4/3/2020 Capitalist Freedom Is a Farce

Capitalist Freedom Is a Farce

BY
ROB LARSON

Milton Friedman was wrong. Capitalism doesn't foster freedom — it produces

autocratic workplaces and tyrannical billionaires.

For all the changes of the last fifty years, the conservative classics have held their place surprisingly
well. Milton Friedman’s Capitalism and Freedom and Friedrich Hayek’s The Road to Serfdom are
still featured on Breitbart’s online bookstore. Rush Limbaugh tells his listeners that “Milton
Friedman should be the Bible for young people, or anybody, trying to understand capitalism and
free markets.” Charlie Kirk, founder of Turning Point USA, celebrates Hayek and Friedman in his
book, while Ben Shapiro holds up Friedman as a conservative icon in National Review.

But what then are the liberty and freedom that conservatives celebrate? And does capitalism
advance or restrain them?

Freedom is regarded so highly because in a way it contains all the pleasures of life — it’s the ability
to do what you want, within the limits of material conditions and a human lifespan. However you
like to spend your time, whoever you love, whatever you like to work on or laugh at, all represent
the tremendous value of social freedom.

According to John Stuart Mill, the basic principle of freedom was that “the only purpose for which
power can be rightly exercised over any member of a civilized community, against his will, is to
prevent harm to others.” The philosopher Isaiah Berlin later described this idea as “negative
freedom,” or freedom from coercion by others. Berlin also suggested a “positive freedom” — the
freedom to do di erent things, rather than freedom from the choices of others. Instead of asking,
“What power centers control me,” positive freedom asks, “What am I free to do with the world’s
opportunities and resources?”

The traditional philosophical view of capitalism is that while it does not provide a “positive
freedom” to a fair share of the world’s production of goods, it provides a “negative freedom” from
economic tyranny by leaving consumers and workers free to choose among di erent options. This
is the view of Friedman and Hayek, and they insist it’s just the right kind of liberty. Many
generations of capitalism’s defenders have agreed.

But any realistic review of the market economy reveals a di erent picture: capitalism limits both
positive and negative freedom. It fosters a huge buildup of private power by concentrating
individual wealth and entrenching corporate control over markets (along with mercilessly
destroying environmental systems and thus the freedom of future generations). Capitalism not
only fails to provide a “positive freedom” to a fair share of the economy — it fails to preserve
“negative freedom” from the power plays of the 1 percent’s corporate property.

When GM and Ford decided to desert cities like Detroit and Flint for poorer towns and countries,
they denied their former workforce any positive freedom to enjoy the industry’s enormous
revenues — revenues the workers themselves had created. When Martin Shkreli’s pharmaceutical

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company hiked the price of a life-saving patented drug from $13.50 to $750, e ectively snatching
it away from disease su erers, it drove dependent users into poverty or bankruptcy — a
frightening restriction of negative freedom. When Amazon held a sweepstakes to see which North
American city would be blessed with its new headquarters, and mayors across the continent threw
billions in tax concessions at the company’s feet, Amazon wielded enormous power over the
destiny of millions of people — laying bare how capitalist investment decisions can dramatically
limit human liberty.

Capitalism’s defenders insist that, as Friedman and his wife Rose wrote in their book Free To
Choose, “When you enter a store, no one forces you to buy. You are free to do so or go
elsewhere. . . . You are free to choose.” They applied the same argument to workers: if you don’t
like your job or career, find another one.

But other figures have seen the market’s alleged negative freedom quite di erently. Consider
Frederick Douglass, the escaped slave and self-taught intellectual. He concluded:

Experience demonstrates that there may be a slavery of wages only a little less galling and crushing
in its e ects than chattel slavery, and that this slavery of wages must go down with the other. . . . The
man who has it in his power to say to a man, you must work the land for me for such wages as I
choose to give, has a power of slavery over him as real, if not as complete, as he who compels toil
under the lash. All that a man hath he will give for his life.

Here Douglass was suggesting that markets allow the exercise of unaccountable power — the
enemy of freedom. But how could a free person be “enslaved” to wages, with so many di erent
options for purchasing goods and finding di erent careers?

