Milton Friedman, “Capitalism and Freedom” ()  EBook PDF, KB, This text-based PDF or EBook was created from the HTML version of this. Capitalism and freedom / Milton Friedman; with the assistance of Rose D. Friedman; . this book, increases in economic freedom have gone hand in hand with. C. Internal Generation of Data When firms have to conduct studies in foreign countries, they may find traditional data gathering and analytical.
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1 Liberty and free market capitalism Notes on Milton Friedman January 7, Today, I would like to talk about the issue of capitalism and freedom or more. Capitalism. Economic freedom. Political freedom. A B S T R A C T. This essay tests Milton Friedman's conjecture that capitalism is a necessary condition for. PDF | Capitalism and freedom is not only the title of a book by Milton Friedman playing a pivotal role in asserting worldwide the neoliberal paradigm, but.
By relying primarily on voluntary co-operation and private enterprise, in both economic and other activities, we can insure that the private sector is a check on the powers of the governmental sector and an effective protection of freedom of speech, of religion, and of thought. The second broad principle is that government power must be dispersed. If government is to exercise power, better in the county than in the state, better in the state than in Washington.
If I do not like what my local community does, be it in sewage disposal, or zoning, or schools, I can move to another local community, and though few may take this step, the mere possibility acts as a check.
If I do not like what my state does, I can move to another. If I do not like what Washington imposes, I have few alternatives in this world of jealous nations. The very difficulty of avoiding the enactments of the federal government is of course the great attraction of centralization to many of its proponents. It will enable them more effectively, they believe, to legislate programs that as they see it are in the interest of the public, whether it be the transfer of income from the rich to the poor or from private to governmental purposes.
They are in a sense right. But this coin has two sides. The power to do good is also the power to do harm; those who control the power today may not tomorrow; and, more important, what one man regards as good, another may regard as harm. The great tragedy of the drive to centralization, as of the drive to extend the scope of government in general, is that it is mostly led by men of good will who will be the first to rue its consequences. The preservation of freedom is the protective reason for limiting and decentralizing governmental power.
But there is also a constructive reason. The great advances of civilization, whether in architecture or painting, in science or literature, in industry or agriculture, have never come from centralized government. Columbus did not set out to seek a new route to China in response to a majority directive of a parliament, though he was partly financed by an absolute monarch.
Newton and Leibnitz; Einstein and Bohr; Shakespeare, Milton, and Pasternak; Whitney, McCormick, Edison, and Ford; Jane Addams, Florence Nightingale, and Albert Schweitzer; no one of these opened new frontiers in human knowledge and understanding, in literature, in technical possibilities, or in the relief of human misery in response to governmental directives. Their achievements were the product of individual genius, of strongly held minority views, of a social climate permitting variety and diversity.
Government can never duplicate the variety and diversity of individual action. At any moment in time, by imposing uniform standards in housing, or nutrition, or clothing, government could undoubtedly improve the level of living of many individuals; by imposing uniform standards in schooling, road construction, or sanitation, central government could undoubtedly improve the level of performance in many local areas and perhaps even on the average of all communities. But in the process, government would replace progress by stagnation, it would substitute uniform mediocrity for the variety essential for that experimentation which can bring tomorrow's laggards above today's mean.
This book discusses some of these great issues. Its major theme is the role of competitive capitalism the organization of the bulk of economic activity through private enterprise operating in a free market as a system of economic freedom and a necessary condition for political freedom.
Its minor theme is the role that government should play in a society dedicated to freedom and relying primarily on the market to organize economic activity. The first two chapters deal with these issues on an abstract level, in terms of principles rather than concrete application. The later chapters apply these principles to a variety of particular problems. An abstract statement can conceivably be complete and exhaustive, though this ideal is certainly far from realized in the two chapters that follow.
The application of the principles cannot even conceivably be exhaustive. Each day brings new problems and new circumstances. That is why the role of the state can never be spelled out once and for all in terms of specific functions. It is also why we need from time to time to re-examine the bearing of what we hope are unchanged principles on the problems of the day.
A by-product is inevitably a retesting of the principles and a sharpening of our understanding of them. It is extremely convenient to have a label for the political and economic viewpoint elaborated in this book. The rightful and proper label is liberalism.
