Milton Friedman Speaks – Is Capitalism Humane?


What I want to talk about is really an issue
which is very much related to the whole problem of human freedom. It has to do with the question
of whether capitalism is humane and what you mean by that. I am sure many of you have heard
the old story about the two Poles who met one another and one Pole said to the other:
“Tell me, do you know the difference between capitalism and socialism?” And the other Pole
said, “No, I don’t know the difference.” Then the first Pole said, “Well, you know, under
capitalism man exploits man.” The other fellow shook his head. “Well, under socialism,” he
said, “it’s vice versa.” Well now that, as a matter of fact, in the present intellectual
atmosphere of the world is a relatively favorable evaluation of capitalism. The interesting
thing to me about this is that the arguments, the issues, in this debate which has been
going on for so long about the form of government have changed. The argument used to be about
strictly the form of economic organization: should we have government control of production
and distribution, or should we have a market control? And the argument used to be made
in terms of the supposedly greater efficiency of centralized government and of centralized
control. Nobody makes that argument anymore. There is hardly a person in the world who
will claim that nationalized industries, or socialism as a method of economic organization,
is an efficient way to organize things. The examples of Great Britain, the examples of
Russia, the examples of some of the other states around the world that have adopted
these measures plus the domestic-grown examples of the post office and its fellows have put
an end to that kind of talk. But the interesting thing is that nonetheless, there is widespread
opposition to capitalism as a system of organization and there is widespread support for some vague
system labeled socialism. The most dramatic example of the change in
the character of the argument and the paradox that I am really bringing out is Germany.
Here was Germany which experienced all the horrors of the Nazi totalitarian state in
the 1930s, here is Germany which after the war under the Erhard policy of Soziale Marktwirtschaft,
social market economy, had an economic miracle with an enormous rise in total income and
an enormous rise in the well-being of the German people, of the ordinary people. And
yet in Germany despite the demonstration of the horrors, on the one side, of a totalitarian
state and, on the other, of the benefits of a relatively free market, here in Germany
you will find a very large fraction of all intellectuals remain- not only remain, have
become- even more strongly anti-capitalist, have become proponents of collectivism of
one form or another. Only a small number have gone into the more extreme versions that you’ve
been reading about in the papers of the terrorists.
But a very large fraction of the intellectuals, those who write for the newspapers, those
who are on television, and so on, are fundamentally anti-capitalist in their mentality. And the
question is, why? What is it that has produced this shift- not this shift, but what is it
that produces this consistent attitude of anti-capitalism on the one hand, and pro-something
called collectivism on the other among intellectuals? One of the most interesting analyses of these
problems I know is by a Russian dissident mathematician named Shafarevich. His essay,
which has never been published- needless to say-in Russia, but it appears in English translation
in a book called Under the Rubble which has been edited by Alexander Solzhenitsyn, and
I strongly recommend that particular paper to you. In it, he discusses the appeal of
socialism over the ages- he goes back a thousand or two thousand years- and he comes out with
the conclusion that just as Freud pointed to the death wish in individuals as a fundamental
psychological propensity, the appeal of capitalism, he argued- I’m sorry-the appeal of socialism,
the opposition to capitalism is really a fundamental sign of a death wish for society on the part
of intellectuals. It’s a very intriguing, strange, and at first sight, highly improbable
kind of an interpretation. Yet I urge you all to read that essay, because you will find
that it is very disturbing by having a great deal more sense to it than you would suppose
such a position could possibly have. I’m not going to take that line. Maybe he is right,
but I think there is a very much simpler reason for this. And that simpler reason is a combination
of a supposed emphasis on moral values, and ignorance and misunderstanding about the relationship
between moral values and economic systems. I may say the emphasis on moral values is
almost always on the part of people who do not have economic problems; it’s not on the
part of the masses. But the problem with this approach, the problem of trying to interpret
and analyze a system, either pro or con, in terms of such concepts as the morality of
the system or the humanity of the system- whether capitalism is humane or socialism
is humane, or moral or immoral- the problem with that is that moral values are individual;
they are not collective. Moral values have to do with what each of us separately believes
and holds true- what our own individual values are. Capitalism, socialism, central planning
are means not ends. They, in and of themselves are neither moral nor immoral, humane nor
inhumane. We have to ask: what are their results? We have to look at what are the consequences
of adopting one or another system of organization, and from that point of view the crucial thing
is to look beneath the surface. Don’t look at what the proponents of one system or another
say are their intentions, but look at what the actual results are. Socialism, which means government ownership
and operation of means of production, has appealed to high-minded fine people, to people
of idealistic views, because of the supposed objectives of socialism, especially because
of the supposed objectives of equality and social justice. Now those are fine objectives,
and it is a tribute to the people of good will that those objectives should appeal to
them. But you have to ask the question: does the system- no matter what its proponents
say- produce those results? And once you look at the results it’s crystal clear that they
do not. Where are social injustices greatest? Social injustices are clearly greatest where
you have central control. The degree of social injustice and torture, and incarceration in
a place like Russia is of a different order of magnitude than it is in those Western countries
where most of us have grown up, and in which we have been accustomed to regarding freedom
as our natural heritage. Social injustice in a country like Yugoslavia, which is a much
more benign communist state than Russia, and yet you ask Djilas- who languishes in prison
for having written a book, you ask the people at the University of Belgrade who have been
sent to prison, or many others who have been ejected from the country, social injustice
in China, where you have had thousands of people murdered because of their opposition
to the government. Again, you look at the question of inequality,
of equality. Where do you have the greatest degree of inequality? In the socialist states
of the world. I remember about 15 years ago, my wife and I were in Russia for a couple
of weeks… we were in Moscow. And we were going with our tourist guide and I happened
to see some of the fancy Russian limousines up there, the Zivs that were sort of a takeoff
on the 1938 American Packards. I asked our tourist guide out of amusement, how much do
those sell for? “Oh,” she said, “those aren’t for sale. Those are only for the members of
the Politburo.” You have in a country like the Soviet Union enormous inequality in the
immediate literal sense in that there is a small select group that has all of the services
and amenities of life, and very large masses that are in a very, very low standard of living.
