Milton Friedman: Is Capitalism Humane? (1977) [video]

https://www.youtube.com/watch?v=27Tf8RN3uiM

by eigenvalue • 6 years ago

35 96 6 years ago

sharemywin• 6 years ago

The main argument for Capitalism is choice and competition. Any argument of freedom without choice to me is like throwing the baby out with the bathwater. I'm not sure laissez faire capitalism if there is such a thing has proven it doesn't consolidate into monopolies or cartels. Especially when it comes to distribution, communication and software(with bundling).

Kaze4045• 6 years ago

Can you expand please? From my observations the last thing capitalism provides is choice, considering most people I know who aren't fortunate enough to have passions that translate into big money (like software) absolutely despise their jobs.

lazyier4• 6 years ago

Dude. Just open your eyes and look around you. Go to a super market. Look at the shelves.

Go to github.com. Look at all the different software languages, operating systems, shells, web servers, and so on and so forth.

Tool manufacturers. Housing choices.

All that stuff only can possibly exist in a capitalistic system. There is no other way. People have tried. We have massive amount of historical precedent on this sort of thing. At this point it should be self-evident.

conanbatt3• 6 years ago

You can try seeing what the known alternative generates in terms of options.

lazyier4• 6 years ago

The only monopolies and trusts that existed for any length of time always had the backing of state government. Whether it's the royal crown establishing the east india company or local governments awarding exclusive access to local cable companies monopolies have always depended on state government.

The problem with sustainable monopolies in a free market is that there are a hundred thousand ways to skin a cat. Even if a particular business has a lock down on a particular resource it can't control alternatives. The only way a monopoly can be sustained is that businesses price things so low that there isn't any profit in competing against them with alternatives. And that is not really terrible and is not likely sustainable anyways.

Most people seem to operate under the misconception that somehow large corporate interests and large governments are opposing and balancing powers.

This is untrue.

Large businesses and large government are interdependent and complimentary. They feed into each other. They need each other. If you want bigger business you need to have bigger government.

The sort of ultra concentration of capital in the hands of a tiny minority of businesses and individuals wouldn't be possible without the government creating a regulatory environment to ensure that it happens first.

trentnix3• 6 years ago

Well said.

And it should be noted that even when the monopoly does not exist, regulation and government intervention almost always favors the larger players in the market. In many cases, they are the ones writing the regulations. Those regulations make the barrier of entry more difficult and discourage new competitors from entering a marketplace.

Big business and big government are symbiotic.

andrepd3• 6 years ago

It's not about the small/large government dichotomy, it's about plutocratic/democratic. '

Even if a particular business has a lock down on a particular resource it can't control alternatives. The only way a monopoly can be sustained is that businesses price things so low that there isn't any profit in competing against them with alternatives.

This is empirically false, there are many ways a large business can lock down a market/resource, or very nearly so, and prevent competition from smaller upstarts. Look no further than two-billion-dollar-a-day-revenue Walmart, whose signature practice is running competitors out of town by undercutting them and sustaining the losses until they close.

oDot11• 6 years ago

The main argument for Capitalism is the NAP and the removal of physical force or threat of it.

As for cartels and monopolies, if you take a look at late 19th to early 20th century USA, where business could in fact form cartels and monopolies -- they were formed, but didn't last. They were ruined by both new competition and by "price busters", the cartel equivalent of a "scab".

That is one of the origins of "progressive" legislation. It seemed that the most efficient way to preserve monopolies and cartels was to use government. Indeed, the original meaning of the word wasn't a "large share of the market", but "exclusivity given by government".

EDIT: Show yourselves, downvoters. Give a rebuttal.

throwaway20482• 6 years ago

Cartels of the late 19th and early 20th centuries were busted up by the federal government by in large, you are making ahistorical statements.

injb5• 6 years ago

Can you give an example of a monopoly that has been brought about and maintained by capitalism - i.e. not maintained by organized crime or the power of the government, but by the principles of free market capitalism alone?

karatestomp• 6 years ago

Got any examples of capitalism that aren't maintained by a government?