Unfortunately, "As a supreme, if unintended compliment, the enemies of the system of private enterprise have thought it wise to appropriate its label",1so that liberalism has, in the United States, come to have a very different meaning than it did in the nineteenth century or does today over much of the Continent of Europe.
As it developed in the late eighteenth and early nineteenth centuries, the intellectual movement that went under the name of liberalism emphasized freedom as the ultimate goal and the individual as the ultimate entity in the society.
It supported laissez faire at home as a means of reducing the role of the. In political matters, it supported the development of representative government and of parliamentary institutions, reduction in the arbitrary power of the state, and protection of the civil freedoms of individuals.
Beginning in the late nineteenth century, and especially after in the United States, the term liberalism came to be associated with a very different emphasis, particularly in economic policy. It came to be associated with a readiness to rely primarily on the state rather than on private voluntary arrangements to achieve objectives regarded as desirable.
The catchwords became welfare and equality rather than freedom.
The nineteenth-century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth-century liberal regards welfare and equality as either prerequisites of or alternatives to freedom.
In the name of welfare and equality, the twentieth-century liberal has come to favor a revival of the very policies of state intervention and paternalism against which classical liberalism fought.
In the very act of turning the clock back to seventeenth-century mercantilism, he is fond of castigating true liberals as reactionary! The change in the meaning attached to the term liberalism is more striking in economic matters than in political.
The twentieth-century liberal, like the nineteenth-century liberal, favors parliamentary institutions, representative government, civil rights, and so on. Yet even in political matters, there is a notable difference.
Jealous of liberty, and hence fearful of centralized power, whether in governmental or private hands, the nineteenth-century liberal favored political decentralization. Committed to action and confident of the beneficence of power so long as it is in the hands of a government ostensibly controlled by the electorate, the twentieth-century liberal favors centralized government.
He will resolve any doubt about where power should be located in favor of the state instead of the city, of the federal government instead of the state, and of a world organization instead of a national government. Because of the corruption of the term liberalism, the views that formerly went under that name are now often labeled conservatism.
But this is not a satisfactory alternative. The nineteenth-century liberal was a radical, both in the etymological sense of going to the root of the matter, and in the political sense of favoring major changes in social institutions.
So too must be his modern heir. We do not wish to conserve the state interventions that have interfered so greatly with our freedom, though, of course, we do wish to conserve those that have promoted it, Moreover, in practice, the term conservatism has come to cover so wide a range of views, and views so incompatible with one another,. Partly because of my reluctance to surrender the term to proponents of measures that would destroy liberty, partly because I cannot find a better alternative, I shall resolve these difficulties by using the word liberalism in its original sense as the doctrines pertaining to a free man.
Oxford University Press, p. It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem; and that any kind of political arrangements can be combined with any kind of economic arrangements. The chief contemporary manifestation of this idea is the advocacy of "democratic socialism" by many who condemn out of hand the restrictions on individual freedom imposed by "totalitarian socialism" in Russia, and who are persuaded that it is possible for a country to adopt the essential features of Russian economic arrangements and yet to ensure individual freedom through political arrangements.
The thesis of this chapter is that such a view is a delusion, that there is an intimate connection between economics and politics, that only certain combinations of political and economic arrangements are possible, and that in particular, a society which is socialist cannot also be democratic, in the sense of guaranteeing individual freedom. Economic arrangements play a dual role in the promotion of a free society.
On the one hand, freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself. In the second place, economic freedom is also an indispensable means toward the achievement of political freedom. The first of these roles of economic freedom needs special emphasis because intellectuals in particular have a strong bias against regarding this aspect of freedom as important. They tend to express contempt for what they regard as material aspects of life, and to regard their own pursuit of allegedly higher values as on a different plane of significance and as deserving of special attention.
For most citizens of the country, however, if not for the intellectual, the direct importance of economic freedom is at least comparable in significance to the indirect importance of economic freedom as a means to political freedom. The citizen of Great Britain, who after World War II was not permitted to spend his vacation in the United States because of exchange control, was being deprived of an essential freedom no less than the citizen of the United States, who was denied the opportunity to spend his vacation in Russia because of his political views.
