Milton Friedman's worldview revolves around his belief in
the possibility and desirability of a "free society" in which all
activity is conducted through a voluntary exchange between individuals
(Friedman 120). Friedman views the
unregulated market as the fairest possible mechanism for distributing goods and
ills, keeping the individual as free as it is possible for a human to be,
constrained only by the limitations of nature, supply and demand. For Friedman, individual liberty is the
highest good, which must be maintained by preventing any consolidation of power
("monopoly") whether in the hands of corporations, governments, or
labor unions.
Friedman asserts that monopolies are problematic in two
ways. First, they reduce human
freedom by reducing the number of alternatives available to individuals. Second, they provide justification for
certain individuals or corporations to "discharge [their] power not solely
to further [their] own interests, but to further socially desirable ends,"
which, in practice, would "destroy a free society" (Friedman 120).
In addition to his primary goal of maintaining a free
society, Friedman aims to "invigorate capital markets, to stimulate
enterprise, and to promote effective competition" (Friedman 132). For Friedman, the political goal of
individual liberty and the economic goal of maximum economic growth are
inseparable: he believes neither can exist without the other.
As it is depicted by Michael Pollan, current U.S.
agricultural policy operates according to a very different set of beliefs from
Friedman's, instead rooted in the ideas of centralized government control promoted by John
Maynard Keynes. The federal
agricultural policy of subsidizing corn production follows Keynes's belief that
the desirable political configuration for economic growth is not a free
society, but a stable one. By
providing subsidies to corn farmers, the U.S. government ensures a stable,
federally-controlled overproduction of field corn, whose prices and levels of
production are largely unaffected by Friedman's natural forces of supply and
demand. This corn can be purchased at low cost by corporations like
ADM and Cargill, who then sell it to consumers in the form of "affordable"
processed foods, subsidized by taxes taken from consumers' incomes. Using their economic power to effect
legislation, these food corporations have secured a system by which they can
utilize public funds for private gain, producing the kind of centralized power viewed by Keynes as necessary and by Friedman as tyrannical (Pollan 52-53).
Opposing Friedman's belief
in humans as rational actors who make decisions based on their own economic
interests, Keynes asserts that human economic behavior is an irrational
phenomenon that can be changed by propaganda, advertising, and fluctuating
national moods. The current U.S.
food system described by Pollan utilizes all of these behavior-changing
devices, leaving nothing up to Friedman's market forces created by the
interaction of free individuals. In
fact, federal consolidation of power lies at the root of today's agricultural
system: Earl Butz's efforts to maintain corn at low prices were motivated by
Nixon's desire to quell political unrest during the 1973 spike in food prices
(Pollan 51-52). U.S. agricultural
policy is Keynesian not only in its reliance on government control of production
and prices, but in its unspoken assumption that social stability - freedom from political-economic
instability - is preferable to maintaining the citizen's freedom to enter voluntarily into exchanges with other individuals.
As you had mentioned in class, it seems that Friedman and Keynes define “freedom” differently. While the former defines freedom as individual liberties (our “natural” and unalienable rights), the latter seems to view “freedom” as freedom from instability achieved by an establishment of economic stability. Since the two authors discuss freedom on different grounds, it made me wonder if the two authors were really against each other, or if they were rather actually completing each other’s theories.
ReplyDeleteViewed in this way, the two are filling distinct, albeit, complementary, gaps: similar to the contrasting but connected components of nature and nurture. Friedman represents nature in his desire to revert back to the “natural state of economics” before the nurture-like environmental alterations of Keynesian management. Both the human rationale and the tendency to maximize utility (neoclassical); and outside influences such as federal regulations and subsidies (Keynesian), are contributing factors to the flow of the market. Since both are indispensable factors to the reality of the market, I think that these Friedman and Keynes should stop being put against each other, but viewed as pieces of a coherent whole.
I would agree with you Jeehye. Although I'm just beginning to ground myself in the world of economics, it seems like there are valuable ideas to be drawn from both ideologies. Although I sided with the Keynesian ideology in discussing Omnivore's Dilemma, I found myself drawing personal connections, or at least finding some sense, in both economists' ideas. Because one of our overarching goals in this class is to ground ourselves in certain realities I think it's important to draw from multiple perspectives. Although our economy, especially in the food and agricultural industry, leans more towards Keynesian economics, it doesn't mean there isn't something to be learned from Friedman. Is there a correct way to put economic practices in place? I'm not sure. But remaining open to how government, corporations, farmers, and individuals (consumers) contribute to or influence economic practices is important.
ReplyDeleteI can NEVER feel, in my guts, where the arguments for 'freedom' (on the right) come from. What's trapping you? Exactly WHAT government policies are in your way? It seems so abstract that it's always like arguing religion (which I try not to do).
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