Free To Choose

Posted: November 17, 2003

MILTON FRIEDMAN
ROSE FRIEDMAN

Where the new governor learned his economics

Free to Choose

From the book that taught Arnold Schwarzenegger the promise of free markets
and the perils of big government. Excerpted from the authors’ Introduction.

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“Experience should teach us to be most on our guard to protect liberty when the government’s purposes are beneficial. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greater dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding.”

— Justice Louis Brandeis, Olmstead v. United States, 277 U.S. 479 (1928)

[Adam] Smith and [Thomas] Jefferson had seen concentrated government power as a great danger to the ordinary man; they saw the protection of the citizens against the tyranny of government as the perpetual need. That was the aim of the Virginia Declaration of Rights (1776) and the United States Bill of Rights (1791); the purpose of the separation of powers in the U.S. Constitution; the moving force behind the changes in the British legal structure from the issuance of the Magna Carta in the thirteenth century to the end of the nineteenth century. To Smith and Jefferson, government’s role was as an umpire, not a participant. Jefferson’s ideal, as he expressed it in his first inaugural address (1801), was “[a] wise and frugal government, which shall leave them otherwise free to regulate their own pursuits of industry and improvement.”

SUCCESS BREEDS COMPLAISANCE

Ironically, the very success of economic and political freedom reduced its appeal to later thinkers. The narrowly limited government of the late nineteenth century possessed little power that would enable good people to do good. And in an imperfect world there were still many evils. Indeed, the very progress of society made the residual evils seem all the more objectionable. As always, people took the favorable developments for granted. They forgot the danger to freedom from a strong government. Instead, they were attracted by the good that a stronger government could achieve — if only government power were in the “right” hands.

These ideas began to influence government policy in Great Britain by the beginning of the twentieth century. They gained increasing acceptance among intellectuals in the United States but had little effect on government policy until the Great Depression of the early 1930s. As we show in Chapter 3, the depression was produced by a failure of government in one area — money — where it had exercised authority ever since the beginning of the Republic. However, government’s responsibility for the depression was not recognized — either then or now. Instead, the depression was widely interpreted as a failure of free market capitalism. That myth led the public to join the intellectuals in a changed view of the relative responsibilities of individuals and government. Emphasis on the responsibility of the individual for his own fate was replaced by emphasis on the individual as a pawn buffeted by forces beyond his control. The view that government’s role is to serve as an umpire to prevent individuals from coercing one another was replaced by the view that government’s role is to serve as a parent charged with the duty of coercing some to aid others.

These views have dominated developments in the United States during the past half-century. They have led to a growth in government at all levels, as well as to a transfer of power from local government and local control to central government and central control. The government has increasingly undertaken the task of taking from some to give to others in the name of security and equality. One government policy after another has been set up to “regulate” our “pursuit of industry and improvement,” standing Jefferson’s dictum on its head.

These developments have been produced by good intentions with a major assist from self-interest. Even the strongest supporters of the welfare and paternal state agree that the results have been disappointing. In the government sphere, as in the market, there seems to be an invisible hand, but it operates in precisely the opposite direction from Adam Smith’s: an individual who intends only to serve the public interest by fostering government intervention is “led by an invisible hand to promote” private interests, “which was no part of his intention.” That conclusion is driven home again and again as we examine, in the chapters that follow, the several areas in which government power has been exercised — whether to achieve security (Chapters 4) or equality (Chapters 5), to promote education (Chapters 6), to protect the consumer (Chapters 7) or the worker (Chapters 8), or to avoid inflation and promote employment (Chapters 9) ....

We have not yet reached the point of no return. We are still free as a people to choose whether we shall continue speeding down the “road to serfdom,” as Friedrich Hayek entitled his profound and influential book, or whether we shall set tighter limits on government and rely more heavily on voluntary cooperation among free individuals to achieve our several objectives. Will our golden age come to an end in a relapse into the tyranny and misery that has always been, and remains today, the state of most of mankind? Or shall we have the wisdom, the foresight, and the courage to change our course, to learn from experience, and to benefit from a “rebirth of freedom”?

If we are to make that choice wisely, we must understand the fundamental principles of our system, both the economic principles of Adam Smith, which explain how it is that a complex, organized smoothly running system can develop and flourish without central direction, how coordination can be achieved without coercion (Chapter 1); and the political principles expressed by Thomas Jefferson (Chapter 5). We must understand why it is that attempts to replace cooperation by central direction are capable of doing so much harm (Chapter 2). We must understand also the intimate connection between political freedom and economic freedom.

(Reprinted by permission of Harcourt, Inc.)

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