The one was ostensibly an economic limitation on freedom and the other a political limitation, yet there is no essential difference between the two. The citizen of the United States who is compelled by law to devote something like 10 per cent of his income to the download of a particular kind of retirement contract, administered by the government, is being deprived of a corresponding part of his personal freedom.
How strongly this deprivation may be felt and its closeness to the deprivation of religious freedom, which all would regard as "civil" or "political" rather than "economic", were dramatized by an episode involving a group of farmers of the Amish sect. On grounds of principle, this group regarded compulsory federal old age programs as an infringement of their personal individual freedom and refused to pay taxes or accept benefits.
As a result, some of their livestock were sold by auction in order to satisfy claims for social security levies. True, the number of citizens who regard compulsory old age insurance as a deprivation of freedom may be few, but the believer in freedom has never counted noses. A citizen of the United States who under the laws of various states is not free to follow the occupation of his own choosing unless he can get a license for it, is likewise being deprived of an essential part of his freedom.
So is the man who would like to exchange some of his goods with, say, a Swiss for a watch but is prevented from doing so by a quota. So also is the Californian who was thrown into jail for selling Alka Seltzer at a price below that set by the manufacturer under so-called "fair trade" laws. So also is the farmer who cannot grow the amount of wheat he wants. And so on. Clearly, economic freedom, in and of itself, is an extremely important part of total freedom.
Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power. The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.
Historical evidence speaks with a single voice on the relation between political freedom and a free market. 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.
Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development.
Political freedom in this instance clearly came along with the free. So also did political freedom in the golden age of Greece and in the early days of the Roman era. History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition. Yet, in each, private enterprise was the dominant form of economic organization.
It is therefore clearly possible to have economic arrangements that are fundamentally capitalist and political arrangements that are not free. Even in those societies, the citizenry had a good deal more freedom than citizens of a modern totalitarian state like Russia or Nazi Germany, in which economic totalitarianism is combined with political totalitarianism. Even in Russia under the Tzars, it was possible for some citizens, under some circumstances, to change their jobs without getting permission from political authority because capitalism and the existence of private property provided some check to the centralized power of the state.
The relation between political and economic freedom is complex and by no means unilateral. In the early nineteenth century, Bentham and the Philosophical Radicals were inclined to regard political freedom as a means to economic freedom. They believed that the masses were being hampered by the restrictions that were being imposed upon them, and that if political reform gave the bulk of the people the vote, they would do what was good for them, which was to vote for laissez faire. In retrospect, one cannot say that they were wrong.
There was a large measure of political reform that was accompanied by economic reform in the direction of a great deal of laissez faire. An enormous increase in the well-being of the masses followed this change in economic arrangements. The triumph of Benthamite liberalism in nineteenth-century England was followed by a reaction toward increasing intervention by government in economic affairs.
This tendency to collectivism was greatly accelerated, both in England and elsewhere, by the two World Wars. Welfare rather than freedom became the dominant note in democratic countries. Recognizing the implicit threat to individualism, the intellectual descendants of the Philosophical Radicals Dicey, Mises, Hayek, and Simons, to mention only a few feared that a continued movement toward centralized control of economic activity would prove The Road to Serfdom, as Hayek entitled his penetrating analysis of the process.
Their emphasis was on economic freedom as a means toward political freedom. Events since the end of World War II display still a different relation between economic and political freedom. Collectivist economic planning has indeed interfered with individual freedom. At least in some countries, however, the result has not been the suppression of freedom, but the reversal of economic policy. England again provides the most striking example. The turning point was perhaps the ''control of engagements" order which, despite great misgivings, the Labour party found it necessary to impose in order to carry out its economic policy.
Fully enforced and carried through, the law would have involved centralized allocation of individuals to occupations. This conflicted so sharply with personal liberty that it was enforced in a negligible number of cases, and then repealed after the law had been in effect for only a short period. Its repeal ushered in a decided shift in economic policy, marked by reduced reliance on centralized "plans" and "programs", by the dismantling of many controls, and by increased emphasis on the private market.
A similar shift in policy occurred in most other democratic countries. The proximate explanation of these shifts in policy is the limited success of central planning or its outright failure to achieve stated objectives. However, this failure is itself to be attributed, at least in some measure, to the political implications of central planning and to an unwillingness to follow out its logic when doing so requires trampling rough-shod on treasured private rights.