One answer, as critics of capitalism have pointed out for centuries, is that markets concentrate and
often tend toward monopoly. From the well-known Gilded Age monopolies in oil and steel to the
Silicon Valley tech giants of today, the dynamics of capitalism generate unbelievable
concentrations of private power. And while antitrust law is intended to constrain such monopolies,
as the eminent economist Alfred Chandler pointed out long ago, commenting on the 1890
Sherman Act, at best such statutes tend to “create oligopoly where monopoly existed and to
prevent oligopoly from becoming monopoly.” Large agglomerations of unaccountable power —
not the freedom-enhancing markets of Friedmanite fantasies — are the stu of mature capitalism.

Douglass’s larger point, however, was that market economies treat basic necessities as
commodities to be bought and sold, including food and shelter. Capitalism compels people to find
work in labor markets, on such terms as they can find and subject to the tyrannical rule of jumped-
up capitalist bullies, from Rockefeller to Bezos.

This is a radical infringement on positive and negative liberty. In order to get the rudiments of life,
most people must submit to the utter dictatorship of the modern workplace — the day-to-day
schedule changes, the dressings-down, the restrictions on freedom of speech. No wonder Douglass
added: “As the laborer becomes more intelligent he will develop what capital he already possess —
that is the power to organize and combine for its own protection.” Collective organization by
workers — that bugaboo of capitalist partisans like Friedman — was the true guarantor of
freedom.

But wait — Friedman and company say they have a trump card: “Since the household always has
the alternative of producing directly for itself,” Friedman wrote in Capitalism and Freedom, “it

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need not enter into any exchange unless it benefits from it.” The power of “exit” restricts the
potentially coercive power of the labor market.

Yet Friedman’s picture of the average family is so rosy it borders on the oblivious. What he refuses
to recognize is that producing goods typically requires capital, the tools and equipment used to
make products.

And capital is enormously concentrated. Inequality scholar Thomas Piketty has found that the
richest 10 percent of US households own 70 percent of total national wealth, and the top 1 percent
alone owns 35 percent. Crucially, corporate stock, which represents ownership of the productive
capital that’s required to make goods and thus enable people to “produce for themselves,” is just as
concentrated, with the richest 5 percent of households holding 67 percent of US equities,
according to the Economic Policy Institute.

Somehow the Chicago School Nobelist fails to realize that the average individual — the individual
around which his entire philosophy is allegedly based — is held hostage to the whims of those who
own the productive economy, who can decide how wretched our work lives will be and which cities
will get to have an economic future. From break times to ergonomics to maternity leave to
acceptable workplace speech, the upper crust calls the shots and makes a mockery of “capitalist
freedom.”

Liberals, for their part, are often prepared to push for more “positive freedom” in the form of
entitlements to health care, education, and a safe environment. But democratic control over
investment and production would represent a far more promising model for liberty, since
achieving worker control would replace capitalism’s profit motive with solidarity — the drive to
support and collaborate with our fellow men and women.

Doing so would end giant firms’ power to sweep the legs out from under a major city by relocating
overseas, or to ruin their employees’ work lives by speeding up production or surveilling them.
Decisions made by cooperatives of workers, elected and subject to recall by their colleagues, could
be made in a matrix of social solidarity and thus significantly limit the power-mongering we’re
used to from today’s corporate world.

We on the Left cannot surrender the language of freedom to the Right. Having a critical analysis of
capitalist corporations is great, but socialists must also promote the transformative potential of
socialist freedom — both to inspire the hard work needed to change the world and to give our
struggles a north star.

In The Road to Serfdom, Hayek grudgingly laments that “the promise of greater freedom has
become one of the most e ective weapons of socialist propaganda.” Hear, hear!

ABOUT THE AUTHOR

Rob Larson is professor of economics at Tacoma Community College and author of Capitalism vs. Freedom: The Toll Road to
Serfdom.

FILED UNDER
IDEAS / THEORY
MILTON FRIEDMAN / FREEDOM / FRIEDRICH VON HAYEK / CAPITALISM

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