Ethics@work: Milton Friedman's ethical legacy

All his life, Friedman was a tireless crusader for market capitalism and for personal freedom, generally.

milton friedman 88 (photo credit: courtesy)
milton friedman 88
(photo credit: courtesy)
Milton Friedman, winner of the Nobel Memorial Prize for Economics, died recently at the age of 94. Friedman first made his name as a macroeconomist; he made very important contributions to monetary economics both as a careful observer and as an innovative theorist, and was also a pioneer in the study of savings behavior. However, Friedman's main impact on the public agenda and his main claim to fame are undoubtedly not due to his contributions to the dismal science. He is not remembered today for his massive 1963 tome, Monetary History of the United States 1867-1960, co-written with Anna Schwartz, but for the best-selling 1980 popular work Free to Choose, co-written with his wife Rose. The book, as its title suggests, advocates leaving individuals and groups free to choose their actions, with as little government intervention as possible. All his life, Friedman was a tireless crusader for market capitalism and for personal freedom, generally. He was profoundly influential; many causes which he first championed and which were early on considered crackpot ideas have now become widespread. A fine example is the volunteer army in the United States, which he advocated from the early 1960s and whose adoption in the following decade he considered his proudest achievement. What I would like to focus on in this brief article is the relationship between Friedman's views and libertarianism, which I would describe as the idea that people have a fundamental right to do whatever they want as long as it does not harm others. Government intervention is objectionable to libertarians on a priori ethical grounds. The motto "Free to choose" would seem characteristic of this approach, and Friedman on occasion referred to himself as a libertarian. However, in my opinion, there is a gap, even an abyss, between the free-market rhetoric characteristic of Friedman (and the Chicago School he fathered) and true libertarianism. Friedman's main emphasis in his pro-freedom advocacy was consistently not philosophical but rather pragmatic. He believed that in the vast majority of cases the individual was simply in a better position than some disconnected central authority to know and further his or her own interests. This is in the best tradition of pragmatic economists like Adam Smith, not of theoretical libertarians such as John Stuart Mill. We see this also with his attitude towards "market failure," cases where free markets work poorly because of counterproductive incentives. True libertarians tend to dismiss these arguments because they believe that even when they are true they don't justify public intervention in private decisions. Friedman's approach was generally to point out that even when there is market failure it doesn't automatically justify government intervention because there is also government failure, which is likely to be even worse. His inherent ideological opposition to regulation was actually relatively weak; he simply felt that fixing the market (for example, by tradable emissions permits to fight pollution) was almost always a more practical and effective solution than overriding it (for example, by setting ceilings on emissions). Friedman also differed from classic libertarians in his evangelical zeal. Libertarianism and a missionary spirit don't really sit well together. If your life philosophy says that the highest value is that people should be free to pursue their self interest and have other people leave them alone, chances are that when they seek a career they will choose one that advances their self interest and leaves other people alone. An evangelical libertarian is not quite a contradiction, but it is at least a paradox. I think that Friedman's unique brand of pragmatic and evangelical "libertarianism" is closely related to his Jewish background. Pragmatically speaking, Jews always seem motivated to active involvement in improving the world. There is also an emphasis on social solidarity that makes it hard for a Jew to be a libertarian. Evangelical zeal is also part of the syndrome. It seems to me that Jews with new social theories always feel obligated to elevate them into a religion, some kind of gospel. Of course, the most prominent example of this is the original evangelists. But we find many other examples. For example, it is possible to be a communist and thus believe that people should voluntarily organize themselves into communes. But the Jewish Karl Marx felt the need to capitalize the C in Communism, write a manifesto and a binding communist scripture and then convert the masses. The most bizarre combination to my mind is so-called "neo-conservatism," a movement in which Jews are very prominent. Conservatism means recognizing the value of leaving things the way they are - certainly not a world view which sits well with the revolutionary zeal of the neo-cons. In the end, Milton Friedman was not a libertarian. He was a utilitarian who strongly believed that the best policy is one that improves the lot of the greatest number of people. Like Adam Smith and many subsequent economists, he had a strong personal conviction that the most effective route to improving the lot of mankind, to tikkun olam, was to minimize government involvement and empower the individual. This conviction was based partly on faith, but mostly on Friedman's experience and careful research. It is a credit to Friedman that he gave prominence to his ideas rather than to his ideology. His insights into the unique ability of the individual to distinguish and advance his or her own interests were enormously influential in his lifetime and constitute his main ethical legacy after his death. The writer is research director at the Business Ethics Center of Jerusalem (, an independent institute in the Jerusalem College of Technology.