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Milton Friedman, RIP

Milton Friedman, Chicago-school economist, has passed away, tragically, at the age of 94. For me, reading his Capitalism and Freedom at a young age was a truly remarkable experience; it remains one of the seminal works of liberty. My deepest condolences to his family. A sad day for liberty, indeed.


I noted at another blog that the first non-fiction libertarian book I read was Capitalism and Freedom. He had a great good influence. Let's not forget he was married to the same woman for sixty years. I think we can forgive his giving his withholding taxes although his wife never did.

I have read quite a few tributes and other takes on Friedman over the past week and while I agree with many that the man's legacy is "mixed," I also believe, with you Chris, that Friedman did make an overall positive contribution to the literature of liberty. His perspectives on everything from occupational licensure to military conscription to the drug war brought certain key libertarian ideas into the mainstream. For this, he deserves kudos.

Concerning Friedman's book, Capitalism and Freedom, the Canadian political philosopher, C.B. Macpherson wrote, what I believe to be the most effective demolition of that book's arguments in an essay, "Elegant Tombstones: A Note on Friedman's Freedom," which first appeared in the journal, Canadian Journal of Political Science, March 1968. The following paragraphs should give the reader some of the flavor of Machpherson's critique of Friedman:

"Professor Friedman's demonstration [in _Capitalism and Freedom] that the capitalist market economy can coordinate economic activities without coercion rests on an elementary conceptual error. His argument runs as follows. He shows first that in a simple market model, where each individual or household controls resources enabling it to produce goods and services either directly for itself or for exchange, there will be production for exchange because of the increased product made possible by specialization. But 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. Cooperation is thereby achieved without coercion'...So far, so good. It is indeed clear that in this simple exchange model, assuming rational maximizing behavior by all hands, every exchange will benefit both parties, and that no act of coercion is involved in the decision to produce for exchange or in any act of exchange.

Professor Friedman then moves on to our actual complex economy, or rather to his own curious model of it:

As in [the] simple exchange model, so in the complex enterprise and money-exchange economy, cooperation is strictly individual and voluntary *provided*: (a) that enterprises are private, so that the ultimate contracting parties are individuals and (b) that individuals are effectively free to enter or not to enter into any particular exchange so that every exchange is strictly voluntary...

...Proviso (b) is 'that individuals are effectively free to enter or not to enter into any particular exchange', and it is held that with this proviso 'every exchange is strictly voluntary'. A moment's thought will show that this is not so. The proviso that is required to make every transaction strictly volunatry 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: 'The consumer is protected from coercion by the seller because of the presence of other sellers with whom he can deal...The employee is protected from coercion by the employer because of other employers for whom he can work...'

One almost despairs of logic, and of the use of models. It is easy to see what Professor Friedman has done, but it is less easy to excuse it. He has moved from the simple economy of exchange between independent producers, to the capitalist economy,without mentioning the most important thing that distinguishes them. He mentions money instead of barter, and 'enterprises which are intermediaries between individuals in their capacities as suppliers of services and as purchasers of goods'...as if money and merchants were what distinguished a capitalist economy from an economy of independent producers. What distinguishes the capitalist economy from the simple exchange economy is the separation of labor and capital, that is, the existence of a labor force without its own sufficient capital and therefore without a choice as to whether to put its labor in the market or not. Professor Friedman would agree that where there is no choice there is coercion. His attempted demonstration that capitalism coordinates without coercion therefore fails."

Hey, Jim, thanks for your contribution here.

Interestingly, Friedman has not been criticized only by the left. Because he was never as "hard core" as others on the libertarian right, he has met with much criticism from those quarters as well. I read this recent piece here, but Murray Rothbard's take on Friedman is perhaps the most critical.

BTW, I have not forgotten about the Brien book. I've finally scanned the original Critical Review essay that I wrote on Brien's book, and hope to get to his new edition in the new year.

Happy holidays!