It may well be that the shift is only a temporary interruption in the collectivist trend of this century. Even so, it illustrates the close relation between political freedom and economic arrangements. Historical evidence by itself can never be convincing. Perhaps it was sheer coincidence that the expansion of freedom occurred at the same time as the development of capitalist and market institutions.
Why should there be a connection? What are the logical links between economic and political freedom? In discussing these questions we shall consider first the market as a direct component of freedom, and then the indirect relation between market arrangements and political freedom. A by-product will be an outline of the ideal economic arrangements for a free society. As liberals, we take freedom of the individual, or perhaps the family, as our ultimate goal in judging social arrangements.
Freedom as a value in this sense has to do with the interrelations among people; it has no meaning whatsoever to a Robinson Crusoe on an isolated island without his Man Friday.
Robinson Crusoe on his island is subject to "constraint," he has limited "power," and he has only a limited number of alternatives, but there is no problem of freedom in the sense that is relevant to our discussion. Similarly, in a society freedom has nothing to say about what an individual does with his freedom; it is not an all-embracing ethic.
Indeed, a major aim of the liberal is to leave the ethical problem for the individual to wrestle with. The "really" important ethical. There are thus two sets of values that a liberal will emphasize the values that are relevant to relations among people, which is the context in which he assigns first priority to freedom; and the values that are relevant to the individual in the exercise of his freedom, which is the realm of individual ethics and philosophy. The liberal conceives of men as imperfect beings.
He regards the problem of social organization to be as much a negative problem of preventing "bad" people from doing harm as of enabling "good" people to do good; and, of course, "bad" and "good" people may be the same people, depending on who is judging them.
The basic problem of social organization is how to co-ordinate the economic activities of large numbers of people. Even in relatively backward societies, extensive division of labor and specialization of function is required to make effective use of available resources. In advanced societies, the scale on which coordination is needed, to take full advantage of the opportunities offered by modern science and technology, is enormously greater.
Literally millions of people are involved in providing one another with their daily bread, let alone with their yearly automobiles.
The challenge to the believer in liberty is to reconcile this widespread interdependence with individual freedom. Fundamentally, there are only two ways of co-ordinating the economic activities of millions.
One is central direction involving the use of coercion the technique of the army and of the modern totalitarian state. The other is voluntary co-operation of individuals the technique of the market place. The possibility of co-ordination through voluntary co-operation rests on the elementary yet frequently denied proposition that both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed. Exchange can therefore bring about co-ordination without coercion.
A working model of a society organized through voluntary exchange is a free private enterprise exchange economy what we have been calling competitive capitalism.
In its simplest form, such a society consists of a number of independent households a collection of Robinson Crusoes, as it were. Each household uses the resources it controls to produce goods and services that it exchanges for goods and services produced by other households, on terms mutually acceptable to the two parties to the bargain.
It is thereby enabled to satisfy its wants indirectly by producing goods and services for others, rather than directly by. The incentive for adopting this indirect route is, of course, the increased product made possible by division of labor and specialization of function.
Since the household always has the alternative of producing directly for itself, it need not enter into any exchange unless it benefits from it. Hence, no exchange will take place unless both parties do benefit from it. Co-operation is thereby achieved without coercion. Specialization of function and division of labor would not go far if the ultimate productive unit were the household. In a modern society, we have gone much farther.
We have introduced enterprises which are intermediaries between individuals in their capacities as suppliers of service and as downloadrs of goods. And similarly, specialization of function and division of labor could not go very far if we had to continue to rely on the barter of product for product. In consequence, money has been introduced as a means of facilitating exchange, and of enabling the acts of download and of sale to be separated into two parts. Despite the important role of enterprises and of money in our actual economy, and despite the numerous and complex problems they raise, the central characteristic of the market technique of achieving co-ordination is fully displayed in the simple exchange economy that contains neither enterprises nor money.
As in that simple model, so in the complex enterprise and money- exchange economy, co-operation is strictly individual and voluntary provided: It is far easier to state these provisos in general terms than to spell them out in detail, or to specify precisely the institutional arrangements most conducive to their maintenance.
