Milton Friedman Rebuttals
By Douglas C. Rapier
Milton Friedman American economist, statistician and recipient of the Nobel Memorial Prize in Economics stated "The most important single central fact about a free market is that no exchange takes place unless both parties benefit." What a load of bilgewater.
One needs look no further than the numerous heinous commercial exchanges foisted upon the indigenous Americans, Africans, Australians, etc. or the ruinous ‘benefit’ suffered by those subjugated and oppressed by modern multi-national corporations and their governmental proxies to see, starkly, that Dr Friedman espouses fantastical nonsense that should not be taken seriously by anyone with a wit’s awareness of reality.
This attempted rebuttal was prompted by a viewing of an interview with Dr Friedman on YouTube. There are many to be seen at that site and considerable more at other sites as well. It might appear to be the fruit of a pitiable hubris for someone without a formal education in economics to attempt to rebut the ideas of Milton Friedman, who is widely considered to be a genius of economic theory. As has been said though, ‘from the mouths of babes oft times comes gems’. So, I cloak myself in that proverb so that I may tread not so lightly on creeds held sacrosanct by acolytes of the Chicago School.
The near deification of Dr Friedman and the fanatical level of devotion to his economic canon shall not deter me. I will not attempt however to address every point of neo-liberal economic theory nor strive to prove that capitalism is immoral. Neither time, nor space nor personal resources permit so daunting an undertaking. Rather, I will focus on the tenet that ‘an individual will serve his own best interest and that that will in turn serve the best interests of a free society’.
First, permit me to start by sharing a few observations regarding power. The nature of power in human society – as illustrated again by historic record - is not collectivism. Rather it is centralization and concentration. Political power, historically, is not wielded collectively but by a central government headed by a king, a dictator, a priest, or priestly caste, a cabal or other elite group. Even elite groups such as parliaments, senates and other governing bodies wield a concentration of power - ostensibly conferred by an electorate.
That the power is concentrated can be illustrated by simply envisioning two groups of equal numbers - one of private citizens and one of Senators. The group of Senators obviously has the greater power to impact policy and legislation.
Power in a democratic society is conferred on governing bodies (city councils, governing boards, legislatures) and thereby controlled by citizen scrutiny via social and political action groups and the ballot box.
The consolidation of power is not alien to democratic governments. In times of crises, even democratic states revert to strong centralized control by a single person (e.g. the US presidential war powers). Power does not disperse. It is consolidated by those who are greedy for it or can justify it by claiming that it is appropriate and necessary to satisfy a higher ‘collective’ need.
Wealth is the concrete example of power: it is collected but it is not collectively utilized. Wealth is accumulated. Rarely is it dispersed except as a means to preserve wealth or as a mechanism by which to consolidate even more wealth. Too often, the consolidation of wealth and power in the hands of the few selfish, rapacious individuals is to the detriment of the citizens’ collective power and wealth. The historic record is rife with examples. You, dear reader, are sure to have already conjured up several.
Selfish greedy men and women in government, by policy and the integral nature of the democratic system, have a higher level of accountability to the citizens than the private citizen. There is no watch dog – except for the legislation enacted by governing bodies – to over-see the private, greedy individual who would steal or withhold wealth to the detriment of his fellow citizens. There must be a watch-dog and another dog to keep one eye on the watch-dog. The temptation to bribe the watch-dog is simply too great and the watch-dog’s temptation to take the bribe stems from the same inherent character flaw: Greed.
Greed is one of the Cardinal Sins of the Roman Catholic Church; it is most assuredly on any of the correlative lists of character defects posited by other codes of morality and social responsibility, as well. Greed is evil in that it is contrary to the benefit of society – the people. To assume that a person in a position of corporate power would subjugate personal power and wealth in order to act altruistically requires an incredible discipline gained from years of studious, unrelenting self-delusion. History is replete with examples that prove the assumption that people who run corporations or governments will be guided by altruism or a social conscience is (was and forever will be) categorically false.
