It has been almost 50 years since Milton Friedman, Nobel economist, released his classic, Capitalism and Freedom. The book has slowly slipped from my course syllabus, not to mention that of the political elite. And why not? What Friedman said is now obvious. Surely, Americans, given the indisputable superiority of the free market over the statist model, no longer needed reminding of the abject failures of socialism, collectivism, wealth distribution, prime-the-pump “stimulus” spending, Keynesian deficit spending, and other discredited policy prescriptions?
Well, after a century of examples of what works and what doesn’t, look at how America voted on November 4, 2008. As Ronald Reagan said, freedom is always a generation from extinction; it must be handed on again and again. The teaching process never ends.
So, I dusted off Friedman’s Capitalism and Freedom. To be sure, Friedman had his faults, particularly in monetary policy, but, generally, his thoughts on economic freedom and the dangers of collectivism and central planning are timeless—especially right now. Consider this nugget from Freidman, critically relevant to the fundamental misunderstandings being painfully reenacted before our very eyes by the progressives now running America:
In the 1920s and 1930s, intellectuals in the United States were overwhelmingly persuaded that capitalism was a defective system inhibiting economic well-being and thereby freedom, and that the hope for the future lay in a greater measure of deliberate control by political authorities over economic affairs. The conversion of the intellectuals was not achieved by the example of an actual collectivist society, though it undoubtedly was much hastened by the establishment of a communist society in Russia and the glowing hopes placed in it. The conversion of the intellectuals was achieved by a comparison between the existing state of affairs, with all its injustices and defects, and a hypothetical state of affairs as it might be. The actual was compared with the ideal.
Tragically, the intellectuals are still striving for that ideal, certain that if only they can get in charge, they can apply all their collective wisdom, learned in their arcane graduate schools, where history’s real lessons are sacrificed at the altar of fantasy and superstition. They can create a better, just society.
“The attitudes of that time are still with us,” wrote Friedman. “There is still a tendency to regard any existing government intervention as desirable, to attribute all evils to the market, and to evaluate new proposals for government control in their ideal form, as they might work if run by able, disinterested men.”
What Friedman added next is sobering. Writing in 1962, he noted that “conditions have changed,” as we “now have several decades of experience with governmental intervention.”
Indeed, it was clear then, way back in 1962, that free economies vastly outperform managed economies. And that was before the collapse of the Soviet/central-planning model, the economic explosion resulting from the Reagan-Thatcher tax cuts, the repudiation of Keynes even in Britain, the bankruptcy of the European welfare state, the rise of the Asian Tigers, and more. What was obvious in 1962 was beyond obvious in 2008—or should have been.
And yet, Friedman sensed a lingering threat, one that hadn’t sauntered off into the night. It was a “subtle” threat, not from enemies outside but from do-gooders inside. He warned of an “internal threat” from those professing “good intentions and good will who wish to reform us,” who “are anxious to use the power of the state to achieve their ends and confident of their own ability to do so.”
It’s so subtle that Americans voted for such reform, or “change,” decisively, on November 4, 2008, without even knowing it, giving the threat vigor.
Thus, the managers and planners are in charge, with their hands on the ship of state, seizing the resources that feed the most dynamic, prosperous engine that capitalism and freedom ever produced. The Invisible Hand has been waved off by the visible hands of the reformers. And they are spending us into oblivion. Not only did we hit unprecedented deficits in the first year of the Obama administration, but we’re at debt levels unseen since World War II. The record deficit left by George W. Bush suddenly looks desirable.
Interestingly, Milton Friedman offered this parting thought: He said that if these individuals ever actually gained the power they craved, they would ultimately “produce a collective state from which they would recoil in horror and of which they would be among the first victims.”
Are they recoiling in horror? I see no evidence. The planners and “stimulus” pushers seem to think the problem hasn’t been enough planning and stimulus. That being the case, if other data pans out—such as the astonishing Gallup poll suggesting a GOP landslide in November—they may nonetheless find themselves the “first victims:” victims of an electoral revolt that drives them from power.
Once again, capitalism would be preserved by freedom.