Indeed, much of technical economic literature is concerned with precisely these questions.
The basic requisite is the maintenance of law and order to prevent physical coercion of one individual by another and to enforce contracts voluntarily entered into, thus giving substance to "private". Aside from this, perhaps the most difficult problems arise from monopoly which inhibits effective freedom by denying individuals alternatives to the particular exchange and from "neighborhood effects" effects on third parties for which it is not feasible to charge or recompense them.
These problems will be discussed in more detail in the following chapter. So long as effective freedom of exchange is maintained, the central feature of the market organization of economic activity is that it prevents one person from interfering with another in respect of most of his activities.
The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected from coercion by the consumer because of other consumers to whom he can sell. The employee is. And the market does this impersonally and without centralized authority. Indeed, a major source of objection to a free economy is precisely that it does this task so well.
It gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.
The existence of a free market does not of course eliminate the need for government. On the contrary, government is essential both as a forum for determining the "rules of the game" and as an umpire to interpret and enforce the rules decided on. What the market does is to reduce greatly the range of issues that must be decided through political means, and thereby to minimize the extent to which government need participate directly in the game.
The characteristic feature of action through political channels is that it tends to require or enforce substantial conformity. The great advantage of the market, on the other hand, is that it permits wide diversity. It is, in political terms, a system of proportional representation. Each man can vote, as it were, for the color of tie he wants and get it; he does not have to see what color the majority wants and then, if he is in the minority, submit.
It is this feature of the market that we refer to when we say that the market provides economic freedom. But this characteristic also has implications that go far beyond the narrowly economic.
Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest possible extent and the dispersal and distribution of whatever power cannot be eliminated a system of checks and balances.
By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.
Economic power can be widely dispersed. There is no law of conservation which forces the growth of new centers of economic strength to be at the expense of existing centers.
Political power, on the other hand, is more difficult to decentralize. There can be numerous small independent governments. But it is far more difficult to maintain numerous equipotent small centers of political power in a single large government than it is to have numerous centers of economic strength in a single large economy.
There can be many millionaires in one large economy. But can there be more than one really outstanding leader, one person on whom the energies and enthusiasms of his countrymen are centered?
If the central government gains power, it is likely to be at the expense. There seems to be something like a fixed total of political power to be distributed. Consequently, if economic power is joined to political power, concentration seems almost inevitable. On the other hand, if economic power is kept in separate hands from political power, it can serve as a check and a counter to political power.
The force of this abstract argument can perhaps best be demonstrated by example. Let us consider first, a hypothetical example that may help to bring out the principles involved, and then some actual examples from recent experience that illustrate the way in which the market works to preserve political freedom. One feature of a free society is surely the freedom of individuals to advocate and propagandize openly for a radical change in the structure of the society so long as the advocacy is restricted to persuasion and does not include force or other forms of coercion.
Since people in this simple economy remain free to produce just for themselves they need not participate in any exchanges unless they feel confident that they will benefit. From this Milton would go on to argue that the same principles would operate in the case of a free enterprise economy. In addition to these arguments, Friedman also made the case that we could not hope to expect that socialism could effectively safeguard political freedoms to the extent that he thought that capitalism could.
So from the standpoint of protecting and safeguarding liberty, capitalism, and indeed, free market capitalism was to be preferred to socialism. And the less interventionist the state is in the economy, then the better off we would be, not only in terms of such things as economic efficiency but also in terms of economic and political freedoms. The claimed correlation between economic freedom and political freedom is not as simple as he made out. This argument neglects the fact that in most of Western Europe in the second half of the 20th century, the expansion of political freedom also coincided with the spread of social democracy.
Likewise, to return to Chile, it is noteworthy that the kinds of economic policies that Friedman advocated were implemented under a military dictatorship, rather than under a democratic government.. Given the political mobilizations of workers, peasants, students and other social groups within the Chile of the early s, it seems most improbable that the kind of economic program that Friedman advocated could have ever been legislated under a democratic political system. Friedman had attempted to do this by first outlining how a simple market economy would work.
This simple economy consists of individuals and households where people make goods and services and exchange them among themselves.
