Saturday, April 2, 2011

Review: Capitalism and Freedom

Capitalism and Freedom will probably evoke a response consistent with the reader's pre-existing views on economics. It is more a book on economic ideology than predictive theory, although the author, the American economist Milton Friedman, attempts to take on rival theories—namely Keynesian economics—with his own empirical evidence. Keynesian economists are skeptical that the free market is always efficient and they typically advocate some intervention to keep everybody working. Although I was left unsure about the author's predictions, the ideological issues he raised should be of interest to all parties. Friedman says, "Underlying most arguments against the free market is a lack of belief in freedom itself." I would like to hear more of the author's critics address this claim head-on.

Capitalism and Freedom by Milton Friedman bookRead more reviews on AmazonFriedman is often labeled a libertarian but he takes some positions other free-market advocates may oppose. One is his willingness to endorse government interference to reduce harmful "neighborhood effects". Another is his idea of a negative income tax that would guarantee a minimum income for all citizens. His position on corporate monopoly also allows for eventual intervention to maintain "competitive conditions". The problem with these suggestions is that Friedman doesn't offer a methodology for determining when such measures are worth violating his core value: economic freedom.

The idealogical approach in Capitalism and Freedom is perhaps a weakness as well as a strength. For instance he mentions that tariffs on foreign goods do not help anybody. His point is that tariffs introduce inefficiencies, which is true, but what he seems to miss is that some workers do not care about efficiency and only want to continue their lifestyle. Friedman's ideology is rendered impotent when citizens impatient with or apathetic about capitalism vote to further their interests by means of government power, a problem for which the author admitted having no solution.

Despite using a generally accessible vocabulary, Friedman's writing is clumsy and rigid—nominalizations run wild when ordinary characters and verbs would do just fine. In short, Capitalism and Freedom is unlikely to convert a collectivist to an individualist, but it will push both to sharpen their arguments.

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