Economics, Liberalism

From Capitalism and Freedom to Free to Choose — Milton Friedman’s defense of liberalism

Capitalism and Freedom was published in 1962 without much fanfare, though it has since stood the test of time.  But Free to Choose was an international sensation when it was published in 1980.  Among economists of a certain generation, they find Capitalism and Freedom the more tightly reasoned book, and explain the impact difference on a general shift of the climate of opinion.  One way to make this claim is to suggest that Capitalism and Freedom was so successful at influencing thought leaders that by the time Free to Choose was published the intellectual elite was more receptive to the ideas.  This might even be Friedman’s preferred explanation as it is consistent with the “tide of ideas” approach to social change.  I am not going to dispute the vital importance of the climate of opinion and how politics is shaped within the constraints of the prevailing ideological climate to a considerable extent.  Instead, I want to ask readers to think of a different question.

See I grew into a classical liberal/libertarian movement where all my elders were influenced either by The Road to Serfdom (1944), or Capitalism and Freedom (1962) well before they ever read Free to Choose (1980).  I always disagreed with the assessment that Capitalism and Freedom was the superior book from an academic perspective.  I agree it is a powerful book, I just think Free to Choose is one of the best books I ever read in economics.  Since all of my teachers and mentors in classical liberalism came to their position well before 1980, they did not see Free to Choose as a transformational work, but instead as at best a popularization of ideas they had already come to accept.  But that was then, and this is now, so there probably are some readers of BHL (like me) for whom Free to Choose was in fact a pivotal text in their introduction to free market ideas and the philosophy of limited government.  I am putting aside the great impact that Ayn Rand had, or that of Murray Rothbard, Robert Nozick, Richard Epstein, etc.  I just want to ask about the economic argument, and ask about the subtle differences between Capitalism and Freedom and Free to Choose.  In my reading, rather than a water-downed and more popular treatment of the material from Capitalism and Freedom, Free to Choose reflects a slightly different perspective.  That perspective is one much closer to the Hayekian focus on knowledge acquisition and utilization through the competitive market, and the Buchanan focus on constitutional level of analysis and the importance of the institutional framework.  On the public choice elements, Friedman is explicit about the “fresh approach to political science” that informs the effort in Free to Choose (ix-x).

Whereas Friedman sees Capitalism and Freedom as more theoretical, and Free to Choose as more concrete, I think the introduction into the analysis of the issues of (1) the quantity of information that must be processed and utilized in the economy, as well as the quality of information that must be assessed by economic participants to produce the coordination of economic activities through time, and (2) the role of interest groups, political structure, and the constitutional level of analysis, make Free to Choose a more subtle and ultimately a more persuasive text about the case for the free market economy and the problems of political intervention into the market economy.  To use Deirdre McCloskey’s recent terminology, the prudence only economics of Capitalism and Freedom gives way to a more nuanced understanding of the operation of a free economy and free society that must account for prudence + many other virtues, history, and institutional analysis.  As that intellectual move is made, the argument becomes not just about efficiency, but also about knowledge mobilization, the civilizing impact of commerce, the creative powers of a free economy, and the liberal plea for cosmopolitanism, toleration, and peace.

What happened intellectually and historically between 1962 and 1980, that the leading US exponent in the public imagination for the free market economy and limited government would shift his argument in such a subtle direction?

  • I agree with the second and third paragraphs completely.  Free to Choose was *the* most influential book on the early formation of my political commitments.   Ultimately Constitution of Liberty and Law, Legislation, & Liberty vol 1 have shaped my views more profoundly, but it’s Free to Choose that first excited my thinking and offered me an intellectual framework for thinking about liberalism. 

    And I find FtC an appealing and important synthesis, not just a popularization, of a number of ideas in liberal social and economic theory.  I can see why Capitalism and Freedom would have been dramatic in its time, but I certainly don’t see its use of normative theory as being any more original than FtC’s use of public choice and Hayekian ideas.  It’s at least as much a popularization of liberal rights theory as FtC is of Chicago and public choice economics.


    Ar the risk of answering a question with a question, at what point did Friedman absorb The Constitution of Liberty (1960)?

  • Who cares about Milton Friedman? 🙂

  • Free to Choose started as a video and the book was built around the TV series. We have the series on sale here:

    But, if people want to place a phone order for it at our toll free number,  866-254-3701 we will ship it for free anywhere in the US> 

  • Anecdotal support, I’m probably just a few years older than Pete, and probably read Capitalism and Freedom in high school or immediately thereafter, so probably three or four years before reading Free to Choose when it came out. Prior to this post, I too probably would have said C+F was the analytically better work and FtC was more a popularization (even though I’m not so much older than Pete as to fall into the category “economists of a certain generation”). I even still have a copy of C+F on my office bookshelf, but no longer have a copy of FtC. Maybe by failing to closely read the ‘popularization’, I’ve overlooked the added depth to the arguments. Interesting.

