Continuing from yesterday, this morning I present my dissection of Milton Friedman’s understanding of freedom.

Here, I argue that Friedman defines freedom as a condition where individuals are not coerced, and where they engage freely with one another at any point past what is necessary for their own self-satisfaction.

In tomorrows post I present my criticism of Friedman’s argument, arguing that it does not present a suitable picture of intrapersonal freedom.


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Part 1 – Unearthing the Neoliberal Conception of Freedom

Here, I reconstruct Friedman’s conception of freedom as presented in the texts ‘Capitalism and Freedom’ and ‘Free to Choose’.

I outline Friedman’s Logical Argument, reconstructing Friedman’s picture of how a small state maximises individual freedom. I then criticise this picture on two grounds; firstly, that it fails on its own terms due to the ‘Engagement Problem’ that I resolve for Friedman. Second, that it doesn’t provide an adequate account of intrapersonal freedom. I argue resolving this second problem requires an appeal to Hayek’s conception of freedom, found in Part 2.

1.1: Friedman’s Concept of Freedom

For Friedman, societies should be judged by the extent that they maximise individual freedom. Friedman argues that the best way to maximise individual freedom is to maximise economic freedom, defined broadly as the absence of state regulation and taxation (1962: 8-9, 12). Economic freedom promotes individual freedom in two ways. First, since economic freedom is a part of total individual freedom, increasing economic freedom necessarily promotes individual freedom. Economic freedom is therefore an end in itself. Second, economic freedom indirectly maximises individual freedom by maximising political freedom, or freedom from coercion (1962: 15).

I focus on Friedman’s second argument. He supports this ‘indirect’ connection between economic and individual freedom with his Logical Argument. This logical argument best illustrates Friedman’s conception of freedom.

1.2 Friedman’s Logical Argument

Friedman’s ‘Logical Argument’ is a thought experiment. In the experiment there are no governments, only a group of individuals who each individually produce for their own needs (1962: 13). These individuals consequently begin in a state of ‘perfect freedom’.

Friedman notes that these individuals could produce more goods if they divide their labour between themselves. One could farm, another cook, another sew, etc. But, Friedman asks, how could these individuals go about organising such a division of labour?

They could form a group, such that decisions on the division are made collectively, rather than individually. But this would infringe on any one commanded persons’ freedom, because they would be coerced into performing a job that they didn’t choose to do; rather, they were assigned to it.

Since no-one likes being coerced, and since nothing explicitly ties the group together, any coerced individual would go back to producing for their own individual interests rather than for the group’s. The potential gains of a division of labour are lost.

Friedman therefore argues that the best way to organise the division of labour is to not ‘organise’ at all. Instead, each individual should exchange voluntarily with other individuals in ways that benefit themselves, allowing for the gains of the division of labour without any coercion. One person wants to sew, so they sew. They then trade their excess sewing to another person who wants to farm, and so on. Labour is divided, and productive gains made, without any need for a government: social organisation and higher productivity are obtained without loses in political freedom.

Since governments can only act through coercion, they necessarily limit individual freedom. Governments are therefore only justified insofar as they enable voluntary exchange to take place – for it is this voluntary exchange that all productive gains are derived from. For a government to guarantee voluntary exchange, it must perform five functions. All other state activity is unjustified. These functions are: enforcing laws to stop individuals coercing one another; facilitating exchange by creating and guaranteeing the value of money; breaking up monopolies; and preventing externalities; and caring for the ‘mad’ (1985: 25-34).

Friedman’s conception of Freedom, therefore, is only relevant for individuals, not groups. A ‘free society’ is simply one that maximises the individual freedom of its citizens. ‘Society’ only refers to a group of individuals, it doesn’t add any qualitative value to that group.

Thus, so long as individual freedom is maximised, achieved by maximising economic freedom, a society is free. This is the neoliberal justification for cutting taxes, regulations, and privatising the public sector: all of these activities rely on the coercive methods of the state that are, by definition, unfree.

To formally write Friedman’s understanding of freedom in MacCallum’s value-neutral triadic formula (An individual X is free from Y to do/be Z) we find: Freedom is of the social individual, from the coercion of other individuals, to act in their own self-interest.

However, this argument for a small state is flawed.

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1.2: The Engagement Problem

Friedman assumes that the individuals he presents begin completely independently of one another. This is deliberate on Friedman’s part, because if the individuals start in a state of distress, or were already engaged with each other, then the purely voluntary nature of their exchange isn’t guaranteed. Perhaps they rely on one-another for food or shelter, making their later exchange of goods a function of their human need, rather than productive desire.

But this presents a problem. If the individuals all start with total individual freedom, then why would they ever engage with one another?

If we assume that each individual aims to maximise their individual freedom, then they have already accomplished their goal; they can gain nothing of value from exchanging with others.

Indeed, by exchanging with others they guarantee the demise of their perfect freedom, since such actions make a coercive state necessary – reducing their freedom. So, each individuals’ rational priority would be do absolutely no exchange at all. If the only good society is one that maximises individual freedom, then an economic society would be terrible. The only kind of state that Friedman can justify with this argument is a state of anarchy.

