A Tribute to Milton Friedman
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On Thursday November 16, 2006, the world lost Dr. Milton Friedman, one of its greatest minds. Milton Friedman’s economic philosophy embodies the American dream and gave rebirth to the ideals of liberty that founded our nation. At the core of his theories was a strong belief in the value of personal freedoms and individual responsibility. His work not only supported capitalism over communism during the Cold War, it advocated that the capitalists be more capitalist.
Friedman’s thinking always sought to fend off government over-regulation. His work on inflation and unemployment revolutionized the standard of monetary policy worldwide, as he proved that central bank attempts to control these indicators often led to greater instability. He advocated that central banks instead act with greater transparency, predictability, and moderation.
This model greatly influenced the policy of Ronald Reagan and Margaret Thatcher, and in turn, set the U.S. and Britain apart from the rest of the developed world. An increased sense of personal determination brought on a new wave of competitiveness and innovation.
Friedman also aimed to improve the wellbeing of all social classes. In the 1990s, he inspired the earned income tax credit, a component of the Welfare Reform Act that provides incentives for the working poor.
His ideas form the basis of the free-market policies advocated by the Washington Consensus, a set of policy recommendations to encourage sustainable growth in developing countries. This has spread Friedman’s ideas as far abreast as Latin America, Eastern Europe, and Asia. However, it should be noted that Friedman’s thought runs counter to the coercion that certain global institutions used to further these policies; just like individuals, developing nations function best when they are given personal responsibility to determine their economic path.
Milton Friedman’s libertarian philosophy will live on through the Cato Institute, the Chicago School of Economics, and numerous policy shifts that reflect his logic. While the immediate future of free trade and school vouchers is far from certain, where these policies succeed, they will serve as an example for more widespread replication.
Political Theory
Interwoven with Friedman’s economic theories is a political philosophy that traces its roots back to the Enlightenment, particularly the ideas of the classical liberals John Locke and Adam Smith. Outlined perhaps most explicitly in his brilliant essay “Capitalism and Freedom,” Friedman held that political freedom is inseparable from economic freedom. Human beings possess a basic right to liberty, constituted by choice, and every person is conceived as an individual chooser, responsible for the course of his life. Friedman’s liberty, along with that of his longtime colleague Friedrich Hayek, is what the historian of ideas Isaiah Berlin termed “negative liberty”: freedom from interference when making choices about alternative courses of action.
In Friedman’s view, the role of the state ought to be confined to protecting a sphere of choice and opportunity. It can restrict liberty only to protect liberty. For instance, the criminal code outlaws homicide to protect the liberty of potential victims, and the general economic system, based upon competitive markets, the enforcement of contracts, and private property rights. As Friedman wrote in “Capitalism and Freedom,” government serves as the “rulemaker and umpire,” constraining choice in order to better protect it.
It is true that Friedman’s argument did allow for times when the government might restrict choice to promote the general welfare. However, Friedman emphasized that it is often difficult to know or decide how far to employ the tool of the government. He thus outlined three criteria, and suggested that any intervention, if it is to be justified, ought to draw on at least one of them.
First, the interference must bring with it significant gains. Second, interference is palatable when other methods less restrictive of choice, such as those found in the market, will likely not work. Third, the government can restrict choice out of paternalism only when the people in question cannot rule themselves and make their own decisions.
Paternalism is unjust, Friedman held, because individuals, not their government, are in the best position to run their lives. Individuals care most about their welfare, have the most information about their goals and aspirations, and thus are in the best position to decide how to go about pursuing those aims and promoting their welfare. Thus, liberty ought to be protected so that people can best pursue their aims. But there was more to Friedman’s defense than this instrumentalist approach. Perhaps drawing on the tradition of Immanuel Kant, he held that people are autonomous and self-governing. Individuals can choose what ends they wish to pursue and then choose how best to go about that pursuit. By arguing that liberty be acknowledged as a fundamental right, then, Friedman was exhorting everyone to recognize that a right to liberty signifies respect for others’ dignity and status as responsible people.
From his foundation of political philosophy, Friedman elaborated his economic views. From the right to liberty grow Friedman’s attacks on overregulation—of trade, transport, and finance, of wages, welfare, and agriculture. The government was restricting liberty on grounds that were not justifiable. It is here that Friedman clearly emerges as the intellectual heir to Adam Smith, for he saw free enterprise capitalism as desirable both because it secures economic choice and disperses political power by means of spreading economic power. By spreading power thin, capitalism could work indirectly to protect other liberties not obviously associated with the economic.
Milton Friedman was expert at explaining complex ideas in comprehensible ways. A true public intellectual and believer in the power of ideas, he shaped the way people thought in America and around the world. His great academic rival, John Kenneth Galbraith, has said of him that “the age of John Maynard Keynes gave way to the age of Milton Friedman.” In the eighties Margaret Thatcher and Ronald Reagan studied and applied his thought. Dissidents behind the Iron Curtain who read his work by candlelight in the bitterest winter of the Cold War now lead many of the governments in Eastern Europe. Together with his oeuvre of economic and philosophical work, the real effects of this theorist’s thought stand today as a brilliant monument to the life of a great man, a man with a towering intellect, strong principled values, and world-shaping vision. No other figure in the twentieth century—nor yet in the twenty-first—matched him as a champion of human liberty.
God bless you, Milton Friedman.
