|ECONOMICS AND FREEDOM
"The typical state of mankind is tyranny,
servitude, and misery" (C&F, at 9).
"Economic arrangements" and
"political freedom" are interrelated. The latter is not possible without
"economic freedom" (C&F, at 8).
separates powers into "economic power" and "political power." This
separation "promotes political freedom" (C&F, at 9).
"Individual liberty" and
"private property" are "inseparable" (LLL3, at 166, and associated
notes at 203-204). "Liberty" and "responsibility" are also inseparable
(COL, at 71).
"Those who would give up
essential liberty to purchase a little temporary safety deserve neither liberty nor
safety" (quote from Benjamin Franklin in RTS, at 147).
The protection of the individual's
"privacy and secrets" by the government, which is "critical" to
liberty, has so far been inappropriate (LLL3, at 63).
The market is not only indispensable to
society, it is the only vehicle for coordinating human activities -- while promoting
freedom. The other vehicle is "central direction" -- or "coercion" --
as practiced by armies or totalitarian states. (C&F, at 8-9.)
The "economic transaction"
is the basic element for coordinating the exchange of goods and services between parties.
In a free society, the transaction must be "bi-laterally voluntary and
informed." In other words, it must be free and uncoerced. (C&F, at 13.)
The "market order" is a
"wealth-creating game" -- a "game of catallaxy." In this
"game," economic outcomes depend on "luck" and "skill" --
and not on "merit." Therefore, the game can be "felt to be unjust."
(LLL2, at 115 and 120.)
The "market order" is a
"spontaneous order" which allows individuals to coordinate their actions, and to
use their "knowledge and skills" to increase their wealth (LLL2, at 107, 120,
124, and 126).
The "market mechanism" is
the "most effective method for securing services that can be priced" (COL, at
"Interference" in the market
order is an "act of coercion"; it "can never be just" -- as it
distorts the marketplace, and secures "privileges" and "benefits to some at
the expense of others" (LLL2, at 128-129).
"Competitive capitalism" is a model
of "social organization" where economic exchanges between parties are beneficial
to both parties, voluntary, and uncoerced. "Competitive capitalism" is the name
given to a "free private enterprise exchange economy." (C&F, at 13.)
|COMPETITION AND THE PRICE
Competition is the
best arrangement for coordinating the economic activities of individuals. And the
"price system" is the best system for conveying "information" (about
values of goods and services and opportunities) to individuals, so they can adjust their
"decisions" accordingly. (RTS, at 55-56.)
Money is an efficient "means" of
exchange (C&F, at 14.)
Money is "one of the greatest instruments
of freedom ever invented by man" (RTS, at 98-99).
Two kinds of harms must be distinguished:
"Positive harms" (e.g., harms inflicted by coercing someone into signing a
contract), and "neighborhood effects" (e.g., effects of pollution) (C&F, at
"Coercion is evil" because it
"eliminates an individual as a thinking and valuing person and makes him a bare tool
in the achievement of the ends of another" (COL, at 21).
The "only way to prevent"
coercion is "by the threat of coercion" (COL, at 21).
|LAW AND ORDER
Law and order must be used to: "prevent
physical coercion"; and to "enforce contracts" (C&F, at 14).
The "rules of the game" are
maintained, interpreted, and enforced by the government (C&F, at 15 and 27).
|RULE OF LAW
The Rule of Law prevents the government from
exercising arbitrary coercive or discriminatory powers against the individual. It allows
individuals to determine, in advance, the "actions" of the state, and to
"plan" accordingly (RTS, at 80-81, 89, and 92-93). The Rule of Law is a
necessary, but not sufficient, "condition for the satisfactory working of a free
economy" (COL, at 222).
The "rules of just conduct"
serve to "prevent conflict." They act to eliminate "some sources of
uncertainty," and, therefore, "facilitate co-operation" (LLL2, at 38).
In the market, only the
"rules of conduct" can be "just" -- not the outcomes.
The question whether the outcomes can be just or unjust is meaningless. (LLL2, at 70 and
Monopolies -- labor, private, or public --
reduce the options and alternatives available to consumers. Monopolies can seriously
"interfere" with free exchange. (C&F, at 14, 28, and 36.)
The three major areas of monopoly are:
"monopoly in industry"; "monopoly in labor"; and "government and
government-supported monopoly" (C&F, at 121-128).
The three major sources of monopoly
are: "'technical' considerations"; "government assistance"; and
"private collusion" (C&F, at 128-132).
Monopolies have two powers: "power . . .
over the prices" and "power to discriminate." Such powers, when used to
"coerce" individuals or firms," to "restrict competition," or to
"influence" the behavior of the market, are "harmful" (LLL3, at 84).
Monopolies can result from
"collusive agreement" or from "deliberate policy" by the state (RTS,
monopoly" has been systematically "abused in order to defraud and deceive"
the people (LLL3, at 57-58).
The only "social responsibility" of
corporate capitalists is to maximize money for stockholders (C&F, at 133).
Economic control is a "path to
totalitarianism" -- and to the "suppression of individual liberty" (RTS, at
101-102, and associated footnotes).
|ENEMIES OF THE FREE MARKET
Socialists and communists (C&F, at 21).
Government mismanagement; flawed
monetary and fiscal policies; wrong rules for maintaining the stability of prices.
(C&F, at 37-55.)
|ENEMIES OF FREEDOM
In the long run, "expansionist"
monetary policy destroys freedom. A monetary policy supporting "inflation" leads
to greater "state control." The effects of inflation include (COL, at
- a weakening of old age security;
- decreases in savings; increases in
- increases in the rich-poor gap;
- increases in social tensions;
- increased preoccupation with
- increases in "government
control"; and, ultimately,
- decreases in freedom.
and "fanatics" (socialists and communists) bent on "planning" society
(RTS, at 61-62).
Doctrine: Selected Philosophical and Ideological Foundations -- From Friedman and HayekThe views
collected here are derived from works by Milton Friedman and Friedrich A. Hayek. The
summarization, organization, and classification are mine.
||Milton Friedman, Capitalism
and Freedom, with the assistance of Rose D. Friedman, 1962 and 1982
||Friedrich A. Hayek, The Road
to Serfdom (1944), 50th anniversary ed., with a new Introduction by Milton Friedman,
1972 and 1994.
||Friedrich A. Hayek, The
Constitution of Liberty, 1960.
||Friedrich A. Hayek, Law,
Legislation and Liberty, Vol. 2, 1976.
||Friedrich A. Hayek, Law,
Legislation and Liberty, Vol. 3, 1979.
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