[EDIT] OK that was a bit glib. My point is things are a lot more complicated than "capitalism does this, government does that" and the two are essentially inseparable. Further this entire thread is full of "markets = capitalism" which is missing the mark—tendencies toward free market policies are a defining feature of capitalism, but free markets per se aren't identical to capitalism.

hfdh4345353• 6 years ago

Natural monopolies, by definition, arise from natural market forces, and thus do not rely on government intervention or unfair business practices to suppress competition. (That doesn't mean natural monopolies always compete fairly or never engage in regulatory capture. Only that these are not necessary for them to become monopolies.) Railroads are a commonly cited example. Today, the network effects of digital platforms are thought to give rise to monopolies (or at least high market concentration).

People who usually ask "give me an example of a monopoly not maintained by the government" are usually not asking in good faith. Many laissez faire capitalists explain away natural monopolies, or pretend they don't exist. So perhaps you expected this answer, and are already prepared to dismiss it.

allemagne• 6 years ago

Do you consider Microsoft's monopoly in the 90s to be maintained by the power of the government?

Would that be different from the way that governments normally maintain a regulatory environment for businesses to expand?

Can free market capitalism even exist without the property enforcement that what we'd consider as organized crime or governments provide?

throwaway432832• 6 years ago

Would-be monopolists don't particularly enjoy playing by the rules of the game. To crib a quote, it becomes the art of saying "good free market" while you look for a stick.

If there's a state, it's natural to try to corrupt it to use its political power. If there is no state or that option looks unappealing, the alternative is to get some political power of the sort that grows out of the barrel of a gun, i.e. to be organized crime.

The implication of the question, that the state is necessary to produce a monopoly, fails to give the full picture. It's not as much that the state is necessary, that economic power can eventually be translated into enough force to subvert the rules. In the absence of a state, that force just takes the shape of an authoritarian proto-state, itself.

n4r9• 6 years ago

I wonder if the Varsity Brand's hold on the cheerleading industry satisfies this? Like all big corporations they use legal means as leverage to suppress competition but other than that it seems like a classic case of one business using dirty tactics to completely take over.

https://mattstoller.substack.com/p/this-is-not-a-democracy-i...

yogthos12• 6 years ago

Amazon today is another example seeing how they account for 90% of online shopping.

clairity3• 6 years ago

"I'm not sure laissez faire capitalism if there is such a thing has proven it doesn't consolidate into monopolies or cartels."

capitalism isn't uniquely prone to monopolies or cartels. all economic systems face problems of gaming, because humans relentlessly probe weaknesses in systems to gain advantage.

and capitalism doesn't attempt to address monopolization head-on and instead relies on competitive dynamics and invisible hands to control the problem. and to be sure, in many cases, it's been enough, but runaway market dynamics like network effects do occasionally overwhelm those mechanisms.

we now have enough practical experience to realize that those occasional runaway trains accumulate and we no longer have very free markets across the economy.

that's why governments step in with regulation (yes, regulatory capture is a problem too) and laissez faire capitalism simply isn't viable long-term.

we should iterate on market-based economies beyond capitalism to reach a more resistant economic system (capitalism =/= market economy, which is a commonly misunderstood).

edit: note that you can have a market-based economy featuring choice and competition without it being capitalism, who's defining feature is putting the means of production into the hands of the (moneyed) citizenry.

viburnum• 6 years ago

The trick with Milton Friedman is to find the one ludicrous assumption his whole analysis hangs on.

injb5• 6 years ago

Which is?

andrepd3• 6 years ago

I haven't watched this particular lecture, but I watched (part of) a rather popular series of lectures, and he had such gems as "colonial empires spent more money in the colonies than they got in return", or "the wheel was never invented in Africa until Europeans arrived", which are such ludicrous, patently false statements that you're even at a loss as how to react.

throwanem6• 6 years ago

In this case, that "...it is difficult to do harm because by preventing a concentration of power, capitalism prevents people from committing sustained, serious harm." Specifically, that capitalism is effective in preventing the concentration of power.

From a perspective shaped by a strong commitment to an ideology and also by the Soviet Union being, in 1977, still a going concern, I can see how someone could err in this way. But that's no reason why we still need to take it seriously, four decades on.

dang• 6 years ago

Maybe so, but please don't post unsubstantive comments here.

https://news.ycombinator.com/newsguidelines.html

rconti• 6 years ago

Without watching a 45 minute video, I assume the argument is something like:

whatever system most effectively leverages comparative advantage / generates the most wealth / most efficiently allocates resources is that which is most humane, because it has the possibility to lift the most people from poverty, from inhumane conditions.

