No political figure has had a bigger impact on the modern world than Milton Friedman, whose supporters will be celebrating his centenary and whose adversaries will be celebrating 10 years of his death. Whether one agrees with him or not, there is no denying that his ideas have shaped the modern world and he has had a bigger impact on British thinking and possibly on British Labour party than Marx.
His seminal work, Free to Choose, was written in 1979. Just two years later Ronald Reagan became president of the USA and enacted the ideology outlined by Freidman. Thatcher caught onto it in Britain, and soon supra-national entities started embodying it; the IMF set up in 1946, the World Bank, the WTO, OECD and even the EEC. Unelected bodies so when the people got fed up of Friedman, there was no way to overthrow his ideology. His ideology transcended democratic states; it is here to stay.
Friedman’s ideology, neo-liberalism, was not revolutionary or new. It was based on the laissez-faire politics of Victorian Britain and pre-progressive America. William F Buckley and the neo-conservative “pulse” had a voice before Friedman’s work and a lot of similarities can be drawn with another thinker, Friedrich von Hayek. But these were fringe figures, none more so that the obscure though now celebrated novelist Ayn Rand. It was Friedman who brought their line of thinking to prominence, primarily through timing. Keynesian theory was on the brink in 1979, and the progressive era of American politics which saw co-operative federalism was at an end in 1974 due to the Watergate scandal. The Republican Party in particular needed a clean break. The world needed a new economic policy.
Hayek played an important role in the rise of neo-liberalism. He was condemned as a heretic in his time, his writings of the 1950s only came to fashion in the 1980s. Considering that he did not believe in social justice and ‘so long as we do totalitarianism will follow’, I personally lean towards giving him the ‘heretic’ label. Where Friedman is flawed, Hayek is rabid, particularly his opposition to socialism or the state in any form. Like his followers, he held human nature in low regard; most neo-liberal thinkers view man as inherently egoistic, following a misreading of Adam Smith. Hayek regards man as inherently lazy, and yet he deplores any form of state intervention to overcome laziness. He also says that men are inherently egoistic and overcome this to become socialist, the very thing he decries. There are very few credible ethical theories where egoism is good and altruism, the “virtue of socialism” (Hayek), is bad. Yet that is Hayek; a peculiar theorist with a sensational aversion to socialism who played a major role in Friedman’s ideology.
The danger of ideology is that it assumes absolutes; that there are truths that transcend time and space. “Government does more harm than good” is a classic absolute of economic liberals, from Hayek to Friedman. Yet it was government that stopped the exploitation of children, that set owners straight, that introduced a humane minimum wage, provided affordable healthcare to millions, cut hospital waiting times, tackled crime, increased educational standards and availability, and most important of all that cut poverty. It is not rhetorical but empirical; the ‘trickle-down effect’ is not and has not worked here in Britain. Charities and voluntary organisations are great for a community, but they are an underfunded, undertrained and overstretched sector. Time and again government has intervened and done good. Government is a tool, like a hammer. A hammer can be used for bad, such as to hurt someone, but it can be used for good, such as to put a nail into a wall. It is not intrinsically good or bad. Government has the potential for bad and to be misused, and it has been as 20th Century European history has shown. But it can also be used for good, to help people, to protect. In late 19th Century England, post-war Britain and now government is needed.
The reason why America got ahead of the game was because of geography; there was plenty of land to expand and isolation from Europe. The USA had to use its own resources and industry as it could not import cheaply. Further, tariffs were in place to bolster American industry. The free markets did not make America rich, but protectionism and geographical limitation did.
If the ideal state is one of no government intervention, no taxation and where the individual is supreme, then Somalia is the ideal state. A novel suggestion to make towards neo-liberals and neo-conservatives, and perhaps even the road Britain is going.
The implementation of Friedman’s ideology has had wide ramifications for social life, a good indicator is the family. Friedman claims that the state is to blame for the weakening of the family. This ignores the observation that fascist states often had stronger communities. But just look at some graphs; the policies of Friedman coincides with an explosion in income inequality, this correlates with a breakdown in community spirit, a rise in crime and deterioration of the family. Let’s take ‘family life’ as traditional conservatives like it; in 1979 74% of women aged 18-49 were married, that fell to 61% in 1991. Births outside marriage doubled during the 80s. This could simply reflect changing attitudes and is fairly harmless. But the number of one parent families rose from 12% in 1979 to 21% in 1992. In 1991 there was one divorce for every two marriages in the UK, a rate only comparable to the USA. Households that were wholly workless increased from 6.5% in 1975 to 16.4% in 1985 to 19.1% in 1994. Family life is one example of where Friedman was hopelessly wrong.
This is a man who opposed the minimum wage. This is a man who detests the British NHS and claims it has hindered more people than it has helped. Perhaps he, or rather his adherents, should work on the US minimum income and then make their case. “Free markets allow man to flourish freely” is a false mantra. The free markets allowed exploitation, domination and slavery.
A major vulgarism within Friedman’s work is the ethical basis for his theory. Many neo-liberal thinkers have a low view of human nature. It all comes down to whether one believes man is innately egoistic and lazy, or that man can be genuinely good. And this is where Aquinian naivety becomes a virtue in politics. But the economic system, political order and society favoured by Friedman and his acolytes is based upon greed and profit. Literally, “greed is good”. An economic system whose basis is greed and profit is a pretty rotten system, particularly if it has no desire to overcome this natural flaw. The whole theory is founded on and advocates vice. Only an incredibly small handful of ethicists have ever considered greed to be a virtue, and those who are believed to have supported greed are often misread; Machiavelli, Hobbes and Adam Smith were all more benevolent than they are credited. Free to Choose begins with a quote from Adam Smith, and throughout the book Friedman refers to Smith. Essentially, Smith is the basis of neo-liberalism. But Smith was not an economist, he was an ethicist. The Wealth of Nations was not his main work, Theory of Moral Sentiment was and both were part of an incomplete trilogy outlining Smith’s virtues. Adam Smith claimed that man had an innate leaning in his conscience towards helping each other and benevolence, not egoism. The whole of modern neo-liberal thought emerged from at best a misreading and at worst a bastardisation of an 18th Century ethicist’s second book. An economic deficit is no reason for a moral deficit.
One massive criticism of Friedman is his skewed history. He considers the laissez-faire period of Victorian Britain a “golden age”. What brought this age to an end was the need for the state to intervene to curtail the exploitation of the workers. It was not a “golden age”; it was an age of abject poverty, of child exploitation, of rampant disease and overcrowded urbanisation, of depravity. And then his false history continues with “the Great Depression was produced by a failure of government”, with the responsibility of free market capitalism to the depression being branded a “myth”. One man’s myth is another man’s truth, but there is no compelling case here. Friedman’s interpretation of history leaves a lot to be desired.
Just as the world needed a new economic order in 1979, so we need one now. Friedman has become outdated and irrelevant. That is the fatal flaw of ideology; it is always caught in the author’s sitz in leben. We need to move on from Friedman; his experiment has failed just as the Marxist one has. Even capitalist supreme George Soros said “The collapse of the global marketplace would be a traumatic event with unimaginable consequences. Yet I find it easier to imagine than the continuation of the current regime”. It is time to consign Friedman to the fires of history alongside Marx and Keynes, to perhaps be reinterpreted in the future. God help that future generation, because under that system the state won’t.
