Friedman on the Corporatist State

Milton Friedman, the much vilified Chicago School economist, put together a book and series of TV programs in 1980 to inculcate the public on his vision of capitalism called Free to Choose.

In one of these, Friedman faces off against Michael Harrington, of the Democratic Socialist Organizing Committee. In the course of his response to Harrington, Friedman surprised me—alarmed me—with views that echo my own.

"I am not an anarchist. I am not in favor of eliminating government. I believe we need a government. But we need a government that sets a framework and rules within which individuals, pursuing their own objectives, can work together and co-operate together."

"I do not believe it’s proper to put the situation as “Industrialists vs Government.” On the contrary, one of the reasons I’m in favor of less government is because when you have more government, industrialists take it over and the two together form a coalition against the ordinary worker and the ordinary consumer. I think business is a wonderful institution provided it has to face competition in the marketplace and it can’t get away with something except by producing a better product at lower cost."

this version is suitable for framing:

"My own view is that market systems are the most efficient means of allocating resources. But a free, unregulated market produces outcomes that are harmful to the commonwealth. The state is entrusted with serving the interest of the commonwealth by structuring protections against exploitative or harmful practices: safeguarding the air we breathe and water we drink; protecting workers from hazardous workplaces; protecting consumers from fraud; protecting our commerce from foreign ownership; and so on. The state sets and enforces the rules of the market, then allows the market to operate."

Where Friedman and I differ most profoundly is not on the role of the state in the market economy, but on the role of the state in supporting the vulnerable in our society: the sick, the young, the poor, the unemployed.

For Friedman, the individual is left to his own devices: You're on your own. Are you sick? Tap your savings, tap your benefits from private insurers (you know, those great altruists who have only your interests at heart?), tap your family or your employer (as long as your health is in their enlightened self-interest, they'll help you). Are you unemployed? It must be a consequence of that pernicious measure known as the minimum wage. Eliminate that and the free market for labour will allow you to find an employer willing to pay you something for your services. It might take more than one job to achieve a subsistence wage, though. Maybe three. Or make yourself more marketable by buying your education from a private college.

When the vulnerable are neglected, addiction rates rise; crime rates rise; illness, illiteracy, poverty all rise. Life expectancy falls. Our society becomes more hostile, and more suffering is packed into our shorter lives.

Friedman's warning about the corporatist state are accurate, though. For example, our current government shills shamelessly for the oil sands, and obstructs any impediments to their development, choosing corporate over commonwealth interests. That's the Calgary School of Economics at work.

No comments: