Acton Institute Powerblog

Why Milton Friedman’s Capitalism and Freedom is still relevant today

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As we approach what would be Milton Friedman’s 104th birthday this Sunday, July 31st, we should note the enduring significance of his evaluation of the connection between economic and political freedom. In his popular work, Capitalism and Freedom, in a chapter titled “The Relation between Economic Freedom and Political Freedom,” Friedman explains how a society cannot have the latter without the former.

Friedman criticizes the notion that politics and economics can be regarded separately and that any combination of political and economic system is possible. He calls the view “a delusion,” holding that there is “an intimate connection between economics and politics.” Though Friedman concedes the possibility of an economically free and politically repressed society, the opposite, he claims, is impossible. Political freedom, both historically and logically, is inseparable from economic freedom.

In a cogent but comprehensive analysis, Friedman explains that economic freedom is a crucial element of individual freedom in its own right, but is also crucial for supporting political freedom:

 Political freedom means the absence of coercion of a man by his fellow men. The fundamental threat to freedom is power to coerce, be it in the hands of a monarch, a dictator, an oligarchy, or a momentary majority…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.

He further outlines the issues with government control of resources, especially of media, which allows for suppression of unpopular speech. Without simplifying the issue, Friedman exposes the realities inherent in allowing for political control in the economic sphere, from difficulty funding and expressing unpopular speech to direct government discrimination against political dissenters’ freedom of speech or even livelihoods. Preserving real political freedom in a system that gives economic power to the government is, Friedman concludes, virtually impossible.

These principles are no less true today, and, while the United States is relatively economically free, threats to both economic and political freedom are growing. The 2016 Index of Economic Freedom evaluated the United States thus:

The United States remains mired in the ranks of the “mostly free,” the second-tier economic freedom status into which it dropped in 2010. America’s historically vibrant entrepreneurial growth is significantly hampered by intrusive, expensive, and often ineffective government policies in areas ranging from health care to energy to education. Government favoritism toward entrenched interests has hurt innovation and contributed to a lackluster recovery and stagnant income growth.

These concerns over political coercion have already become a reality in the growing bureaucracy. Similar concerns about religious freedom have cropped up in the wake of the passage of the Affordable Care Act and other state healthcare programs. Friedman asserts that “capitalism is a necessary condition for political freedom.”  If the trend toward larger government control of economic activity continues, where will it leave political freedom in the United States?

 

Mimi Teixeira

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