Capitalism and freedom
Capitalism and Freedom ( Capitalism and Freedom ) is a non-fiction book of the American economist Milton Friedman , originally in 1962 by the University of Chicago Press published and the role of capitalism discussed in the liberal society. It sold over 400,000 copies in the first eighteen years of its release and more than half a million since 1962. It has been translated into eighteen languages (as of 2020). The German version of the book first appeared in 1971 and was reissued in 2002.
Friedman argues in the book for economic freedom as a prerequisite for political freedom and opposes the prevailing economic theory of Keynesianism at the time. Today it is considered to be one of the most important works of economic policy and is particularly popular among American conservatives and libertarians .
context
Capitalism and Freedom was published nearly two decades after World War II , at a time when the Great Depression was still in the collective mind. Under the Kennedy administration and previous Eisenhower administrations, government spending on defense, welfare and infrastructure grew rapidly. Both major parties, Democratic and Republican , supported the increase in spending in different ways. This, like the New Deal , was supported by most intellectuals on the grounds of the Keynesian economy. Capitalism and Freedom introduces the idea of how competitive capitalism can help achieve economic freedom and opposes an overly dominant role of the state in the economy.
content
introduction
The introduction sets out the principles of Friedman's archetypal liberal, a man who supports limited and federalized government. Friedman opts for the continental European and not for the American definition of the term liberalism in the sense of classical liberalism or economic liberalism instead of left-wing liberalism .
I. The relationship between economic and political freedom
In this chapter Friedman promotes economic freedom as an important requirement for political freedom. He argues that with the means of production under the auspices of the state, real disagreements and exchanges are nearly impossible. In addition, economic freedom is important, since any "bilateral voluntary and informed" transaction would benefit both parties to the transaction. Friedman notes that economic freedom protects minorities from discrimination because the market is indifferent to "their views or their skin color".
II. The role of the state in a free society
According to the author, the government of a liberal society should enforce law and order and property rights, take measures against certain allocative, technical and qualitative monopolies and reduce negative effects. The government is important on the one hand as the forum that determines the rules of the game and on the other hand as the referee who watches over the rules. The government should also have control over money issuance , as the constitution and society have long recognized.
III. Control over the money
He discusses the development of the monetary system in America, which culminated in the Federal Reserve Act of 1913 . Far from acting as a stabilizer, the Federal Reserve has not acted as it should have done in several circumstances. Friedman suggests that the Federal Reserve should have a consistent rule of increasing the money supply by 3 to 5% per year.
IV. International Financial and Trade Agreements
This chapter advocates the end of the Bretton Woods system of fixed exchange rates in favor of a fluctuating exchange rate system and the end of all currency controls and trade barriers, even "voluntary" export quotas. Friedman says that this is the only real solution to the problem of the trade balance , which would automatically equalize with floating exchange rates.
V. Financial Policy
Friedman argues against the constant government spending, which is there to compensate for weaknesses in the private sector and to help the economy grow. On the contrary, government spending would make the economy more unstable, not more stable. Friedman uses specific findings from his own research, which show that the increase in government spending, contrary to Keynesian multiplier theory, would only lead to an increase in gross domestic product of roughly the same size . Various reasons for this discrepancy are discussed.
VI. The role of the state in education
The policy advocated here is vouchers that students can use to attend classes at a school of their choice. The author believes that everyone in a democracy needs basic education to become a citizen. While there would be underinvestment in human capital (in terms of spending on technical and vocational schools), it would be a mistake by the government to provide free technical education. The author suggests several solutions, some private, some public, to stop this underinvestment.
VII. Capitalism and Discrimination
In a capitalist society, Friedman argues, it costs a lot of money to discriminate and it is very difficult given the impersonal nature of market transactions. However, the government should not legislate on fair employment practices (which was eventually enshrined in the Civil Rights Act of 1964 ) as this would impede the freedom to employ someone based on the skills the employer wishes to use. For the same reason, laws on the right to work should be abolished. Friedman is in favor of a complete end to racial segregation in education, but does not think government regulations are the right way to achieve them.
VIII. The monopoly and social responsibility of employers and trade unions
Friedman notes that there are three types of monopoly : public monopoly, private monopoly, or public regulation. Neither of these alternatives is desirable or generally preferable. Monopolies came from many sources, but these, through direct and indirect government intervention, were the most common and should be stopped wherever possible. The doctrine of "social responsibility" that corporations should care about the community and not just about profit is highly subversive for the capitalist system and can only lead to totalitarianism .
IX. Free choice of profession and licenses
Friedman takes a radical position against all forms of government licensing . The biggest proponents of licenses in an industry are usually the people in the industry who want to keep potential competitors away. The author defines registration, certification and licensing and explains these using the example of doctors. There is no liberal justification for licensing doctors. According to Friedman, it leads to poorer care and a medical cartel .
X. The distribution of income
Friedman examines the progressive income tax , which was introduced to redistribute incomes to make things fairer, and finds that the rich are in fact exploiting numerous loopholes and undoing the redistributive effects. It would be far more equitable if there were a single flat tax with no deductions that could cover tax revenue at a rate that was only slightly above that of the lowest tax bracket at the time.
XI. Social and welfare measures
While well-intentioned, Friedman said many social welfare interventions do not help the poor as much as some believe. Friedman focuses its argument on the Social Security ( Social Security ) as a particularly large and unfair system.
XII. Actions to Combat Poverty
Friedman advocates a negative income tax to solve the problem of poverty by giving everyone a guaranteed minimum income instead of the current policies, which he sees as misguided and inefficient.
XIII. Summary
The conclusion of the book focuses on how government intervention would always have the opposite effect. Most of the good things in the United States and the world came from the free market, not the government, and they would continue to do so. The government, despite its good intentions, should stay away from areas where it does not need to be active.
reception
The book Capitalism and Freedom is considered Friedman's first major work and contributed significantly to his later fame. The book, along with much of Milton Friedman's writings, influenced the movement of libertarian and conservative philosophy in America. Milton's philosophy of economic and individual freedom has spawned similar thinking political parties and movements like the Libertarian Party and the Tea Party . In 2011, the book was included in Time Magazine 's top 100 non-fiction books written in English since 1923 .
The book also had a great and far-reaching impact on the field of political economy in various countries. Some of Friedman's proposals are being tested and implemented in many places, such as the flat tax in Estonia (since 1994) and Slovakia (since 2004), a system of free exchange rates that has almost completely replaced the Bretton Woods system, and national education voucher systems in Chile (since 1981) and Sweden (since 1992), to name just a few prominent examples. However, many other ideas have been neglected, such as the end of licensing and the abolition of corporate taxes .
Text output
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Capitalism and Freedom. Chicago University Press, Chicago 1962.
- Capitalism and freedom. Seewald, Stuttgart-Degerloch 1971; most recently Piper, Munich / Zurich 2004, ISBN 3-492-23962-5 .
Individual evidence
- ^ Capitalism and Freedom . ( uchicago.edu [accessed January 24, 2020]).
- ^ A b Milton Friedman: Capitalism and Freedom | NZZ. Retrieved January 24, 2020 .
- ^ A Tract for the Times, A Tract for the Times . In: The Economist . ISSN 0013-0613 ( economist.com [accessed January 24, 2020]).
- ↑ Milton Friedman: Capitalism and Freedom: Foreword by Horst Siebert . Piper ebooks, 2019, ISBN 978-3-492-99535-1 ( google.de [accessed January 24, 2020]).
- ↑ Time Magazine's All-TIME 100 Nonfiction Books. Retrieved January 24, 2020 .