One of the most despicable travesties perpetrated against social justice was the dubious judgment made by the US Supreme Court which ruled that corporations had the same Constitutional rights as human citizens under the 14th Amendment; that corporate entities were equal to human beings before the law. This notion flies in the face of common sense and common decency. To say that IBM should have legal rights equal to John Q Citizen is absurdly fantastical. Corporate entities are NOT individuals any more than any organization (e.g. the Catholic Church, the Lions Club, the Republican Party, etc) is an individual but rather, a formal association of individuals comprising a group. If an entity does not develop from a human fetus then the entity is not, CANNOT be a citizen and therefore is NOT entitled to the rights of citizenship. Yet, according to the 1886 ruling on the case Santa Clara County vs. Southern Pacific Railroad Co., it was the decision of the Court
Recently, Justice Sonia Sotomayor during oral argument on the campaign-finance case Citizens United v. Federal Election Commission suggested that the Court should revisit more than 100 years of precedent, questioning whether corporations were properly considered “persons” entitled to rights under the Constitution. Justice Sotomajor suggested the majority might have it all wrong -- and that instead the court should reconsider the 19th century rulings that first afforded corporations the same rights flesh-and-blood people have. Judges "created corporations as persons, gave birth to corporations as persons," she said. "There could be an argument made that that was the court's error to start with...[imbuing] a creature of state law with human characteristics." So, apparently, this is not a dead issue. There may be hope that the strangle-hold that corporations have on US policy-making could be challenged by the Court.
The relevance of this century-old ruling to this discussion on Freidman’s economic theories is ponderous. Corporations – collective commercial entities – despite the ruling that they hold the rights of individuals are not born and raised as individuals. They are not inculcated with the moral codes of behavior inherent in human society. They have no higher aspirations than to increase market share and revenue while containing cost and overhead to maximize the return on investment.
That, it must be admitted, is a pale credo by which to govern one’s social interaction. It furthermore provides little ground upon which culture and society might advance itself except in the crassest, meanest terms. Dr Friedman rejoices in exalting the dynamism of the individual acting as the driving force in commerce and innovation. What Dr Friedman seems to ignore or chooses to ignore is that while Great Art, Music, Dance and Literature are all due to the dynamism of the human spirit, the artifacts of High Culture are not market driven nor are they the result of tyrannical corporate entities. They are the result of human beings born, bred and operating within human society and answerable to the codes of personal conduct, scruples, a sense of right and wrong, a sense of pride and a sense of shame instilled by the culture and traditions of society. Corporate entities, it goes without saying, have none of those features.
Dr Freidman’s insistence that ‘greed is good’ and that “no exchange takes place unless both parties benefit" in a free market system therefore is a foundation built on shifting sand, for the corporate entity and the individual businessperson ultimately are bound by the same code of social conduct; none. At least, none that adheres to one taught in childhood or which demands personal accountability for actions taken against fellow human beings. That the aphorism ‘Nothing personal; it’s business’ is cited by anyone and everyone who has ever acted unscrupulously during a commercial exchange should be proof enough. This shop-worn old saw is meant to exonerate the unscrupulous party of all moral and cultural restraints of acceptable social conduct for the sake of self-aggrandizement. Mr Friedman’s self-regulating ‘Free Market’ is delusional; the inconstant, fickle ground upon which neo-liberalism is erected.
We have witnessed once again the collapse of the economic edifice constructed on the unstable, unsound foundation of Free Market dogma. That is the 500-lb Gorilla that Milton Friedman and his Chicago Boys ignored when finessing and fetishing their neo-liberal policies. It's the revelation of the presence and power of that Gorilla that induced Alan Greenspan's 'uh-oh' moment before the House Committee regarding the most recent melt-down of the economy when he stated “I found a flaw in the model that I perceived as the critical functioning structure that defines how the world works." A flaw… Basically, Greenspan admitted that the financial markets could not regulate themselves as he had believed according to neo-liberal Free Market doctrine. Yeah, that’s some flaw; counting on the fox not only to take care of the hen-house but assure the continued existence of eggs and poultry.
(Mr Greenspan’s testimony can be seen and the transcript read here: http://www.distressedvolatility.com/2008/10/dissecting-alan-greenspans-testimony.html )
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