No exchange will occur unless both parties will benefit. From this Milton would go on to argue that the same principles would operate in the case of a free enterprise economy: The proviso that is required to make every transaction strictly voluntary is not freedom not to enter into any particular exchange, but freedom not to enter into any exchange at all.
This, and only this, was the proviso that proved the simple model to be voluntary and noncoercive; and nothing less than this would prove the complex model to voluntary and noncoercive. But Professor Friedman is clearly claiming that freedom not to enter into any particular exchange is enough: Professor Friedman would agree that where there is no choice there is coercion. His attempted demonstration that capitalism coordinates without coercion therefore fails.
But if that is the case, then how much more it must be the case that coercion does exist when we have an economy founded upon having a relatively small fraction of the population owning most capital, with the majority of people having little choice but to sell their labor to the owners of capital.
In other words, under capitalism, the situation is very different from the hypothetical simple exchange economy.
There, people can survive without having to enter into any exchanges, whereas, under capitalism people do have to enter into exchanges in the labor market with capitalists, if they wish to survive. Contrary to Friedman, he held that it was possible to design a socialist economy that could safeguard political freedom and he outlined some various socialist models that he thought could provide the necessary safeguards.
Some of these proposed models involved varieties of market socialisms or at least socialist systems where the means of communication would not all be under the direct control of the state.
Of course there is no guarantee that the state will have such a commitment under socialism. Macpherson also took Friedman to task for holding an overly narrow philosophy of freedom.
Notions of positive liberty have tended to more characteristic of continental thinkers like Rousseau or Hegel or Marx, than Anglo-American liberalism, but Macpherson saw John Stuart Mill as a thinker who was influenced to some extent by German idealism who embraced both negative and positive liberty. Macpherson thought that Mill was thus a better, more humane, representative of the classical liberal tradition than was Friedman, even Friedman insisted on describing himself as a classical liberal.
Macpherson himself identified with both the liberal tradition and the socialist tradition including Marxism and he sought out ways to synthesize these two political traditions together. This raises some important questions. Milton Freidman insisted that the answer was freedom from coercion, what Berlin called negative liberty. The famous slogan of the French Revolution implied that the good society required a balance between freedom, equality, and fraternity.
Friedman, as we have seen placed most his emphasis on freedom and negative freedom at that , rather than on equality, even though he did acknowledge equality to be desirable.
But for him equality was subordinate to liberty, although he held out hope that a free market economy would over time become somewhat more egalitarian.
And in Capitalism and Freedom, he argued that the existence of a wealthy upper class was desirable, not only because such a class would provide the bulk of investment required for economic growth, but also because such a class would provide the money to support innovations, not only in business and technology, but also in the arts and other cultural activities. BTW I would also point out that Isaiah Berlin, who developed the famous typology of concepts of liberty, both negative and positive, was himself, like Friedman, a supporter of negative liberty as a political ideal, and like Friedman, was disparaging of positive liberty as a political ideal as opposed to it being a personal ideal for people , since he believed that positive liberty, as a political ideal, lent itself to abuse by totalitarians.
Unlike Friedman, though, Berlin also recognized equality as a political ideal that had equal standing with liberty. But may be of equal validity. Also online at: Friedman, Capitalism and Freedom. Chicago University Press, Macpherson, C. A Note on Friedman's Freedom. Essays in Retrieval. Oxford, He disagreed with the Keynesian approach to macroeconomics, which favors govern- ment spending as a corrective when there is too much unemployment.
They basically revived what had been known as the Quantity Theory of Money that had been th th popular back in the 18 and 19 centuries. And he emphasized that historically, the rise of liberal democracy th th and political liberties coincided with the rise of modern capitalism in the 18 and 19 centuries. He argued that a free-market economy was necessary to provide checks against the ambitions of governmental politicians and to provide thus a basis for the preservation of political freedom and democracy.
She contended that such thinking is profoundly mistaken because it is more naturally suited to provide a moral basis for socialism than for capitalism and hence could be used to defend capitalism only by means of special pleading and distorted reasoning. This simple economy consists of more or less self- sufficient individuals and households where people make goods and services and exchange them among themselves. The proviso that is required to make every transaction strictly voluntary is not freedom not to enter into any particular exchange, but free- dom not to enter into any exchange at all.