Indeed, in a more direct way, if you take the wage rate of foremen versus the wage rate
of ordinary workers in the Soviet Union, the ratio is much greater than it is in the United
States. I am reminded again of another- I seem somehow
to be referring to Poland, but on this same trip that we took to Russia we stopped in
Poland, in Warsaw, for a while and we met there a marvelous man, a man by the name of
Edward Lipinski, who was in this country a year ago at the age of 83 or 4, and I believe
was arrested when he got back to Poland because he had been one of those who had signed and
authored a declaration against the suppression of freedom of thought and speech in Poland.
But at the time we met Edward Lipinski he seemed to be fairly free. He was a man, who
had been a socialist all his life, and this was very hard- he was then in his 70s I may
say when we saw him, he was retired. It is a very hard thing for a man to go back on
all of his lifelong beliefs, and so he said as follows to us, he said, “You know, I used
to believe in socialism. I still do, but socialism is an ideal. We can’t have it in the real
world,” he said, “until we’re rich enough to be able to afford it.” And he said socialism
will be practical when every man in Poland has a house and two servants. And I said to
him, “Including the servants?” And he said, “Yes.” (laughter) Now capitalism, on the other hand, is a system
of organization that relies on private property and voluntary exchange. It has repelled people-
it’s driven them away from supporting it, because they have thought it emphasized self-interest
in a narrow way, because they were repelled by the idea of people pursuing their own interests
rather than some broader interests. Yet if you look at the results, it’s clear that the
results go the other way around. It’s in the capitalist societies of the world- only where
capitalism has prevailed over long periods have you had both freedom and prosperity.
The greatest measures of freedom…if you look at the Western countries where freedom
prevails, it doesn’t prevail perfectly- we all have our defects- but by and on the large,
few would deny that in the United States, in Great Britain, in France, in Germany, in
Western Europe, we have a greater degree of freedom on an individual and personal level
than you do in most other places around the world… in Australia…Japan to a considerable
extent today, though not 200 years ago. If you look you will find that freedom has prevailed
where you have had capitalism and that simultaneously so has the well-being and the prosperity of
the ordinary man. There has been more social justice and less inequality. Now, the question is that you have to ask,
and you have to ask the proponents of these two systems, has socialism failed because
its good qualities were perverted by evil men who got in charge? Was it simply because
Stalin took over from Lenin that communism went the way it did? Has capitalism succeeded
despite the immoral values that pervade it? I think the answer to both questions is in
the negative. The results have arisen because each system has been true to its own values-
or rather- a system doesn’t have values, I don’t mean that- has been true to the values
it encourages, supports, and develops in the people who live under that system. What we’re concerned with in discussing moral
values here, are those that have to do with the relations between people. It’s important
to distinguish between two sets of moral considerations: the morality that is relevant to each of us
in our private life, how we each individually conduct ourselves… behave; and then what’s
relevant to systems of government and organization, are the relations between people. And in judging relations between people, I
do not believe that the fundamental value is to do good to others, whether they want
you to or not. The fundamental value is not to do good to others as you see their good.
