Friedman: He argued for, among other things, a volunteer army, freely floating exchange rates, abolition of
licensing of doctors, a negative income tax, and education vouchers
role of economic capitalism in a liberal society
Advocate of free market
He argued for, among other things, a volunteer army, freely floating exchange rates, abolition of licensing of
doctors, a negative income tax, and education vouchers
He argues for economic freedom as a precondition for political freedom
American usage of liberal has been corrupted since the Great Depression
- The introduction lays out the principles of Friedman's archetypal liberal, a man who supports limited
and dispersed governmental power. Friedman opts for the continental European, rather than American,
definition of the term.
i. The Relation between Economic Freedom and Political Freedom
- In this chapter, Friedman promotes economic freedom as both a necessary freedom and also as a vital
means for political freedom. He argues that, with the means for production under the auspices of the
government, it is nearly impossible for real dissent and exchange of ideas to exist. Additionally,
economic freedom is important, since any "bi-laterally voluntary and informed" transaction must benefit
both parties to the transaction.
ii. The Role of Government in a Free Society
- According to the author, the government of a liberal society should enforce law and order and property
rights, as well as take action on certain technical monopolies and diminish negative "neighborhood
effects." The government should also have control over money, as has long been recognized in the
constitution and society.
This book explains how the 2008 financial meltdown came about and how to revitalize global and domestic
economies. It shows how capitalist economies developed and why the state matters in their functioning. Free
market purists claim that the state is an inefficient institution that does little for society beyond providing
stability and protection. The activities related to distributing resources and economic growth, they say, are
better left to the 'invisible hand' of the marketplace. These notions now seem tragically misguided in the wake
of the 2008 market collapse and bailout. Mark Martinez describes how the flawed myth of the 'invisible hand'
distorted our understanding of how modern capitalist markets developed and actually work. Martinez draws
from history to illustrate that political processes and the state are not only instrumental in making capitalist
markets work but that there would be no capitalist markets or wealth creation without state intervention. He
brings his story up to the present day to show how the seeds of an unprecedented government intervention in
the financial markets were sown in past actions. "The Myth of the Free Market" is a fascinating and accessible
introduction to comparative economic systems as well as an incisive refutation of the standard mantras of
neoclassical free market economic theory.
In ‘The Capitalist Threat’, George Soros argues against laissez-faire capitalism, asserting that it presents the
greatest danger to open and democratic societies. While many socialists would readily embrace this idea, one
would be hard-pressed to describe Soros as a socialist. Arguably the most successful speculator of all time,
Soros has profited immensely from free markets, in 1992 he made a billion dollars in a single day by betting
against the British pound and till recently, his flagship Quantum Funds was the world’s largest hedge fund.
However, despite his immense success under the capitalist system, Soros now fears that free markets and the
values associated with them are threatening us all.
Laissez-faire capitalism, he believes, has become the dominant belief in our society today and its promotion of
the idea that the common good can be best served through the uninhibited pursuit of self-interest has bred
excessive individualism. In addition, he rejects the view that laissez-faire capitalism leads to the optimal
allocation of resources, asserting that it is ‘just as much a perversion of supposedly scientific verities as
Marxism-Leninism is’ because it depends on the economic theory that free and competitive markets are
allocatively efficient. Central to this argument is his concept of ‘reflexivity’, which is a feedback mechanism
between one’s perceptions of events and the effect that these perception have on the events themselves. The
problem with the theory of perfect competition as Soros points out is that it requires