October 4, 2007

Free to Choose

Filed under: Friedman, Politics — duncan @ 8:40 pm

Stop me if you’ve heard this one before. Economists love Freedom. And only capitalism can provide freedom, because only capitalism distributes goods and services by market methods. When I clock off at the end of another grisly working day, I can get the bus down to Bluewater, and buy whatever Noam Chomsky book I want – thanks to the magic of the market.

Of course this freedom is really freedom to buy and sell. I sell myself – I rent out my body and my mind – in exchange for money. Then I can use that money to buy, or rent, whatever I please – food, property, other people’s bodies and minds.

The freedom of capitalism is, in the first place, the freedom of the consumer. Only secondarily is it freedom of the worker. It’s a simple matter of power relations: those with money have power over those who need it. As a consumer, I have power; as a worker, I don’t. At the end of the working day you gasp for air – free at last! – because as you leave your employer’s domain you are transformed from servant into master.

In this world, money is freedom. You earn your freedom. You renounce your freedom in order to receive it. Freedom is transmitted, from the wealthy to the poor, in exchange for labour and obedience – the lack of freedom.

Now here’s Milton Friedman: “The ethical principle that would directly justify the distribution of income in a free market society is, ‘To each according to what he and the instruments he owns produces.’” (Capitalism and Freedom, p. 161-2)

Why would this be characteristically the ethical principle of a free society? What is the link, if any, between ethically justified earnings and the possession of productive resources? Furthermore: “What is the relation between this principle and another that seems ethically appealing, namely, equality of treatment?” (p. 162). “Are we prepared to urge on ourselves or our fellows that any person whose wealth exceeds the average of all persons in the world should immediately dispose of the excess by distributing it equally to all the rest of the world’s inhabitants?” (p. 165)

If, within the marketplace, money is freedom, then the question of the distribution of income is also the question of the distribution of freedom. Consider the law of diminishing marginal utility: the first dollar I earn gives me twice the utility of my second dollar, which gives me twice the utility of my third, and so on. Now re-apply this law to freedom. Let’s say the marginal freedom I get from each dollar earned diminishes as my earnings increase – not a wholly ridiculous idea. Don’t we have here a powerful argument for redistribution – based on the maximisation of freedom, and couched in the freedom-loving economists’ own terms?

Why doesn’t Friedman discuss this? Why does he see state-enforced income redistribution as only a theft, never a gift, of freedom?

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