Laissez-faire

and the
Minimal State
Ally, Elizabeth, Lishire, Tomi
Table of contents
01 Edmund Burke
Thoughts and Details on Scarcity

02 Milton Friedman
Capitalism and Freedom

03 James Buchanan
The Threat of Leviathan

04 Conclusion
Edmund Burke
Thoughts and Details on Scarcity
1. Provision of necessities of life
is not the responsibility of the
state
1. Public prosperity: allowing
state intervention in the
market? False
2. Redistribution of wealth
would change little and is a
bad idea
3. Rate of wages is not directly
related to price of provisions
Milton Friedman
Capitalism and Freedom, Chapter 1 & 2
 #1
A “free private enterprise exchange
economy” (aka capitalism) is a
non-coercive way to organise people
in society

Chapter 1
 #2
A free market resembles a
proportional representation system,
avoiding tyranny of the majority and
preserving political freedom.

Chapter 1
 #3
The features of a free society is
fundamentally incompatible with
communism/socialism.

Chapter 1
 Milton Friedman Chapter 2

3 MAIN POINTS

THE STATE AS A PRIVATE NEIGHBORHOOD

NEUTRAL UMPIRE MONOPOLIES AS EFFECTS
THE LESSER OF 3
EVILS

Chapter 2
 THE STATE AS NEUTRAL UMPIRE

THE ROLE OF GOVERNMENT IS TO:

● Take action on certain technical monopolies and
neighborhood effects

Chapter 2
 PRIVATE MONOPOLIES AS THE LESSER OF 3
EVILS

● Public regulation: Can paradoxically secure market

position of monopolies
VS
● State-controlled monopoly: Often lacking in innovation
and develop into costly bureaucracies

Chapter 2
 NEIGHBORHOOD EFFECTS

● Neighborhood effects: When the actions of certain

individuals affect others in which it is not possible to
charge or recompense them

Chapter 2
James Buchanan
The Threat of Leviathan
We need to constrain
Leviathan…

… through imposing procedural/decision rules on our

own government, to prevent it from being misused as a
revenue-maximising instrument (instead of properly
reflecting voter preferences).
1. Procedural rules are a
constraint that can mitigate
the problems created by
decision-making biases.
1/2 PROBLEMS

Cost-benefit analysis cannot

lead to perfectly efficient
budgets because of
interdependence and
piecemeal decision making.
2/2 PROBLEMS

Politicians and bureaucrats

are motivated by self-interest
to sway budgets in their own
favour (overexpansion).
2. We need to constrain these
three institutions:

Productive state
Protective state
Post-constitutional contract
3. The ‘‘goodness’’ of an
outcome is evaluated on
procedural criteria, not moral
criteria; this should guide our
vision of a “good society”.
Conclusion
Features of a free market Author
Taxation (limited) Friedman
Buchanan
Main arena for people to meet their needs All
Limited welfare Burke
Limited role of government Friedman (via
free market)
Buchanan
A means to preserve political freedom Friedman (Ch 1)
 Govt determines Govt should/must
No Govt the rules of the provide public goods
Intervention free market (efficiently)

Burke Friedman Buchanan