Throw Out Milton Friedman

By Mason Mohon | @mohonofficial

I think it’s pretty clear that Friedman is a statist. -Murray Rothbard

Milton Friedman is popular, and not just “libertarian popular” (although he is) but mainstream popular. His book Capitalism and Freedom has over half a million sales and Free to Choose has also had its fair share of economic and political influence. I have spoken to many fellow lovers of the free market and many have stated he was their primary influence in pushing people towards libertarian ideology.

While more proponents of the free market is a great thing, Friedman’s worldview of classical liberalism is inconsistent and his economic methods are needlessly faulty. The Friedmanite economic worldview is lacking and has multiple barriers if we ever wish to proceed towards our goal of reaching a free society.

The first issue with Friedman and his intellectual influence is the method he goes about economics. To quote from his Essays in Positive Economics:

The ultimate goal of positive science is the development of a “theory” or “hypothesis” that yields valid and meaningful (i.e. not truistic) predictions about phenomena not yet observed.

What this basically means is that economic science should act like the hard sciences, in that we should make a hypothesis and go out into the world and test it. To Friedman, economics seems to be analogous to Chemistry or Physics.

At the same time, this small statement seems to have a bit of a call back to the positivist claim that only empirically verifiable statements are meaningful. Hence, statements that have purely logical backing, rather than empirical backing, are meaningless. This poses an obvious issue to adherents to the Austrian School of economics, for reasons that I will get into shortly.

He goes on:

Tautologies have an extremely important place in economics and other sciences as a specialized language or “analytical filing system.” Beyond this, formal logic and mathematics, which are both tautologies, are essentially aids in checking the correctness of reasoning.

But economic theory must be more than a structure of tautologies if it is able to predict and not merely describe the consequences of action; if it is to be something different than disguised mathematics.

Let us tackle the original claim that merely logically backed claims cannot be meaningful. Mathematics is a logically backed field of study, full of theorems that are not true because we went out and tested a hypothesis, but rather because we can think them through and based on logical thinking we can work through the issue and know it to be true.

The adherent to praxeology understands that the law of diminishing marginal utility is a valid theorem, not because we go out in the world and watch as people value each additional unit of a good less. We don’t start to count the percentage loss in psychic utils that people begin to attain. No! That wouldn’t make any sense!

We know the law of diminishing marginal utility to be true because it is a logically consistent theorem. It is why people will pay more for diamonds than they will for water. Because there is so much water that nobody cares if they sell a bottle for a dollar fifty. But there are so few diamonds that they can be sold for extreme prices, even though water is so much more critical to human life.

If praxeological reasoning doesn’t back this up, then what does? Why is this economic theorem valid if not for the reasons of praxeology? Friedman surely didn’t have an answer.  As Robert Murphy says in Choice:

He hasn’t demonstrated why economic theory must “be able to predict” in a way that is different than merely describing “the consequences of action.”

Milton Friedman really had no backing for his attacks on the arguments on praxeology. But he couldn’t change positions, because how would he keep his blessed government ties if he didn’t remain in the field of mainstream economics.

This ties into the second issue with Milton Friedman. Milton and his Friedmanites have no real theory of justice or the state or what its limits should be. Sure, he talks about classical liberalism at the beginning of Capitalism and Freedom, but he makes no efforts to define the ethical bounds of such a belief system and how far it should hold back the government.

Therefore, the state then becomes a sort of deus ex machina of his economic world. When an issue isn’t worth thinking through, boom, just let the state take care of it. His son, David, did a much better job of this, thinking through every aspect of statist policy and realizing the private market could do so much of a better job.

As Murray Rothbard said in his interview with The New Banner:

I mean, if you are in favor of the state having control of the money supply, control of the education system, and a guaranteed annual income, that’s it. There is not much more that can be said. The fact that the Friedmanites are against price control is all very well, and I hail that, but the fundamental aspects of the state remain. The state still commands the highposts of the economy.

This is one of the problems with Friedmanites — they have no political theory of the nature of the state. They think of the state, and this is true of Milton and the whole gang as far as I can see, as another social instrument. In other words, there is the market out here and then there is the state, which is another friendly neighborhood organization. You decide on which thing, which activity, should be private and which should be state on the basis of an ad hoc, utilitarian kind of approach. “Well, let’s see, we’ll feed the thing through the computer. We find that the market usually wins out, that the market is usually better.” So, most of the time they come out in favor of the market on things like price control or government regulations, but they really think of the state as just another social instrument. And so when they come out in favor of the state, they go all out.

There is really no limit in the eyes of Friedman and his followers as to how far the state should actually end up going. A strong proponent of the free market should always make the assumption that the market is going to do better and there should be a steep burden of proof for the government to take control of any system.

Milton contributed quite a few things to economics. But he should not be praised, and his everyone word should not be followed. His classical liberalism is hollow and his economic methods are weak. Read his works, there’s some good stuff in there. But nobody should consider themselves a “Friedmanite.”

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