Milton Friedman: The Worldly Philosopher

By Victor Ji //

Milton Friedman is not a name you would typically associate with the title “philosopher.” Born in 1912 to a Jewish working-class immigrant family, Friedman earned his name as one of the founders of the “Chicago School of Economics” and as the winner of the 1976 Nobel Prize in Economics for his analysis of consumption, monetary history and theory, and stabilization policy. He is famous for his rejection of mainstream Keynesian economics, which promotes robust governmental intervention. Less commonly  known, however, is what motivated Friedman to promote. these dissident opinions: his  commitment to personal freedom. In Friedman’s mind, the freedom of the market, the cornerstone of all economic theory he had created and championed, are just but the means to ensure the freedom he so cherished.

One thing to note before we dive in: Milton Friedman’s methodology consists of breaking down complex subjects into individual components, then tracing these components back in time to the core reason(s) for their institution in the first instance, recognizing their contemporary significance and proper boundaries.

In Friedman’s conception, economic freedom has a dual relationship in its promotion of political freedom: on the one hand economic freedom itself is a form of human freedom broadly conceived, an end in itself, and its force in the achievement of political freedom. 

What is “economic freedom”? The term might evoke catch-phrases such as “capitalism”, “greedy businessman”, “profit”, “alienation.” For Friedman, however, economic freedom is nothing more than a simple extension of individual freedom. Imagine that we are in a state of nature with no currently formed relationship between the individuals: what should we do? What constitutes the relationships we so cherish that underline the word “community”? Friedman answers that the fundamental thing that weaves human beings together is the activity of voluntary exchange. The activity of voluntary exchange is defined to include things like freedom of association and freedom of expression (your right to speak things you think of without fear of legal punishments). However, if we trace back in time and in constitution, we see the most fundamental form of voluntary exchange historically and sociologically is economic in nature: we use what we produce by our own labor in excess to get what others produce in excess that we happen to need. Imagine a network of Robinson Crusoes: each household uses the resource it owns to produce goods and services in exchange for goods and services produced by another household, on terms mutually accepted by the two households. These exchanges are the origin of the market. 

The establishment of economic exchange is significant because it allows the human to satisfy his or her wants indirectly by producing goods and services for others, rather than directly producing goods for its immediate use.

However, the observant reader might wonder: “it is all fair and square about how the market is constituted in the first place, but what does that have to do with political freedom?”

Milton Friedman holds that this has to do with the two fundamental  ways interpersonal exchanges have been organized, historically: the government and  the market.

What is the problem if we do voluntary exchange through the government? The loss of political freedom, held Friedman. Friedman defines political freedom as the freedom of one man from the coercion of any type from the will of another man. How do we define coercion? Coercion is broadly conceived, in the human relationship (henceforth of exchange) as the forced non-voluntary activity imposed on one by another. If, Friedman reasons, we allow the government to intervene in the free exchange process (note we consider free to mean mutually voluntary with perfect information symmetry) we open up the door for coercion in its most insidious and invisible terms.  By removing the sphere of voluntary exchange (economics) from the hands of the government, held Friedman, we can ensure the citizenry as having an effective check against the political power.

Further, Friedman shows that economic power is easier to disperse as the source of them are individually oriented exchange activities rather than traditions inscribed into law in the sense of political institutions. That is due to the secondary nature of political institutions: political institutions were created (as those of you who have read the social contract theories are fully aware) because we the people collectively need an authority to enforce the basic ground rules, to avoid the arbitrary freedom of one hurting the freedom of another. Therefore, the government, being the source of legitimacy, can only be unicentric, for if the source of legitimacy is doubled, its effects would necessarily decline. Therefore, due to the tendency of political power to be concentrated in one place and the hands of too few people, Friedman held the market must be free to avoid too many resources being at the hands of the government to be freely distributed. 

While not usually considered a politician, Friedman is actually much more concerned with political freedom and autonomy of the people (which prompts him to adopt his own economic philosophy) than we usually give him credit for. Economists, in my opinion, are almost all just worldly, policy-oriented philosophers. At the end of the day, it turns out, one could never separate political philosophy from economics.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s