In response to:
The Road to Selfdom from the April 17, 1980 issue
To the Editors:
In an otherwise lucid review of Free to Choose [NYR, April 17] Robert Heilbroner lightly skips over the Friedmans’ contention that capitalism and political freedom go hand in hand. Heilbroner apparently buys the Friedman line that “capitalist societies create political freedoms,” adding only that capitalists “simultaneously fear the implications of applying the democratic creed to the economic sphere.”
It is true that the world’s mature democracies have capitalist economies, although rarely as laissez faire as the Friedmans would like. The historical process that produced this pairing has been well analyzed by Charles Lindblom in Politics and Markets. Here history is not likely to repeat itself. More telling for our time is the no less documented fact that a majority of the world’s capitalist economics are not democracies. Indeed, as countries enter full-scale industrialization in the second half of the twentieth century, capitalism seems strongly associated with political exclusion, if not outright repression. Witness South Korea and the Philippines, Argentina and that nation with which Milton Friedman has had more than a passing association: Pinochet’s Chile. It is not obvious, then, that capitalist societies create political freedoms today.
When asked about Chile at a public lecture at my university, Friedman feigned no more than the fleeting involvement of a single trip. Nothing was said of the long association between his department at Chicago and the economics institute of the Catholic University in Chile which provided Gen. Pinochet with key members of his economic team. In Chile these policy-makers are routinely known as “the Chicago boys.” Given the emphasis he likes to place on individual responsibility, Friedman’s sidestepping the Chilean connection struck me as disingenuous. But more important than the lineage of prescriptions are their outcomes.
Heilbroner reminds us that Friedman believes theory should be judged by its results, not by the plausibility of its internal argument. Well, Chile does seem a rather clear case of a longstanding democratic and civil libertarian tradition being reversed in order to follow economic prescriptions that closely resemble Friedman’s. Is this coincidental? Temporary? No one who knows that country well believes Chile will recover its democratic ethos in a decade, if ever it does. Too much blood has been spilt; too much blood is on the hands of those who will dominate Chilean institutions for a generation. Inasmuch as Chile is but one of a series of repressive capitalist regimes to have arisen in Latin America since 1964, we can hardly dismiss it as an aberration. What does this result mean for the Friedmans’ hypothesized link between capitalism and freedom?
While the market has many of the advantages the Friedmans ascribe to it, they overlook the price of admission, a more than “minor distortion” in societies where at least a third of the adult population is unemployed, underemployed or otherwise marginalized—and where, of course, the negative income tax hasn’t quite caught on. In these situations capitalist economic rationality does not square with social justice, for the simple reason that this third of the population is needed neither as laborers nor as consumers. If given money, these people buy food, not deodorants or appliances. If given land, they grow what they need to eat, not crops for export. They are redundant as workers, since capitalism arrives in the machine-intensive form that is the stock-in-trade of its agents, the multinationals. And they don’t save and invest.
The more it follows its own logic, then, the more the capitalist economy must turn its back on the lower classes. Economy is not coterminous with society. With which will the state go? If the state opts for economic “rationality,” it meets resistance from workers and peasants, particularly in settings (like Chile) where notions of human dignity and equality are widespread. Hence the need for repression. In short, the Friedmans have it wrong: under conditions existing in much of the world today (I don’t say all), their kind of market capitalism generates not freedom and democracy but repression and exclusion—and for reasons more long-lived than the trauma surrounding a coup.
Ithaca, New York
Robert Heilbroner replies:
The issue raised by Professor Kenworthy is very important but very complex, as I am sure he would agree. There is some basis for considering European capitalism to have been the cradle of political freedom, because the bourgeoisie that sought to gain the contractual rights needed for the market system also needed to gain the political rights needed to curb the ancien regime. Subsequently, the institutions of political liberty, originally intended only for the benefit of the bourgeoisie, became the basis for the gradual emancipation of the working class. Moreover, within advanced capitalisms today, the market system undoubtedly continues to serve as a buffer against the extension of political power. The right to enter and leave economic life without permission, and the right to strike, are market freedoms that powerfully support political liberty.
Professor Kenworthy is undoubtedly correct, however, in asserting that the link between economic and political rights is different in the newly emerging capitalisms. The movement into capitalism in these nations is powerfully impelled by the pressures of imperialism rather than by spontaneous efforts to create a new indigenous bourgeois social order. The technology of the capitalism imported from abroad creates undigested enclaves of modernity in vast, still “backward,” peasant settings. As a result there seems to be little or no broad political movement toward liberty that emerges from these capitalisms.
On the other hand, there has been disturbing evidence from a half century of modern history that political liberties do not survive under regimes that deny market freedoms. It is possible that Allende’s Chile might have been the counterexample for which we have long been waiting, but the record to date is not reassuring. I would think that the strongest case that could be made for the Friedmans’ position is that some form of market system, not necessarily that of contemporary capitalism, may be a necessary, although not a sufficient, condition for political liberty as we define it. That would enable us to hope that Yugoslavia, for example, might yet achieve a level of political liberty comparable to, say, Italy, while recognizing that present-day Chile or the Union of South Africa has sunk to the levels of Albania or the USSR.
November 20, 1980