It is, of course, up to societies to regulate the allocation of those resources to maximize the realization of that possibility.

oDot11• 6 years ago

If you agree that capitalism makes for the most efficient allocation of resources, there is no need to regulate that allocation.

yogthos12• 6 years ago

The real question is towards what end those resources are being efficiently allocated. Capitalism is an incredibly efficient system for accumulating resources with a tiny percentage of the population at the expense of everyone else. This is precisely why late stage capitalist societies inevitably turn into oligarchies.

yaa_minu8• 6 years ago

Maybe you should watch the video before passing a comment? You're completely wrong with your assumption because he made no such statement in the talk.

cSoze4• 6 years ago

At about 8 minutes he starts talking about looking at the outcomes of the different systems. Specifically he brings up incarceration rates and inequality. It's interesting how poorly the United States currently stacks up on those measures compared to democratic socialist countries.

yaa_minu8• 6 years ago

45% of incarcerations in the US are due to the drug war [1].

https://www.bop.gov/about/statistics/statistics_inmate_offen...

cSoze4• 6 years ago

At 13:42 Milton Friendman questions whether "socialism failed because it's good qualities were perverted by evil men" and goes on to claim that the both socialism and capitalism have failed or succeeded by each system being true to its own values. By that same argument, capitalism has failed by being true to its own values regardless of what the precise reason for the current high incarceration rates are.

His argument and his positions are horribly simplistic. Neither capitalist nor socialist structures can meet all of the needs of a society.

rcMgD2BwE72F• 6 years ago

Which greatly benefits the private prison–industrial complex, which can lobby in favor of such war, and increase its profit.

yogthos12• 6 years ago

Betteridge's law of headlines applies here

throwanem6• 6 years ago

"Capitalism prevents concentrations of power" was a pretty wild take even for 1977! Here in 2020, it's arrantly ludicrous.

yogthos12• 6 years ago

I love how you're getting downvoted for stating basic facts. 3 people in America own more wealth than bottom 50% of the population. Similar situation in Canada where fewer than 90 the richest families own more wealth than 3 provinces combined.

https://www.forbes.com/sites/noahkirsch/2017/11/09/the-3-ric...

https://globalnews.ca/news/4360299/wealth-inequality-canada/

cSoze4• 6 years ago

Towards the end of the video he also calls up 1900s America as the period of time that best exemplifies capitalism, not surprisingly an era marked by extreme inequality.

yaa_minu8• 6 years ago

The concentration of power, in this case, refers to political power not market(economic) power. If you think about it carefully, economic power often is very weak and vulnerable as they often derive them from consumers which means they can only maintain it by giving consumers what they want. People like Bezos, Bill Gates are far less powerful than say, Putin, Erdogan, Xi, etc.

As an example, how far did Bloomberg's billions take him in the democratic nomination?

throwanem6• 6 years ago

In what way does capitalism act to prevent concentration of political power, then?

tothrowaway• 6 years ago

Anyone looking for a challenging read should consider Milton Friedman's book "Capitalism and Freedom". It's short, but very dense. He covers topics like a negative income tax (which you've heard of) and ideas you've probably never considered (like school vouchers, elimination of occupational licensure, and elimination of tariffs).

The downside is, if you find his arguments convincing, it will leave you feeling even more angry about the current role of government in society.

JackRabbitSlim2• 6 years ago

"Where do you have the greatest degree in equality?" The answer to that looks very different in 2020 than it did in 1970.

"Look at the wage rate between the foreman and the worker in Iussia" - I have, a foreman in the US today makes twice the hourly rate of the worker and that's before benefits packages and other compensations low level hourly workers do not get. So it can be more than double.

In fact, the OECD's own data the US is now has a wider inequality gap than Russia.

https://data.oecd.org/inequality/income-inequality.htm

Only in economics could someone be so provably wrong yet considered a luminary...

yaa_minu8• 6 years ago

The talk was given in 1977 when at the time Russia was socialist. This is no more the case. A better comparison can be made today with say Venezuela.

Milton Friedman: Is Capitalism Humane? (1977) [video]

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