

Strange Bedfellows

Now, Friedman doesn’t talk about this, but it strikes me as something odd and interesting enough to mention. Hollywood is a product of a free society. You don’t find Hollywood in East Germany or Russia. Hong Kong (capitalist) cinema is much more advanced than mainland China (communist) cinema. But take note of the values Hollywood promotes: private enterprise (i.e. corporations) are evil, the free market is evil, bigger government is better. Examples: ElysiumDivergence, and The Wolf of Wall Street. If someone into the free market becomes the hero, it is only by accident. Think of Oliver Stone’s Gordon Gekko. Stone was making a movie about what an ass Gekko was. It was only by some kind of accident that Gekko became a folk hero. It was sort of like John Milton writing Paradise Lost: Satan got all the cool lines and God got all the lame lines. Even though Milton was a devout Puritan, Satan emerged as the Byronic hero.

Now what happens if someone approaches Hollywood to do a movie where industrialists are the heroes, corporations do good, and government invades people’s civil liberties? Well, it just gets turned down. Atlas Shrugged was privately financed.

But here’s the point: isn’t it strange that anti-capitalist socialism loving Hollywood is made possible by a capitalist democracy?

Economic and Political Freedom

Most of the effort in the first chapter is directed at the following argument: economic freedom equals political freedom and vice versa. It seems pretty clear today, but I guess this wasn’t always the case. From Friedman’s arguments, it seems that back in the 50s and 60s, the prevailing argument was that economic freedom and political freedom were entirely different things.

Friedman argues that exchange controls in Great Britain after WWII (ostensibly a limit on economic freedom) made it impossible for her citizens to vacation in the United States (a political freedom). So limiting one limits the other. Conversely, compulsory old age programs administered by the government (ostensibly a limit on political freedom) results in an additional clawback on each paycheque (a harm to economic freedom).

As an aside, when I worked for Bayside Mechanical, there was a DB pension plan administered by Local 324, the Plumber & Pipefitter’s Union. I deregistered from the plan and took a higher salary instead. The freedom to be able to choose my own investments and my own destiny meant more than the convenience of having a third party make my investments for me. That the trustees of the carpenter’s union a few years ago had squandered their pension funds on speculative real estate investments made that choice a no brainer. With freedom comes responsibility to do the right thing. In fact, true freedom is only free in the sense that it is free to do the right thing.

Until next time, I’m Edwin Wong and I’m thankful for the freedom to be Doing Melpomene’s Work.

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