Milton Friedman: liberty's great economics teacher

The death of Milton Friedman, which follows closely on the recent death of Lord Harris, also a great exponent of classical liberal thought, signifies the exit of one of the last great thinkers of his generation. It is beyond dispute that Friedman cast a giant shadow across the intellectual landscape of the twentieth century, as even some of his detractors will concur.

Thinkers such as Milton Friedman and Friedrich von Hayek argued for individual liberty in the economy and society at a time when the general tendency throughout the world was towards statist, socialist and dirigiste governance. They were armed with the conviction that the instinct for freedom was such an inherent characteristic of the human spirit that ultimately the struggle for freedom would prevail over policies and governments that negated it.

Proceeding from this conviction, the great proponents of liberty saw their task as simply to demystify and explain the reality of human action. They were not ideologues going around fanatically advocating the implementation of socio-economic command systems, irrespective of their consequences, both intended and unintended. In their view, collectivist policies emphasised the subordination of the will of the individual to that of the collective, as interpreted and defined by those in the citadels of government. Friedman regarded such a course as inimical to human nature and anathema to individual liberty and its necessary concomitant, personal responsibility.

Friedman’s genius resided in the fact he could explain complex economic concepts in a way that everybody could understand. He cogently and clearly explained not only that freedom delivers, but also why it delivers. He consistently showed that people propelled by their own self-interest, and ever seeking to make improvements in their socio-economic circumstances, generally engage in productive economic activities and in the process contribute to the welfare of others, just as Adam Smith had written two hundred years before.

In order to drive the point home empirically, Friedman juxtaposed the freer economy of West Germany with socialist East Germany. Rising like a phoenix from the ruins of the Second World War, West Germany had become the second biggest economy in the world while East Germany was an economic fiasco. In a video based on his book Free to Choose he made the remark, as he stood next to the Berlin Wall, that despite the economic discrepancies between the two countries, their similarities were patently obvious: same culture, same language, relatives on both sides of the wall, the same work ethic, yet the economic outcomes were so different.

I came across Free To Choose at a time when I was puzzled by the exodus of people from the countries of the socialist eastern bloc to the capitalist west – the west that I had so energetically denigrated during my struggle against apartheid. I was struck by the fact that the refugees were from all walks of life: poets, scientists, athletes and ordinary people with no particular distinction. And I was reminded that the Berlin wall had been erected not by capitalist Germany (to keep socialism out) but by the socialist German Democratic Republic (East Germany), to keep its people in and prevent them from escaping to West Germany.

Friedman’s insights propelled me to broaden my inquiry. I compared South Korea and North Korea, Hong Kong and Communist China. Again there were the same similarities in cultures, languages, and work ethic on either side of their borders, one group economically successful and the other an economic disaster. Milton Friedman’s study of West and East Germany provided compelling empirical verification that freedom delivers.

Friedman was to have a further influence on me. I was a victim, along with millions of my country-folk of an omnipresent and omnipotent apartheid government, which dictated the lives of black people from the cradle to the grave and aroused in me a compulsive distaste for a leviathan state. The power of government was spectacularly manifest in the fact that black Africans, who constituted over 70 percent of the population, were denied property rights and had been effectively nationalised.

Milton Friedman taught me that government grew at the expense of individual liberties. He argued that government’s role in the economic arena should be confined to the implementation of policies that enhanced or deepened individual liberty. His teachings motivated and defined my struggle as being about cutting government down to size and remaining perpetually vigilant against any signs of government encroachment on individual liberty.

He expounded on a Hayekian theme: the observation that knowledge is dispersed among individuals and further made more complex by their individual preferences, wants and needs, which are constantly changing. No single individual, or organisation, or institutional entity, could purport to be the reservoir of all that knowledge. No government could implement and direct the endeavours of myriad diverse individuals without negative effects, as was attempted by the people in charge of command economies. Such fallacious policy-making would manifest itself in moribund economies as was evidenced by the implosion of socialist economies towards the close of the 1980’s.

Friedman explained that markets harmonise the individual economic efforts of people of diverse cultures and backgrounds. He showed that the spontaneity of the free market does not result from human design but from human action. In a free market the colour, race, culture and even political proclivities of people, consumers and producers alike, are of no consequence. He alluded to this phenomenon as the impersonal operation of market forces.

My personal experiences with apartheid laws, which interfered at every turn with people’s lives, implemented at times with brutal force, made me wary of dictatorial government. Friedman’s message that no government should have such power was a ray of light to me; that apartheid was the antithesis of a free market. This insight has contributed tremendously to my outlook as I consider solutions to South Africa’s challenges, reinforcing my view that those solutions are to be found in Friedman’s non-divisive free market. Still speaking to me in the same vein are his intellectual bedfellows, Walter Williams and Thomas Sowell.

The wisdom that Friedman bequeathed to me is the reality that human nature will ultimately triumph over ideologies that are not in conformity with it. He influenced the thinking of the Communist Chinese leaders who embarked on the most radical free market reforms in recent times and were rewarded with decades-long high economic growth. In the same way he influenced the thinking of other political leaders, economists and ordinary people worldwide. Small in stature, this giant of a man was a guiding force for good and his remarkable influence brought positive change to the world.

Milton Friedman, my guide and mentor, I salute you. I wish I had met you.

Author: Temba A Nolutshungu is a director of the Free Market Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author's and are not necessarily shared by the members of the Free Market Foundation.

FMF Feature Article/ 21 November 2006