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Other social contract theorists, like Hobbes and Locke, escape this problem using a ‘natural coercion’ premise. Individuals will naturally coerce one another if left in a ‘state of nature’, and consequently, a state is justified to prevent that coercion (1968: 185) (1956: 12).

However, introducing a ‘natural coercion’ premise into Friedman’s argument means his competitive capitalist society is no longer based solely on voluntary exchange. The individuals organise and exchange involuntarily because a lack of organisation leads to a life that is ‘nasty, brutish, and short’. They must now organise to survive, so do net get to ‘choose’ whether to engage with others or not (1968: 186).

Friedman could try to maintain that the individuals are still voluntarily choosing to organise because they have, in a strict sense, the choice of remaining in the brutal state of nature. But it seems more appropriate to say that the individuals are coerced into forming a government by the intolerable conditions of such a state. The choice between organising or remaining in the state of nature is meaningless because one option is, by definition, worse than the other. No real choice involved, and consequently, the motivating force for individuals to organise is lost.

Thus, Friedman’s conception of competitive capitalism cannot be said to preserve any individual’s perfect freedom.

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Does the Engagement Problem stump Friedman then? Not quite. There is another way he could resolve it.

Granting that individual freedom is a central goal of the neoliberal project, we could add another goal: the satisfaction of self-interests. This would allow trade-offs between the two justifiable where they conflict. Thus, Friedman could safely assume the engagement of individuals with each other on the condition that their self-interests are increased by such interactions. This enables individuals to organise with one another, even with a sacrifice of individual freedom, because doing so through voluntary exchange increases their ability to satisfy their self-interests.

Thus, the Engagement Problem is resolved because co-operation is no longer inconsistent with the pursuit of individual freedom.

This solution is consistent with Friedman’s writings in two ways. First, while it does clearly contradict his claim that societies ought to promote individual freedom, it does do justice to Friedman’s original picture, where individuals engage with one another voluntarily, out of self-interest, not coercion. Thus they can still be said to be voluntarily exchanging, and therefore organising co-operatively. Second, it is consistent with Friedman’s writings on poverty. Friedman claims that the ‘heart’ of the liberal philosophy is a ‘belief in individual dignity, where ‘dignity’ means the freedom to make the most of your abilities and opportunities, according to your own goals (1962: 195). Thus, Friedman seems to implicitly recognise that being free requires an ability to actually use that freedom – that there should be a ‘floor under the standard of life of every person in the community’ (1962: 191).

Finally, this reading of also seems to be the most charitable way to read Friedman. The ‘state of nature’ individuals have no use being economically or politically free when they must work all day to just to produce enough food for survival.

Thus, the best way to read Friedman is as a liberal who sees both individual freedom and self-interests as the ultimate goals of the liberal project.

To summarise, Friedman’s Logical Argument claims that individuals in the state of nature are perfectly economically and politically free, and that by organising they can produce more, thereby satisfying more self-interests. I have shown that this argument begs the question of organisation since the individuals have no reason to organise with one another if they are motivated purely by individual freedom. I argue that the traditional solution to this problem, the ‘natural coercion’ premise present in Hobbes and Locke, does not work for Friedman because he wants capitalist society to maintain a claim on pure freedom. I therefore argue that the best way to read Friedman is to add the satisfaction of a given level of self-interest as an ultimate goal of the liberal political project.

This path affects Friedman’s formulation of freedom. We need to add the concept of ‘adequate freedom’ into MacCallum’s formula. Doing so gives us: Freedom is of the social individual, from the coercion of other individuals and an inadequate standard of living, to pursue their own self-interest.

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Friedman, M. and Friedman, R. Capitalism and Freedom (London: University of Chicago Press, 2002)

Friedman, M. and Friedman, R. Free to Choose (Harmondsworth: Pelican Books Ltd, 1985)

Hobbes, T. Leviathan (Harmondsworth: Penguin, 1981)

Locke, J. Two Treatises of Government, Student ed. (Cambridge: Cambridge University Press, 1988)

One response to “The Freedom of Milton Friedman: Part 1”

  1. Lew avatar

    Really excellent post, you’ve surmised everything in a clear way which naturally leads from one point to another.
    I feel there’s even a more basic flaw in Friedman’s thought experiment, in the assumption that people are essentially free agents who seek to maximize their freedom as their first priority. I feel this already denies the basic human nature to seek out and form social groups, but also ignores the wants and desires of people who need help from one another. Maybe his hypothesis works better in a pre-existing society with fewer wants than literal subsistence farmers, but then we’re trying to retroactively prove why capitalism works by assuming it’s already working.
    I think you’ve solved the problem well with the addition that people can be free agents who are self-serving, rather than purely interested in maximizing their individual freedom. I think I also feel sorry for Friedman when he introduces the idea that there should be a floor of society, which is directly contrary to the rest of his ideas, perhaps out of a sense of guilt? Does he realise that people will be left behind with truly free economic capitalism, and then realise that people don’t deserve that kind of treatment? There’s a conflict there, and maybe one he’s unable to grapple, but I’d need to read more of his writings to look into it.


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