Milton Friedman: There sort of is a two way relationship between political freedom and
economic freedom. In a way, a growth in economic freedom tends to promote political freedom
for the reasons you’re saying. As in China now, where there’s real protests in the
villages about having to, having to have the bureaucrats named by Beijing run them and
they are beginning to be elections for local leaders is the first step. So in that sense
economic freedom promotes political freedom.
On the other hand, political fre – grow- you have the situation that political freedom
promotes a lack of economic freedom. Opposes economic freedom, promotes a growth in government.
You take a case like the United States, we’ve had complete political freedom but the extent
of economic freedom has been declining not increasing and it’s been declining precisely
because we have political freedom. So I don’t think you can give a simple answer because
it’s a two way relationship.
Gary Becker: No, and I also think it’s, there’s a fair bit of evidence now that
as countries evolve economically you have a tendency to go toward political freedom.
Now I think you’re raising an interesting complication, once you get the political freedom
there may be forces that are set up that begin to throttle some of the economic freedom,
the governments get bigger and that’s why I wanted to move to a subject where that’s
the center of the subject. As you know, there’s been some opinion in recent years called ‘The
End of History’, that somehow the whole world had moved and now we move toward free
markets and political democracy and that’s been the goal of all this historical forces
and the future looks very rosy. Uh, I can guess your views on that but I think it’d
be nice to hear how confident are you about that and what do you see are the problems
in the future?
Friedman: I don’t believe that that’s valid at all. The - first of all the people
who put out that view have a very generous interpretation of a free economy. From their
point of view, as long as you have markets of some kind, it’s a free economy. It doesn’t
really matter how one of those markets are manipulated, it doesn’t much matter if the
government has extensive controls over those, it’s still a free democracy. In the second
reason, place, my view of history is very different. My view of history is that it runs
in long, long swings and that the question of a free economy is entered into that. You
start with Adam Smith in 1776, it was at a time when you were highly controlled economy,
were catalysts in that case, in which the belief was that the strength of a nation depended
on how much gold it could have and the way to get gold was to keep out the products of
other people, but to sell as many of your products as you could. Something which was
possible for a few countries but which was self-defeating on the world scale. Adam Smith
started an intellectual revolution toward a, toward a world of freedom. He would have
been in favor, of course, of economic freedom, political freedom, and civic freedom, all
sorts. But it took about what, forty, sixty years? 18, when were the corn laws…
Becker: 1840s..
Friedman: 1840s. So it took about sixty years
Becker: Yup, took a long time.
Friedman: And then, from then in the 19th century, that kept going, and Britain really
moved toward more economic freedom and more political freedom. But then, about the 1880’s
or so you had the Fabian society form, I’m not sure exactly what date it is, but its
sometime..
Becker: Around that time…
Friedman: Sometime around that time, and intellectual opinion started to shift away from a Cobden
Bright belief in free markets, no tariffs and I say repeal the corn laws and you started to have
a movement that’s already obvious in the early 20th century. In – toward greater
government involvement. That’s about the time when the government took over the schools,
and it’s also the time where you had the movement toward imperial preference, toward
social insurance, early stages of Social Security system. It, one of the most interesting books
I know is a book on law and public opinion by Dicey..
Becker: Oh yeah, right, I know…
Friedman: And in the – 19 4 – in the preface he wrote to the 1914 reprint of his book he
essentially predicts the welfare state that came in the 30s and 40s as a result of that.
Well, that set in motion, that movement set in motion another trend. That trend which
was – the main names you’re going to associate with that one are Friedrich Hayek, Ludwig
von Mises, Lionel Robbins…
Becker: Milton Friedman..(chuckles)
Friedman: Well, a little later, a little later. And that was a movement toward pointing out
the difficulties were, which were arising. It was, I think, best encapsulated by the
title of Hayek’s great pamphlet ‘The Road to Serfdom’, and you started to have a movement
in public – in opinion – back the other way, but that movement of opinion again which
I would say started oh at the – something like 19 late 30s or early 40s something
probably that late that movement of opinion had no effect at all for 20 or 30 or 40 years.
But then, as government grew and as the public at large became dissatisfied with what was
happening with government growing you got more and more backing, more and more it affected
the opinion more generally and finally around 1980 it started to have a real effect. With
the fall of the Berlin Wall and the collapse of the Soviet Union it became – you got
the doctrine you were talking about. But again, that’s a wave. It hasn’t worked itself
out yet by any matter of means, but when it does I have no doubt that there will be wave
in the opposite direction that will come along and you’ll move back again.