Milton Friedman’s astounding contribution to the U.S. economy is something that continues to affect the present day. One of the primary ideas he espoused focused on the value of liberalism in developing an overarching theory to govern modern society. However, Friedman lamented the fact that contemporary interpretation of the term “liberalism” may have a negative effect. He also pointed out that the failure to fully understand the deeper meaning and intended purpose of liberalism may end up in the creation of a society that misses out on the benefits of liberal ideas. Friedman made the assertion that the correct appreciation of liberalism begins with the realization that at its core is the extreme value placed on freedom.
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Friedman’s Understanding of Liberalism
Friedman’s arguments centered on the correct understanding of the concept called liberalism. He said that at the heart of liberalism is to promote and ensure the freedom of individual citizens. In an ideal society, the citizens are supreme entities, and every ordinance or policy must be created with this goal in mind. Everything must work out to ensure that a person’s freedom of choice is unhampered. Nonetheless, the right to be free is limited in the event that a citizen decides to use that same liberty to harm another human being (Friedman 2).
Friedman as a Conservative
Milton Friedman pointed out that in order to safeguard people’s freedom under a society governed by public officials and various government agencies, it is imperative to create a representative type of governance. Furthermore, it is also crucial to create safeguards and impose limitations on the arbitrary power of the state (Friedman 5). The same thing can be said when it comes to the development of economic policies. In fact, the popular concept labeled as “laissez faire” was created to reduce the capability of the government to control the nation’s economy. This type of thinking and pronouncements caused Friedman to earn the label as an American conservative, because he wanted to establish limitations to the government’s power over the people.
Bruce Scott’s Invisible Hand
Bruce Scott clarified Friedman’s “laissez faire” economic system by saying that there is a need for an “invisible hand” or an invisible force that regulates the economy. The emergence of a powerful government will eliminate the presence of the “invisible hand”, because a state with significant arbitrary power can enforce rules that businessmen and consumer must follow. In this authoritarian system, people are compelled to obey even if it is not in the best interest of the stakeholders or the consumers to adhere to such rules and regulations. Bruce Scott asserted that it is dangerous to adopt a system without the “invisible hand” mechanism that promotes self-regulation. The collapse of the Soviet Union in 1991 supports this point of view (Scott 5).
Stephen Marglin’s Opinion Regarding the Market Economy
Marglin’s criticism of the impact of market forces is rooted in the fact that the current system fails to encourage the emergence of a community of people helping each other out. Marglin acknowledged the fact that the market economy succeeded due to the pursuit of cost-efficiency. At first glance, it seems easier to rely on an insurance provider as opposed to expecting help from neighbors in times of desperate need. However, Marglin wanted his readers to look at the bottom line. At the end of the day, it is not about rebuilding broken barns or the re-construction of a house burned down by fire. At the end, it is all about people. Marglin said that an efficient market economy caused families to lose sources of livelihood. This phenomenon is manifested in communities that are no longer cost-efficient centers of trade.
Economists Judging the Role of the State Differently
Marglin reminded his readers that due conventional thinking on how to determine the country’s economic performance, economists all over the world tend to focus on the mathematical aspect in the study of gross domestic product. Due to the problems encountered recently, specifically the 2008 financial crisis that radically altered how people perceived banks and corporations, there is a need to re-examine America’s fundamental beliefs when it comes to the management of resources.
George Lodge’s Ideological Consciousness
The ideas espoused by Friedman and John Stuart Mill who came before him are rooted in the concept of individualism. Freedom is important, but the current laws and policies were created to ensure the freedom of the individual and not the group of people living within a community. Lodge asserted that it is the height of anti-Americanism if politicians cease to believe in the value of individualism. However, Lodge acknowledged the fact that Americans believe in the utmost necessity of individualism, but they also establish institutions and organizations designed to ensure the welfare of the community. Therefore, Lodge said that it is imperative to reconsider the current ideology in order to realize how the United States government is currently being transformed in accordance to people’s needs.
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Differing Views: Private versus Private goods
Popular support for the “laissez faire” framework is not only for the purpose of self-regulation. It also comes from a clear distinction between private and public goods. According to Jon Wisman, in a traditional market economy there is greater demand for private goods as opposed to public goods (Wisman 4). Thus, a free market system is more valuable than a powerful government that may develop a capacity to interfere with the cost-efficient system market economy enjoyed by many individuals. It is therefore important to maintain a system that assures the availability of private goods at a fair price.
Views Concerning Human Behavior
It has been made clear that freedom and individualism are some of the critical components that ensure the establishment of a self-regulated market economy. Nevertheless, it is also crucial to consider the impact of human nature. It is human nature to compete and win every time there is a conflict of interest between another fellow human being. Jon Wisman uses this analogy to discuss how core beliefs in freedom and individualism were violated by pharmaceutical and insurance companies in order to make large sums of money (Wisman 1).
It is of great importance to cherish the ideas of freedom and individualism, because these are foundation stones that help establish America as one of the greatest nations in human history. These foundational beliefs gave rise to free markets that made America one of the richest nations in the planet. However, it is also important to re-examine the ideological framework that produced laws and economic policies, because changing needs and the impact of human nature created problems that are so complicated that a blind faith on the power of a self-regulated market economy may lead to a social and economic collapse. It is the right time to consider ideas that can help Americans improve their understanding on the value of capitalism and democracy.
Friedman, Milton. Capitalism and Freedom. Chicago, IL: University of Chicago Press, 1962. Print.
Marglin, Stephen. “Why Thinking Like an Economist Can Be Harmful to the Community.” Challenge 51.2 (2008): 13-26.
Scott, Bruce “Capitalism: The Indirect Economic Governance of a Visible Hand.” Challenge 55.4 (2012): 5-23.
Wisman, Jon. Freedom, Prescription Drugs, and Social Irrationality. Huffington Post. 2015. Web.
Wisman, Jon. “Keynesian Economics and Economists’ Views on the State.” Forum for Social Economics 16.1 (1986): 1-15.