Friday, February 18, 2011

The Political Theory Consortium discusses Friedman on Economic and Political Freedom

The Political Theory Consortium met last night for the third time this semester, to discuss Milton Friedman’s essay “The Relationship Between Political Freedom and Economic Freedom.” Friedman is best known as the twentieth century’s most persistent public voice for free market capitalism. This essay, published in 1962, begins from the premise that most intellectuals believe that politics and economics are “separate and largely unconnected; that individual freedom is a political problem, and material welfare an economic problem.” In response to this “delusion,” Friedman argues that the two are intricately linked, that only specific economic arrangements can foster particular political freedoms, and that “a society that is socialist cannot also be democratic, in the sense of guaranteeing individual freedom.”


I am skeptical about Friedman’s basic characterizations here. Our differing perceptions may stem in part from the fact that he’s writing as an economist and not a political theorist. I think one would be hard pressed to find a political theorist (in the twentieth century, at least, but going further back in the tradition as well) who saw economic conditions and political freedom as radically distinct. Of course, I may have already modified Friedman’s claim in talking about “economic conditions,” by which I mean people’s material well-being, and not “economic freedoms,” by which Friedman means the liberty to do business without government regulation. I also dispute Friedman’s conclusion that socialism and democracy are fundamentally incompatible. Again, though, I have in mind states like Sweden, England, Germany, France, and the Netherlands today, which all seem to do a decent job balancing the two. Friedman, in contrast, has in mind totalitarian socialist states such as the now defunct Soviet Union (he’s writing in the early ‘60s, so of course).


The debate last night was heated. There were some staunch Friedman defenders, who did a good job articulating the values that draw them to his approach. But there was also a general distrust, articulated by a number of participants, of any theory that does not seem to at least minimally account for issues of social justice. And of course, we went off a ways on the requisite tangent regarding whether there is any such thing as a “self made man” (or woman) in this day and age.


The question I put to the group, and keep coming back to in my own head, is what Friedman has to offer a person who is not sold on his very limited conception of personal freedom (i.e. free enterprise, or the freedom from government regulation of economic activities), as well as a person who does not accept his account of socialism as contemporarily relevant. In Modern Political Thought this week we read Hobbes. It’s entirely possible to read Hobbes as kind of paranoid and fearful, which explains why he advocates an absolute sovereign power (and a monarch, to boot) as the source of order and thus some semblance of peace in the land. Needless to say, the picture of government he paints is not especially attractive to modern democratic citizens. And yet, we can still learn so much from Hobbes about conceptions of human nature and society, theories of sovereignty, latent notions of what the “various contentments of life” might be, the relationship between autonomous states, etc.


I want to give Friedman the benefit of the doubt, but I’m curious how much punch this account of the benefits of free market capitalism packs, given the intellectual and historical glossing he seems to do here (and I’m not alone in thinking so. In an obituary for Friedman, Paul Krugman sang his praises as an economist, but voiced a lot of skepticism about his authenticity and accuracy in his role as a public intellectual). Thoughts??

7 comments:

Ryan said...

From my perspective, Friedman's free market, anti-regulation ideal neglects the prospect of monopolies that ultimately would limit the personal freedom he so supposes. He states that monopolies would be discussed in future chapters, but the traditional "free hand" and competition arguments just don't pass muster.

I think the inevitability of monopolies in such a free market is analogous to physics and the 2nd law of thermodynamics: the entropy--the measure of energy not available to do work--of a closed system never decreases. In other words, that system's energy always "runs down"; if the universe is a closed system, there can only be so many times the energy contained therein is reformulated as stars, that give off heat and light, etc.

I think the same applies to free market economics. The competition in a closed capitalistic system always "runs down" to monopolistic entities in each commodity sector. Given time, dominant producers will emerge and, through self-interest, extinguish competing producers. I think this is only accelerated with advancing technology and distribution, where one entity can leap ahead far enough and advertise/distribute quicker than ever. In the same way the universe may one day consist entirely of dead matter, with all "workable energy" extinguished, so too would a truly free market run down to inert, monopolistic entities.

Fortunately, ours is not a "closed system," because it is ironically through government intervention of breaking up monopolies and funding small start ups that our "free market" succeeds to the limited extent it does. In this way, "workable energy" is constantly injected into the system, and must continue in proportion to how much we want our economy to thrive.

Sara Rushing said...

I like your analogy to physics, Ryan. I guess my question is mostly empirical: when has increased deregulation in the U.S. actually resulted in better functioning markets? People mention the airline industry, as at least initially becoming more competitive, offering better prices, and having a lower barrier to entry. But other than that I'm not sure. Certainly the media has gone in the other direction - less regulation has led to vastly more consolidation (leading David to suggest in class that the media ought to be analyzed as a virtual trust now).

