Adam Smith’s masterworks from the 18th century inform today’s debates in political economy. In more recent times, Ludwig von Mises’s Human Action, first penned in 1940, continues to advise economics at the frontiers.
Milton Friedman’s 1962 book, Capitalism and Freedom, translated into nearly 20 languages with a million copies sold, has also earned a special place in the annals of classical-liberal thought. As we approach the anniversary of Friedman’s birthdate, July 31, 1912, this book’s insight deserves renewed appreciation.
Energy was not a subject of this book, as it was of Free to Choose, written by Milton and Rose Friedman in 1979. In the 1960s, energy was a backwater. “For all its importance to the way we lived,” three MIT-affiliated authors wrote, “energy was invisible, and never got in our way. Only those who made their living from it read books about it.”
But consider these Friedman quotations from 1962 in terms of today’s energy and climate debates.
Perils of Government Intervention
“There is still a tendency to regard any existing government intervention as desirable, to attribute all evils to the market, and to evaluate new proposals for government control in their ideal form, as they might work if run by able, disinterested men, free from the pressure of special interest groups.” (p. 197)
“The central defect of [interventionist policies] is that they seek through government to force people to act against their own immediate interests in order to promote a supposedly general interest…. They substitute the values of outsiders for the values of participants; either some telling others what is good for them, or the government taking from some to benefit others.” (p. 200)
“Concentrated power is not rendered harmless by the good intentions of those who create it.” (p. 201)
“Even though the men who wield this power initially be of good will and even though they be not corrupted by the power they exercise, the power will both attract and form men of a different stamp.” (p. 2)
Advantages of Freedom
“Government can never duplicate the variety and diversity of individual action.” (p. 4)
“… a major source of objection to a free-economy is precisely that it … gives people what they want instead of what a particular group thinks they ought to want. Underlying most arguments against the free market is a lack of belief in freedom itself.” (p. 15)
Decentralization
“If government is to exercise power, better in the county than in the state, better in the state than in Washington…. The preservation of freedom is the protective reason for limiting and decentralizing government power.” (p. 3)
Business and Politics
“The view has been gaining widespread acceptance that corporate officials and labor leaders have a ‘social responsibility’ that goes beyond serving the interest of their stockholders or their members. This view shows a fundamental misconception of the character and nature of a free economy.” (133)
“Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine. If businessmen do have a social responsibility other than making maximum profits for stockholders, how are they to know what it is?” (p. 133)
“If businessmen are civil servants rather than the employees of their stockholders then in a democracy they will, sooner or later, be chosen by the public techniques of election and appointment.” (p. 134)
“… There is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rule so the game, which is to say, engages in open and free competition, without deception or fraud.” (p. 133)
Threats to Freedom
“Make the advocacy of radical causes sufficiently remunerative, and the supply of advocates will be unlimited.” (p. 18)
“Freedom is a rare and delicate plant.” (p. 2)
