Capitalism and Freedom: Fortieth Anniversary Edition

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University of Chicago Press, Feb 15, 2009 - Business & Economics - 230 pages
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Selected by the Times Literary Supplement as one of the "hundred most influential books since the war"

How can we benefit from the promise of government while avoiding the threat it poses to individual freedom? In this classic book, Milton Friedman provides the definitive statement of his immensely influential economic philosophy—one in which competitive capitalism serves as both a device for achieving economic freedom and a necessary condition for political freedom. The result is an accessible text that has sold well over half a million copies in English, has been translated into eighteen languages, and shows every sign of becoming more and more influential as time goes on.

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Excellent book, gives the best recommendations for implementing policy in the historical and contemporary economic environment (imo). Current a finance student, so have a reasonable level of economic knowledge, however I had to re-read some chapters multiple times to understand the principles, so that is why I have given it 4 stars instead of 5. However, the content is great and I would highly recommend for those who have a degree in an economics related field. 

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The link between economic and political freedoms has been supported for a long time, and Milton Friedman's "Capitalism and Freedom" is one of the more important texts in that intellectual tradition. The central thesis of this book is that the private ownership and enterprise, rather than the government controlled services, is the true guarantor of personal freedoms. Friedman acknowledges that there are indeed certain activities that a government has a legitimate role in (like the arbitration and the enforcement of the laws), but those tend to be exceptional and require a special set of circumstances in order to be justified. In the second chapter he gives a non-exhaustive list of fourteen activities that the government has asserted an exclusive role in for which there is no good justification. It is interesting to note that as we approach the fourteenth anniversary of the publication of this book, only a couple of those are still not in effect (there is no universal draft during a peacetime and the Post Office does not have an exclusive right to distribute mail any more).
The chapter on monetary policy is very interesting. Friedman considers monetary policy to be one of those activities over which a government can exercise a legitimate monopoly. This has however been disputed in recent years by more libertarian thinkers - even when it comes to printing and distributing money, there is no good a-priory reason why a private entity wouldn't be able to accomplish this as well. In fact, I would probably have more trust in money issued by some well established corporations or banks than that issued by 90%+ of governments around the world. In this chapter Friedman also goes at length expounding on pros and cons of the gold standard, which nowadays is not all that in vogue at all.
The chapter on discrimination is also one of the more interesting ones. Friedman outlines what would now be considered a consistently libertarian position: although he personally finds all sorts of discrimination based on race, gender, or religion particularly abhorrent, he doesn't think that it is the role of government to impose any sorts of measures that would amount to enforced "inclusiveness." He has a problem with the very notion of "discrimination." In many instances one man's discrimination is another man's right to exercise a taste preference. Whatever it is, Friedman thinks that the best and most effective way of dealing with discrimination is again through allowing the existence of free market. In a perfectly free market discrimination against individuals or groups will have immediate and very deleterious consequences for any purveyor of goods or services. Here again the case is made that capitalism is the best guarantor of personal freedom. This is not just an abstract argument - time and again the experience has shown that whenever a group was allowed to freely compete in the marketplace, the discrimination and the prejudice against that group has diminished.
Another topic that gets into Friedman's crosshairs is that of overregulation of all sorts of trades and professions. The supposed aim of most of these regulations, licensing and certifications is the protection of the public. However, it is a plain empirical fact that almost all of those regulations are imposed on the request of the regulated industries, rather after an outcry from the public. What these regulations in fact do is create barriers to entry and shielding of the industry insiders form the competition. Friedman argues that this is yet another form of limitation of freedom that is imposed through the prevention of the existence of a free market. He argues that this is seldom justified, and that market would create a much more efficient way of weeding out the incompetent products and services, even in the case of medical industry. One can't help think that of the present debates over the medical insurance in the US, and wonder how much of it could be solved by simple deregulation of the whole industry


I The Relation Between Economic and Political Freedom
II The Role of Government in a Free Society
III The Control of Money
IV International Financial and Trade Arrangements
V Fiscal Policy
VI The Role of Government in Education
VII Capitalism and Discrimination
VIII Monopoly and the Social Responsibility of Business and Labor
IX Occupational Licensure
X The Distribution of Income
XI Social Welfare Measures
XII Alleviation of Poverty
XIII Conclusion

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About the author (2009)

Milton Friedman is a senior research fellow at the Hoover Institution, Stanford University, and the Paul Snowden Distinguished Service Professor Emeritus of Economics at the University of Chicago. In 1976 he was awarded the Nobel Prize in economics. He has written a number of books, including two with his wife, Rose D. Friedman—the bestselling Free to Choose and Two Lucky People: Memoirs, the latter published by the University of Chicago Press.

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