The US Nobel economist Milton Friedman was one of the most effective critics of big government of his time – mainly, the second half of the twentieth century. But this week I found myself at a meeting of the Libertarian Alliance, having to defend him against charges of statism.
Friedman thought of himself as a liberal rather than a libertarian, and ‘the consistent liberal,’ he once argued, ‘is not an anarchist.’ Human beings are not angels, in his view, so they need government to restrain them. He thought government had a wide role – to maintain law and order, dispense justice, define the rules of property, promote competition, maintain sound money, and protect the destitute. Equally, he believed that governments were too big, to avaricious, too centralised, too bloated, and far too likely to fail in anything they took on.
He is known, of course, for his work on money and inflation. But he did not propose, as Hayek did, competition in currency production. He thought the reality of our times is that governments are in control of the money supply, so the question is simply how to sustain them. He thought a gold standard impractical – inevitably, rather than using the metal itself as money, people would use paper (or electronic) receipts for it, so you have the same problem of potential over-printing of that paper as you do today. So he thought the best thing was to have a monetary rule, preventing politicians from over-producing the paper money we have today.
On regulation he was much more libertarian, calling for an end to rent controls, the mail monopoly, wage and price restrictions and even state licensing of doctors and lawyers. On the other hand he did support the registration of certain professions, like taxi drivers, who could cheat the public if they could not be easily identified.
He did not believe in compulsory schooling, nor in state-run universities, but supported a state-led voucher system for education. He would replace the state pension system – but with one of obligatory saving into personal accounts.
You could say, then, that Friedman simply accepted some of the political realities of his age – though he always urged economists to think radically and he himself pushed the boundaries of what was taken for granted. To him, the state was no more than a tool for the use of individuals, who necessarily had priority. It was why he pointedly – and successfully – opposed the military draft, and argued that drugs should be decriminalised. In terms of advancing the libertarian agenda, few people in recent times have done more.