Monday, May 3, 2010

Precis: Free to Choose

Rose and Milton’s Friedman’s Free to Choose lures and captivates by qualifying claims and anticipating directions, resulting in one of the most powerful, compelling, and generous texts that we have read. What I appreciate most about this text is that includes concepts that an “Introduction to Economics” course often fails to explain. This is because Friedman speaks from not only an economic perspective but also a philosophical one, therefore examining some of the more pressing theories thoroughly. Such concepts include human freedom, economic freedom and equity, all three themes driving this book through the critical analysis of the market as a whole.

Friedman argues that the market’s main way of relaying information is through prices (chapter one specifically talks about “The Role of Prices”), and prices therefore, must naturally be able to reach their own levels based on the preferences of both consumers and producers; no government involvement is necessary. One of his central arguments in chapter one is that price is the language that all cultures speak. Adam Smith, economist and philosopher, was the man who gave us the answer as to how price is the language of the market: “Adam Smith’s flash of genius was his recognition that the prices that emerged from voluntary transactions between buyers and sellers— for short, in a free market— could coordinate the activity of millions of people, each seeking his own interest, in such a way as to make everyone better off”(13). In essence, Smith believed that the world would be a better place if the market were free of government regulation.

Smith “analyzed the way in which a market system could combine the freedom of individuals to pursue their own objectives with extensive cooperation and collaboration needed in the economic field to produce our food, our clothing, our housing” (2). His argument was that a free market could establish an avenue in which capital is able to flow naturally into productive hands; hence improving it’s own system. The individual who “intends only at his own gain” is led down a road that “promotes an end that was no part of his own intention”, thus self-interest allows an “invisible hand” to naturally guide society. By pursuing his own interest he essentially betters the community. Furthermore, Smith wrote, “both parties to an exchange can benefit and that, so long as cooperation is strictly voluntary, no exchange will take place unless both parties do benefit” (2). Today, cooperation is not strictly voluntary.

Additionally, Friedman further mobilizes his argument in support of Smith through the example of the production and selling of a pencil, “none of the thousands of persons involved in producing the pencil performed his task because he wanted a pencil…Each saw his work as a way to get the goods and services he wanted…we are exchanging a little bit of our services for the infinitesimal amount of services that each of the thousands contributed toward producing the pencil” (13). All of the individuals that took part in creating the pencil— the wooden frame, the metal on the tip, the rubber eraser, the lead— each individually made then shipped their own products to a factory to be assembled. Friedman also claims that it is incredible that the pencil was ever produced at all, for “no one sitting in a central office gave orders to these thousands of people… (they) live in many lands, speak many languages, practice different religions, may even hate one another— yet none of these differences prevented them from cooperating to produce a pencil”(13). They labored voluntarily and chose to produce for their own self-interest, hence enhancing the entirety of the market.

Finally, Friedman notes that today’s economy does not run with the aid of an “invisible hand” but rather is guided and regulated by the government— tariffs and other restraints on international trade, domestic action fixing or affecting individual prices, including wages…monetary and fiscal policy producing erratic inflation and numerous other channels”(17). Government interference of the price system causes disruption of the natural “language” could be spoken by millions: “anything that prevents prices from expressing freely the conditions of demand or supply interferes with the transmission of accurate information”(17); he argued that the market was meant to be spontaneous, and believes that there is hope that we can still return to an economic system that is less strictly regulated.

Rhetorically Friedman appeals to the audience by including historical accounts of the developing "new world"(U.S.) and using simple examples to mobilize his argument, leading him to write in an informative manner. As many other subjects, economics can be taught in a very complex, complicated way, or it can be simplified to a level that the average audience can comprehend; Friedman takes introductory economics concepts combined the with political philosophy to write a book that reaches a large audience.

Paulina Inzerillo


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