The Theories of Milton Friedman - Essay Example

The Theories of Milton Friedman The purpose of this essay is to discuss the theories of Milton Friedman regarding the political economy, with an emphasis on why the government intervention in economic decisions always entails a certain kind of restriction. First the paper tries to explain why the freedom that Friedman has in mind may be a hindrance to the entailment of democracy. Secondly the paper deals with the explanation of why the common distinction between authoritarian rule and democratic rule is inconsequential for M Friedman’s general characterization of government. Also, the paper focuses on why the Bill of Rights provides citizens with fewer and less certain protections than are provided them by the free market. Lastly, the paper entails upon the role of democracy in a free market. Democracy and freedom Freedom constitutes of both economic and political freedom. (Friedman, 2002) For Friedman, the economic freedom does not just relate to the economic arrangements that are made between two parties voluntarily, but also is an indispensable means to the achievement of political freedom. Hence, freedom in this case might refer to a situation with a minimum government intervention so that the rights of any of the citizens are not in any way restricted and a free market is entailed. Appropriate as it might seem to Freidman, the notion of freedom he has may not exactly involve democracy. Democracy means the rule by people but when observed practically, the term is another word for majority rule. The basic of notion of democracy thus is that rational individuals may want to prefer freedom over absence of freedom and so the majority of the rational individuals would chose to vote for freedom. In this sense, the democracy may be linked to the freedom prescribed by Friedman. But on the other hand, a democracy may not coexist with a free system. This is so because total freedom may lead to anarchy as it would also include the freedom to restrict the freedom of others, a notion that is not followed in a democracy. As a result, the level and extent of freedom proposed by Friedman may not involve democracy. General characterization of Government For Friedman, the distinction between a democratic or authoritarian government is irrelevant. This is so because his general characterization of the government is a body that intervenes in the economic system to restrict its freedom, and since economic freedom is related to political freedom, the freedom politically. It does not matter to him whether the country is ruled by one person or a group of people having the same ideas. For him, the effect of both on the economy is the same because both try to intervene in the financial markets in an attempt to regulate them and thereby restrict the free market forces. Friedman’s notion of freedom includes the minimum intervention by the government, be it an authoritarian one or a democratic one. The Bill of Rights and Freedom When it comes to the Bill of Rights, Friedman believes that the Bill restricts the freedom of the citizens. (Friedman, 2002) Giving the example of the monetary control by rules, he argues that it is not desirable to design legislating rules for monetary policies because it makes little sense to tie the hands of the monetary authority in this way. The monetary authority may want to do what the rule prescribes it to do but it is also important to note that it may have alternatives too which it may think would do better as compared to following the rule. The same goes for the legislature. If the legislature wants to adopt a certain rule, it may do so, but it may also want to take into account and implement the best and the ‘right’ policy in every case. Similarly, the Bill of Rights is also a generalization of certain rules that may apply to particular situation. It is, as Friedman relates, absurd to have a set of rules when each case is not judged through its own merits. He also states that when that if the law imposing authorities are to take each case as it came, the majority would for sure deny the freedom of speech to every citizen. The implication of the disallowance of free speech would hamper the development of new ideas, experimentation and change. All in all, Friedman believes that the imposition of the Bill of Rights have resulted in the solving of each case using the same rules and laws. The laws applied may not be in reality applicable to the case and may be a result of the restriction of freedom. A free market may allow people to be judged on the basis of things that are directly relevant to them and not to any prescribed law. The Role of Democracy Friedman’s characterization of the capitalist system includes an assumption according to which all individuals are considered rational. His theory, like that of Adam Smith, states that all the people try to maximise their self interest, which may also include the need for freedom. The role of democracy in this case would be to ensure that freedom is provided to every individual. As mentioned above, total freedom might entail a degree of freedom that may restrict the freedom of others. Democracy in this system should be such that the rule by the majority does not in any way affect the freedom of other citizens. It is true that freedom is important for an economy to flourish, but it is the role of the democracy to make certain that the rights of any of the citizens or market agents are safeguarded and not restrained because of the providing of total freedom to some individuals. Capitalism, as Friedman relates, is important for a democracy but it is not the only determinant of democracy. Conclusion To conclude, for Friedman, the proposed role of the government is so limited that it does not matter whether the system of government is authoritative or democratic. All that concerns Friedman is total freedom provided to the citizens and market agents. Even the Bill of Rights is, in his opinion, a hindrance to total freedom, both economic and political. Works Cited Friedman, Milton. Capitalism and Freedom. Chicago: University of Chicago, 2002. Print. Read More