Web Assignment 7: Kristen Durham: Milton Friedman's Challenge

This page is for Kristen Durham's students.

• The page for Ben Peacock's students is here.
• The page for Varanya Chaubey's students is here.

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A whole host of writers we have read so far in the course--Keynes and Polanyi most strikingly--have strongly argued that the market needs to be tamed or guide or muzzled or regulated or controlled if anything like a free, wealthy, and peaceful civilization is to exist. Milton Friedman says not: Milton Friedman says that the government is not the corrector of the defects and evils of the market and the guardian of freedom and prosperity, but is instead our enemy. The right policy, Friedman says, is to let the market rip. This is a powerful challenge to my conventional social-democratic reflexes.

Write a comment of at least 200 words on what you think of his argument. Contribute to the discussion that is ongoing--that is, react and respond to not just Friedman but, to the extent it is appropriate, the earlier posters and commenters on the webpage.

Do this by 5 PM on October 16.

Comments

[Salman Ahmed]

Milton Friedman argues that a completely free capitalistic system would be the most efficient at allocating resources and that it would lead to the best social conditions for the populace if unrestricted. He felt that any government intervention in the economy only led to inefficiency and an overall decline in welfare. As most of my colleagues and many intellectual heavyweights of the past have stated this simply is not the case. Free market capitalism in its freest form has only one purpose, to allocate scarce resources at the highest possible price and to cut costs of production to lowest possible. An emphasis on the welfare of society is lacking to say the least. A free market treats human beings assets which when not needed, can be expended. That is why most economies have adopted a Keynesian system of capitalism with social protective measures in place.
My colleagues have mentioned the fact that Friedman’s proposed flat tax would only serve to hurt the citizens at the bottom of the income ladder. His ideas for a free market also rest on the assumption that all consumers would be well informed consumers who have access to all market information and are of high intelligence. As many have stated, this is a completely Utopian ideal which has no relevance in real society. Friedman argues that the market corrects itself in the long term which may be true; however, the people who are adversely affected during a downturn in the market can’t be expected to simply wait for the market to enter another upswing which in a completely free system may take decades to come around. The magnitude of these downturns in the market must be alleviated to a certain degree in order to maintain peace and order in society otherwise a state of anarchy could result. This would call for monetary and fiscal policy which Friedman is clearly against. These are some of the reasons why simply “letting the market rip” would be a foolish choice to make.

[Nicholas DeGroot]

Like some of the previous posters, I am glad that we read Orwell and Polyani before Friedman, this has helped us see that there are aspects of society that will not fair well if not supported by the government. Friedman advocates for a government that provides framework to markets by sponsoring a monetary system in addition to defining, interpreting and updating laws that govern exchange and property. Friedman espouses that in order for a market transaction to be considered free, it has to occur with voluntary informed consent. He acknowledges that enterprise, whether supported by the government or its own scale can lead to a monopoly that restricts the liberty of consumers. Friedman says we must analyze our corrective options at this point to determine if intervention would be beneficial or should be avoided. As long as capitalism remains competitive and transparent to consumers, we should need no major government involvement. Freidman says collective expenditure on national defense is about as good as government spending should get. I believe he shirks the true repercussions that would occur if we were to dismantle the welfare state.