    Speculating in response to the last question, the period 1962 to 1980 saw: (1) the growth of public choice as a counterpart to standard public finance so deepening Friedman’s understanding of these issues, (2) the institutional work fostered by the ideas of Coase, Demsetz, Williamson, Alchian, etc., all flower during this time which also deepens Friedman’s understanding of economy and society, (3) Hayek wins the Nobel Prize (and has long since left Chicago) so Friedman probably takes his ideas more seriously.

    Also, Friedman’s own emergence as a public intellectual during this period – Newsweek column, TV appearances, etc. – and his own Nobel Prize, serves to get him outside of the academy and into more direct engagement with the larger world. It isn’t necessarily the case that this would yield a more cosmopolitan outlook, but it seems to have happened with Friedman.

  • Michael Zigismund

    Between 1962 and 1980:

    a. Friedman’s Monetary History was published
    b. the military draft was discontinued, in part due to Friedman’s work inside and out of the Nixon administration
    c. Friedman garnered the negative publicity of the Chile episode
    d. Friedman won the Nobel
    e. stagflation catapulted Friedman’s Monetarism as the chief popular rival to Keynesianism

    Furthermore, Free to Choose doubled as an easily-digestible documentary, with the additional benefit of episode-ending debates. Hot stuff! It would have been a miracle if this combination failed to make Free to Choose a smash success.

    To your point, I think the medium of the documentary informed the thematic contours of Free to Choose, rather than the other way around. And it was also the medium of the documentary — not the thematic message of  Free to Choose — which sparked its popularity.

    These are my initial thoughts. Perhaps you might expound more on the thematic differences between the books. I suspect I didn’t fully grasp the point.

    • One of the most significant and underestimated economic events in U.S. history occurred when the 1963 series of the Federal Reserve note became irredeemable for “the peoples'” Treasury-Direct coin. 

      After the Fed was loosed from its mooring, and together with acquisition of the 1937 power to tax/regulate users of non-Treasury-Direct currencies, the Fed walked away with unprecedented economic discretionary powers.

      One of the most contradictory things I’ve ever heard about Milton Friedman after this happened is that he reportedly declared, “We’re all Keynesians now,” but yet Friedman stated in another interview that Keynes would never have agreed with what we now call “Keynesian economics,” nor would Keynes have wanted to be identified with the phrase soon before he died in 1946.

      • “The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.” Time Magazine, “The Economy: We Are All Keynesians Now,” 12/31/1965 

        Whenever I see the word “agent” (as in Kevin Vallier’s agent-neutral/agent-relative distinction) I think of the ancient Law of Agency and I know there’s a “master” and a master/servant relationship somewhere. I’m not sure if this is what Kevin is implying, but he seems to be saying we’re all slaves (in which case, I’d agree); it’s just that in some instances we should be required to see the world from the slave’s perspective.

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  • David B. Levenstam

    I studied economics for the first time at the University of Illinois in 1978, where a neo-Keynesian doctoral candidate taught my Econ 101 course. Econ 101 was a 5-hour course that covered both micro and macro. We had a unit it it that might have accurately been called “Why Milton Friedman Is Evil.” One of my buddies, however, took Econ 101 with a monetarist, and got a completely different view of Friedman. We argued about Friedman for a couple of years, and then my buddy urged me to Read Free to Choose. I’ve never read a book with a more determined closed mind, and yet the Friedmans persuaded me of the superiority of free markets, private property and limited government over government intervention. For me, as for Pete, “Free to Choose was in fact a pivotal text in [my] introduction to free market ideas and the philosophy of limited government,” so much so, in fact, that I require my macro students to read and review Free to Choose even now, a third of a century after the Friedmans published it.

    I didn’t read Capitalism and Freedom until many years later. Where the Friedmans pitched Free to Choose to a wide, popular audience–to the same audience that used to read Milton’s Newsweek columns–Milton seemed to have pitched Capitalism and Freedom to an audience better educated in economics. I did seem to me, as to Pete initially, to do a stronger job on the economics. If I didn’t have to work three part-time teaching jobs to make ends meet, maybe I’d reread them both and see if I agree with Pete’s newer insights into the superiority of Free to Choose.

    Some 20 years after I read Capitalism and Freedom, what stands out to me most still remains Friedman’s inclusiveness. Somewhere in Capitalism and Freedom he wrote something like, “We as liberals don’t like large concentration of power, and government is the largest concentration of power.” Unlike many classical liberals he didn’t first make a big fuss over the distinction between classical and modern liberalism, alienating large swaths of his intended audience by pointing out that they weren’t his kind of liberal. Friedman had the virtue of being able to disagree without being disagreeable, and therein I think lies at least much of the secret of his success. Speaking as someone who can rarely even agree without being disagreeable, I think that most of us advocates of free markets, private property and limited government could do a better job of persuading by being more like Friedman.