[Excerpts] Capitalism and Freedom, by Milton Friedman
Capitalism and Freedom
(Note: Where Friedman uses the term “liberalism” does so in its classical form with an emphasis on liberty, not in its current usage as a synonym for collectivism or progressivism.]
“Government is necessary to preserve our freedom, it is an instrument through which we can exercise our freedom; yet by concentrating power in political hands, it is also a threat to freedom.” p. 2
“The nineteenth-century liberal regarded an extension of freedom as the most effective way to promote welfare and equality; the twentieth-century liberal regards welfare and equality as either prerequisites of or alternatives to freedom.” p. 5
“…a society which is socialist cannot be democratic, in the sense of guaranteeing individual freedom.” p. 8
“Fundamentally there are only two ways of coordinating the economic activity of millions. One is central direction involving the use of coercion — the technique of the army and of the modern totalitarian state. The other is voluntary co-operation of individuals — the technique of the marketplace.” p. 13
“Indeed, a major source of objection to a free economy is precisely that…it gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.” p. 15
“The fundamental threat to freedom is the power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority. The preservation of freedom requires the elimination of such concentration of power to the fullest extent possible and the dispersal and distribution of whatever power cannot be eliminated — a system of checks and balances. By removing the organization of economic activity from the control of political authority, the market eliminates this source of coercive power. It enables economic strength to be a check to political power rather than a reinforcement.” p. 15
“It is entirely appropriate that men make sacrifices to advocate causes in which they deeply believe. Indeed it is important to preserve freedom only for people who are willing to practice self-denial, for otherwise freedom degenerates into license and irresponsibility.” p. 18
“The ideal is unanimity among responsible individuals achieved on the basis of free and full discussion. This is another way of expressing the goal of freedom…” p. 23
“Fundamental differences in basic values can seldom, if ever, be resolved at the ballot box; ultimately they can only be decided, though not resolved, by conflict.” p. 24
“The wider the range of activities covered by the market, the fewer are the issues in which explicitly political decisions are required and hence in which it is necessary to achieve agreement. In turn, the fewer the issues on which agreement is necessary, the greater is the likelihood of getting agreement while maintaining a free society.” p. 24
“…children are responsible individuals in embryo, and a believer in freedom believes in protecting their ultimate rights.” p. 33
“What we urgently need, for both economic stability and growth, is a reduction of government intervention, not an increase.” p. 38
“A [classical] liberal is fundamentally fearful of concentrated power. His objective is to preserve the maximum degree of freedom for each individual separately that is compatible with one man’s freedom not interfering with other men’s freedom. He believes that this objective requires that power be dispersed. He is suspicious of assigning to government any functions that can be performed through the market, both because this substitutes coercion for voluntary cooperation in the area in question and because, by giving government an increased role, it threatens freedom in other areas.” p. 39
“The Great Depression in the United States, far from being a sign of the inherent instability of the private enterprise system, is a testament to how much harm can be done on the part of a few men when they wield vast power over the monetary system of a country.” p. 50
“Let us live up to our destiny and set the pace, not be reluctant followers.” p. 73
“If one were deliberately seeking to devise a system of recruiting and paying teachers calculated to repel the imaginative and daring and self-confident, and to attract the dull and mediocre and uninspiring, he could hardly do better than to imitate the system of requiring teaching certificates and enforcing standard salary structures…” p. 96
“Monopoly exists when a specific individual or enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.” p. 120
“Since unions have generally been strongest among groups that would have been high-paid anyway, their effect has been to make high-paid workers higher paid at the expense of lower-paid workers. Unions have therefore not only harmed the public at large and workers as a whole by distorting the use of labor; they have also made the incomes of the working class more unequal by reducing the opportunities available to the most disadvantaged workers.” p. 124
“I have never known much good done by those who affected to trade for the public good.” — Adam Smith p. 133
“Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine…If businessmen are civil servants rather than employees of their stockholders then in a democracy they will, sooner or later, be chosen by the public techniques of election and appointment. And long before this occurs their decision-making power will have been taken away from them.” p. 133,134
“The overthrow of the medieval guild system was an indispensable early step in the rise of freedom in the Western world…In more recent decades, there has been a retrogression, an increasing tendency for particular occupations to be restricted to individuals licensed to practice them by the state.” p. 137
“…the great argument for the market is its tolerance of diversity; its ability to use a wide range of special knowledge and capacity. It renders special groups impotent to prevent experimentation and permits the customers not the producers to decide what will serve the customers best.” p. 160
“Non-capitalist societies tend to have wider inequality, even as measured by annual income; in addition, inequality in them tends to be permanent, whereas capitalism undermines status and introduces social mobility.” p. 172
“All things considered, the personal income tax structure that seems best to me is a flat-rate tax on income above an exemption, with income defined very broadly and deductions allowed only for strictly defined expenses of earning income…I would combine this program with the abolition of the corporate income tax, and with the requirement that corporations be required to attribute their income to stockholders, and that stockholders be required to include such sums on their tax returns.” p. 174
“The distribution of income is still another area in which government has been doing more harm by one set of measures than it had been able to undo by others. It is another example of the justification of government intervention in terms of alleged defects in the private enterprise system when many of the phenomenon of which champions of big government complain are themselves the creation of government, big and small.” p. 176
[On Social Security] “What conceivable justification is there for taxing the young to subsidize the old regardless of the economic status of the old; for imposing a higher rate of tax for this purpose on the low incomes than on the high; or, for that matter, for raising the revenues to pay the subsidy by a tax on payrolls?” p. 184
“Nationalization means the bulk of the ‘experts’ become employees of the nationalized system, or university people closely linked with it. Inevitably they come to favor its expansion, not, I hasten to add, out of narrow self-interest but because they are operating within a framework in which they take for granted governmental administration and are familiar only with its techniques.” p. 186
“Only the doctrinaire socialist, or the believer in centralized control for its own sake, can, so far as I can see, take a stand on principle in favor of nationalization of the provision of annuities.” 187
“Those of us who believe in freedom must also believe in the freedom of individuals to make their own mistakes. If a man knowingly prefers to live for today, to use his resources for current enjoyment, deliberately choosing a penurious old age, by what right do we prevent him from doing so? We may argue with him, seek to persuade him that he is wrong, but are we entitled to use coercion to prevent him from doing what he chooses to do? Is there not always the possibility that he is right and that we are wrong? Humility is the distinguishing virtue of the believer in freedom; arrogance, of the paternalist.” p. 188
“One of the major costs of the extension of governmental welfare activities has been the corresponding decline in private charitable activities.” p. 190
“There is always the danger that instead of being an arrangement under which the great majority tax themselves willingly to help an unfortunate minority, it will be converted into one under which a majority imposes taxes for its own benefit on an unwilling minority…I see no solution to this problem except to rely on the self-restraint and good will of the electorate.” p. 194
“The heart of the [classical] liberal philosophy is a belief in the dignity of the individual, in his freedom to make the most of his capacities and opportunities according to his own lights, subject only to the proviso that he not interfere with the freedom of other individuals to do the same.” p 195
“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, free from the pressure of special interest groups. The proponents of limited government and free enterprise are still on the defensive.” p. 197
“Is it an accident that so many of the governmental reforms of recent decades have gone awry, that the bright hopes have turned to ashes? Is it simply because the programs are faulty in detail? I believe the answer is clearly in the negative. The central defect of these measures is that they seek through government to force people to act against their own immediate interests in order to promote a supposedly general interest. They seek to resolve what is supposedly a conflict of interest…by forcing people to act against their own interest.” p. 200
“Concentrated power is not rendered harmless by the good intentions of those who create it.” p. 201
