Ebenstein on Friedman

Written By:  Wendell Krossa

Some of the best insights of Milton Friedman, perhaps one of the greatest champions for freedom in human history.  His influence in countries like Chile and China was significant in turning them toward more freedom.

His long term goals were an economic system that would contribute to political freedom, economic efficiency, and substantial equality of economic power.  Yes, that is Friedman.  The last one, as his biographer noted, has virtually disappeared from Friedman’s writings.  Friedman considers free private property capitalism to be the most suitable vehicle for achieving his goals.  He says, “Free private property capitalism is the most efficient and productive economic order yet discerned and leads to the most democratic and most civilly free societies”.

Further quotes from Lanny Ebenstien’s biography entitle Milton Friedman, “Free trade is the central libertarian economic tenet.  Free trade, at home and abroad, is essential to human freedom, economic plenty, and peace”.

“If left alone, the market will generally perform its magic more effectively in producing wealth than government involvement could ever accomplish”.

“It is not that capitalism is inherently flawed.  It is that it was not given the appropriate circumstances in which to flourish…much of the welfare state in the US originated in the Great Depression…led to vastly expanded government regulation of the economy and to many social programs…many social welfare programs were begun because it was thought that free private property capitalism is inherently unstable, unreliable, and non-productive.  But if capitalism is, in fact, incredibly productive, much of the original justification for the welfare state is lost”.

He argues in detail that the major lesson of the Great Depression was the wrong lesson (this was his area of expertise and the area of his great debate with Keynes).  This lesson that you could not count on private enterprise to maintain prosperity and had to rely on government to play a major role…the lesson that should have been learned was that government let them down.  It was mismanagement of the monetary system that produced the Depression and not a failure of the market system.

He was an advocate of less government and freer and more competitive markets as the principle by which to order societies.

Another key point in his work, inflation, is always and everywhere a monetary phenomenon.  He was a monetary policy specialist.  As Ebenstein notes, “His key macroeconomic views include the belief that nations should expand their money supply at a fixed rate of about 2 to 5 percent a year and practice free international trade”.  This rate of expansion approximates average economic growth rates.  He also advocated keeping government spending, marginal tax rates, and regulation low.  “He preached the virtues of free markets, stable prices, denationalization, privatization, free trade, less regulation, reducing the size and scope of government, lower taxes, flexible international exchange rates, and noninflationary monetary policies”.

“Friedman’s vision of a libertarian society is one in which government at all levels (local, state, and national) would be reduced to no more than 10 to 15 percent of the economy for all functions, including defense (other than in a time of war). He favors decentralization of government and thinks that what government activity remains in the future should take place more at the local and state than at the national level…He believes that by restricting government to the functions of defending the nation from foreign enemies, protecting each of us from coercion by our fellow citizens, adjudicating our disputes, and enabling us to agree on the rules that we shall follow, humanity could produce the most and be happiest and freest”.