Can anyone give me examples of markets that have been improved (for the industries, and for the consumers) by less regulation?

Little Friedman? said...

Friedman on Monopoly: http://www.youtube.com/watch?v=tdLBzfFGFQU
Professor Dominick T. Armentano: http://www.youtube.com/watch?v=8C4gRRk2i-M
Most monopolies are a result of government privilege.

Ryan your analogy is great I think it really summaries the argument. Jordan will love this. Marx had a similar conception called "the concentration of capital". He believed that monopolies were inevitable in capitalism because of the collusion of the bourgeoisie and the nature of business buyout. See I have read parts but not the whole of Das Kapital. I do not remember where I ran across this tidbit so feel free to correct me.
There seems to be two sources of this fear of monopoly: one, Marxist whether someone knows it or not this comes from the socialist era critique of the concentration of capital, two what I call Zimmerian history. It is largely believed by people who believe that free markets=monopoly is that the late-ish industrial age of 1860-1910’s is one whereas large monopolies came to dominate the American economy. Some regional monopolies did exist at the time with minimal government endorsement. They were regional usually in the back country. They did not last long with national competition and free markets (Heyak has a great case for why monopolies are inefficient no competition=no price system). The monopolies that unions and progressives fought against on the national scale were not these companies however. They were companies that existed with significant government subsidies and influence over government officials.
I do not think that liberty as the fundamental unit of political life is a “limited view of freedom”. The opposite is true; economic liberty is the greatest expression of personal liberty. If Social Justice means those things that benefit the worst off in society aka maximin (Rawls). Then there is no greater tool for the Social Justice in the free society then increase of production possible through the protection of property rights and equality under the law.

Jim Cave said...

Hey guys,
First of all I really enjoyed reading the jist of the discussion on the blog. Keep in it. Unfortunatly I was not there for said discussiion, and did not read the specific peice that you discussed. However, I believe that I am aware of the concepts discussed and would like to contribute to the discussion for the first time in months.

For those of you who do not know me I was involved in the Consortium last year and then graduated. Currently, I live in Mali and serve with the Peace Corps in a very very small agriculturally based village. My job is somewhat all comsuming (according to Peace Corps I work twenty four hours a day, seven days a week), and so it is sort of hard for me not to see the discussion though any other lens than that of development/the third world.

Like all issues worth discussing this one is difficult to fully grasp. Especially when you live in a place like I do. From my experience here development seems to "help" others unequally. While opprotunities for higher education have increased, some people drive nice Mercedes and you can get satelitte TV in the bigger towns. There is a shocking percentage of the population that can't read (or do basic math), cannot afford the soap needed to wash their hands and are fated to some form of modern day serfdom. The arguments I attribute to Arundhati Roy about the way open markets and globalization have effected India also fall into the realm of truth for Mali. It may seem that I'm coming down on capitalism (which I am in a way), but market intervention has also hurt Mali in a real way.

If one looks into the world wide cotton industry, or more specially CMDT in Mali, it can be seen how a government intervention (as a form of a government enforced monopoly) in the economic realm that adversely effect "the little guy". I would go into more detail, but there are a number of people waiting to use the computer so I'll cut it off at this.

Jim Cave

P.S. Ryan as always good points. Likewise (David?), your comments were also well in order.

rpratt said...

Some of the best critical comments on Friedman were by Canadian C.B.Macpherson in "Elegant Tombstones: A Note on Friedman's Freedom," originally in Canadian J. of Political Science, 1968(see MSU Libary online sources); reprinted in Macpherson's DEMOCRATIC THEORY:Essays in Retrieval(Oxford U.P.1972).
Ray Pratt, Emeritus Prof.,Political Science.

Adam said...

Glad to the Political Theory Consortium is still alive at MSU. Although I must say that after the departure of Jim and myself, it'll never be the same :) haha. One interesting experience I had this semester at law school was the opportunity to attend a lecture at the school by Milton Friedman's son, (David?, I think). He discussed anarcho-capitalism (slightly over my head). But he did make some interesting points and tried to make it understandable to the non-economists (like me) who attended. It would be nice to MSU bring in more speakers in the political science department.


Keep up the good work, and I hope this club continues for many years ahead!

- Adam Warren

Sara Rushing said...

Thanks to Ryan for getting the discussion rolling. It's great to see some illustrious "alumni" of our department weighing in here - both former students, Jim and Adam, and our emeritus professor Ray Pratt, who was generous enough to retire right when I needed a job!

Look for my biweekly recap of Political Theory Consortium meetings. Our energy is catching - it sounds like some students in Sociology have been inspired to start a similar group! Next up for us is a discussion of the "Carceral State" - the prison as political socialization machine, compliments of November's American Political Science Review. Should be interesting!