Laissez-faire!

Equitable Incomes

  Everywhere in the world there are gross inequalities between the poor and the wealthy.  Few can fail to be moved by the contrast between the luxury enjoyed by some and the grinding poverty suffered by others.  In the past century, a myth has grown up that free enterprise capitalism increases such inequalities, and that it is a system under which the rich exploit the poor.  Nothing could be further from the truth.  Wherever the market economy has been permitted to operate without interference, wherever anything approaching equality of oppurtunity has existed, ordinary people have been able to attain levels of living never dreamed of before.  Nowhere is the gap between rich and poor wider, nowhere are the rich richer and the poor poorer, than in those societies that do not permit the market to operate without government interference.  That is true of feudal societies as in medieval Europe, and much of modern South America.  It is equally true of centrally-planned societies, such as Russia . . . .

  Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant relatively little to the wealthy.  The rich in ancient Greece would not have benefited very much from modern plumbing because servants brought all the water the rich needed.  The same is true for television and radio, since the wealthy could bring the leading musicians and actors to their homes.  Other advances would have added very little to their life that they did not already possess.  Modern capitalism has thus benefited the poor much more than it has aided the wealthy.  It has brought conveniences that were the sole preserve of the rich to everyone . . . .

  Industrial production, technological advances, and just plain hard work are dependent upon the desire for profit.  What incentive does a producer have to make goods as efficiently as possible if it will not result in some sort of personal reward?  If a hockey player's salary would be the same whether he skated hard or not, why should he try?  He might do so for a while, but why would he work hard for nothing?  Would you?  Why should you make the effort to start a new business, invent a new manufacturing process, or invest your money, if there was no reward?  Human beings need the incentive provided by the private enterprise economy.¹

¹Milton and Rose Friedman, Free to Choose: A Personal Statement, New York: Harcourt Brace Jovanovich, 1980, p. 23, pp. 146-148. Abridged.

Free Will or Coercion

  Perfection is not of this world.  There will always be poorly-made products, quacks, and con artists.  But on the whole, the private enterprise system protects the consumer better than those systems that depend upon government involvement in the economy.  As Adam Smith said, competition does not protect the consumer because businesspeople are altruistic or generous, or even because they are more competent, but only because it is in the self-interest of business to serve the consumer.  If one merchant offers you goods of lower quality or of higher price than a second merchant, you will not return to the first store.  The central feature of the market economy is that it usually prevents one person from interfering with another.  Consumers are protected from coercion by sellers because of the presence of competitors.  Sellers are protected from coercion by consumers because of other consumers to whom they can sell.  Employees are protected from coercion by the employer because of other employers for whom they can work, and so on.  Indeed, a major source of objection to a free economy is precisely that it does this task so well.  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.²

Economic Freedom

  Fundamentally, there are only two ways of co-ordinating the economic activities of millions.  One is central direction involving the use of coercion by the modern totalitarian state.  The other is voluntary co-operation of individuals by the market place.  Many intellectuals, even in our democratic societies, take for granted that free enterprise capitalism exploits the masses, whereas central economic planning is the wave of the future that will set their countries on the road to rapid economic progress.  The facts themselves are very different. Wherever we find any large degree of individual freedom and wide-spread hope of further progress in the future, there we also find that economic activity is organized mainly through the free market.  Wherever the state undertakes to control the economic activities of its citizens, ordinary citizens have little political freedom, a low standard of living, and little power to control their own destiny.  The most obvious example is the contrast between East and West Germany.  People of the same blood, the same civilization, the same level of technical skill and knowledge inhabit the two parts.  Which has prospered?  Which had to erect a wall to pen in its citizens?  Which must man it with armed guards, assisted by fierce dogs, manfields, and similar devices of devilish ingenuity in order to frustrate brave and desperate citizens who are willing to risk their lives to leave their communist paradise for the capitalist hell on the other side of the wall?  On one side of that wall the brightly-lit streets and stores are filled with cheerful, bustling people.  Some are shopping for goods from all over the globe.  Others are going to the numerous movie houses or other places of entertainment.  They can buy newspapers and magazines expressing every variety of opinion.  They speak with one another or with strangers on any subject and express a wide range of opinions without a single backwards glance over the shoulder.  A walk of a few hundred feet, after an hour spent in line, filling in forms and waiting for passports to be returned, will take you, as it took us, to the other side of that wall.  There, the streets appear empty; the city, gray and pallid; the store windows, dull; the buildings, grimy.  One hour in East Berlin in enough to understand why the authorities put up the wall.³

³Friedman,  Capitalism and Freedom, pp. 69-70; Free to Choose, pp. 54-55.  Abridged.

Freedom

  It is widely believed that politics and economics are separate and largely unconnected; that individual freedom is a political problem and material welfare an economic problem; and that any kind of political arrangements can be combined with any kind of economic arguments.  But such a view is a delusion.  There is an intimate connection between economics and politics, and only certain combinations of political and economic arrangements are possible.  A society which is Marxist cannot also be truly democratic.  In addition to providing economic freedom, capitalism promotes individual freedom by separating economic power from political power and in this way enables the one to offset the other.  This prevents power from being concentrated in only a few hands.  Historical evidence speaks with a single voice on the relation between political freedom and the market economy.  I know of no historical or contemporary society that has a large measure of political freedom without also employing the market economy.  A free society releases the energies and abilities of people to pursue their own objectives.  It prevents some people from arbitrarily suppressing others.  It does not prevent some people from achieving positions of privilege, but so long as freedom is maintained, these positions of privilege are subject to continued attack by other able, ambitious people.  Freedom preserves the opportunity for today's underprivileged to become tomorrow's privileged and, in the process, enables almost everyone, from top to bottom, to enjoy a fuller and richer life.⁴