[Milton Friedman] Capitalism and Freedom

  • Title: Capitalism and Freedom
  • Author: Milton Friedman
  • Published: 2002
  • Publisher: University of Chicago Press
  • ISBN: 0-226-26421-1

Capitalism and Freedom” is Friedman’s most influential book of neoliberalism. The central theme of this book is to argue how to maximize freedom through the free market and a small government.

Main Ideas

  • Restrict the role of the government – the smaller, the better –
    • Policing, National defense, and protection of private property are the only roles of the government; all others are not necessary
    • Against the Keynesian Economic spending
  • Free Market can solve all problems including labor and schooling

Criticism

Friedman argues that his idea is based on freedom and results in the ideal democratic society. However, his experiments in South American countries turned out disastrous.

All economic models are restrictive – based on a model that deals with limited variables and ignores others -. Friedman’s idea lacks the most critical factor, “human beings.” He regards a human just like a $1 bill. It is rather an intellectual deception and nothing but an elitism. As Noam Chomsky mentions, he just wants the profit of a few over many.

The most serious problem of this book is that it has been so popular despite its logical pitfalls of most of the claims. Friedman’s argument is out of context or deceptive in general. One example is his preference for a flat tax rate over progressive tax rates; Friedman argues that by adopting a proper flat tax, the total tax revenue can be increased. But the point of the progressive tax rate is not the amount of collected tax money but the redistribution of income. I do not think Friedman did not know this simple fact.

There are two important arguments that need to be mentioned.

  1. Adopting the free market might cause a short-term problem but will result in long-term benefits.
    • History shows the opposite, as we can see in the South American countries. A lot of examples can be found in Naomi Klein’s “The shock doctrine.”
  2. Development of Asian Tigers (Taiwan, South Korea, …, and even Japan) was due to capitalism and free-market policies.
    • In his book “Bad Samaritans,” Ha-Joon Chang shows that Asian tigers had developed their economy through protectionism and government-led industries.

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