It is not to force them to do good. As I see it, the fundamental value in relations among
people is to respect the dignity and the individuality of fellow men, to treat your fellow man not
as an object to be manipulated for your purpose, but to treat him as a person with his own
values and his own rights, a person to be persuaded- not coerced, not forced, not bulldozed,
not brainwashed. That seems to me to be a fundamental value in social relations. In all systems, whether you call them socialism,
capitalism, or anything else, people act from self-interest. The citizens of Russia act
from self-interest in the same way as the citizens of the United States do. The difference
between the two countries is in what determines self-interest. The man in the United States
who is serving as a foreman in a factory… his self-interest leads him to worry about
not getting fired. The man in Russia who is acting as foreman in a factory…his self-interest
leads him to worry about not being fired at. (laughter and applause) Both are pursuing their own self-interests,
but the sanctions, the effects- what makes it in their self-interest, is different in
the one case than in the other. But self-interest should not be interpreted as narrow selfishness. I quote a man who speaks much more eloquently
than I can. This is Thoreau and I quote him from Walden. Here’s what Thoreau said about
unselfishness as a moral virtue. He said, “There is no odor so bad as that which arises
from goodness tainted… If I knew for a certainty that a man was coming to my house with the
conscious design doing me good, I should run for my life. Philanthropy is almost the only
virtue which is sufficiently appreciated by mankind. Nay, it is greatly overrated and
it is our selfishness which overrates it… If anything ail a man so that he does not
perform his functions, if he have a pain in his bowels even- for that is the seat of sympathy-
he forthwith sets about reforming the world. Being a microcosm himself, he discovers- and
it is a true discovery and he is the man to make it–that the world has been eating green
apples; to his eyes, in fact, the globe itself is a great green apple, which there is danger
awful to think of that the children of men will nibble before it is ripe, and straightaway
his drastic philanthropy seeks out the Esquimaux and the Patagonian, and embraces the populous
Indian and Chinese villages.” That’s Thoreau on unselfishness as a moral value. More important and more fundamentally, whenever
we depart from voluntary cooperation and try to do good by using force, the bad moral value
of force triumphs over good intentions. And you realize this is highly relevant to what
I am saying, because the essential notion of a capitalist society, which I’ll come back
to, is voluntary cooperation, voluntary exchange. The essential notion of a socialist society
is fundamentally force. If the government is the master, if society is to be run from
the center, what are you doing? You ultimately have to order people what to do. What is your
ultimate sanction? Go back a ways, take it on a milder level. Whenever you try to do
good with somebody else’s money, you are committed to using force. How can you do good with somebody
else’s money unless you first take it away from him? The only way you can take it away
from him is by the threat of force. You have a policeman, a tax collector, who comes and
takes it from him. This is carried much farther if you really have a socialist society. If
you have an organization from the center, if you have supposed government bureaucrats
running things, that can only ultimately rest on force. But whenever you resort to force,
even to try to do good, you must not question people’s motives. Maybe
they are evil sometimes, but look at the results of what they do. Give them the benefit of
the doubt. Assume their motives are good. You know, there’s an old saying about the
road to hell being paved with good intentions. You have to look at the outcome, and whenever
you use force, the bad moral value of force triumphs over good intentions. The reason is not only that famous aphorism
of Lord Acton. You all know it, you’ve all heard it: “power corrupts; absolute power
corrupts absolutely.” That’s the whole aphorism. That is one reason why trying to do good with
methods that involve force lead to bad results, because the people who set out with good intentions
are themselves corrupted. And I may add, if they are not corrupted they are replaced by
people with bad intentions who are more efficient at getting control of the use of force. But
also, the fundamental reason is more profound: the most harm of all is done when power is
in the hands of people who are absolutely persuaded of the purity of their instincts
and of the purity of their intentions. Thoreau said that philanthropy is a much overrated
virtue; sincerity is also a much overrated virtue. Heaven preserve us from the sincere
reformer who knows what’s good for you and by heaven is going to make you do it whether
you like it or not. That’s when you get the greatest harm done. I have no reason to doubt
that Lenin was a man whose intentions were good. Maybe they weren’t. But he was completely
persuaded that he was right and he was willing to use any methods at all for the ultimate
good. Again, it is interesting to contrast the experience of Hitler versus Mussolini.
Mussolini was much less of a danger to human rights because he was a hypocrite, because
he didn’t really believe what he was saying; he was just in there for the game. He started
out as a socialist, he turned into a fascist, he was willing to be bribed by whoever would
bribe him the most. As a result there was at least some protection against his arbitrary
rule. But Hitler was a sincere fanatic; he believed in what he was doing and he did far
greater harm. Or if I may take you on to a minor key, in which you may not join me I
realize, Ralph Nader is a modern example of the same thing. I have no doubt that Ralph
is sincere. I have no doubt that he means what he says, but that’s why he is so dangerous
a man who is threatening our freedom. (applause) In the past few decades… in the past few
decades there has been a great decline in the moral climate. There are few people who
doubt the decline in the moral climate. We see evidences of it here. The lack of civility
in discussions among people, the resort to chants instead of arguments-these are all
evidences on one level of a decline in moral climate. But we see it also in the rising
crime statistics, in the lack of respect for property, in the kind of rioting that broke
out in New York after the blackout, in the problems of maintaining discipline in elementary
schools. Why? Why have we had such a decline in moral climate? I submit to you that a major
factor has been because of a change in the philosophy which had been prominent in society,
from a belief in individual responsibility to a supposed belief in social responsibility,
from a tendency to get away from the individual, from his responsibility for his own life and
his own behavior. If he doesn’t behave properly, that’s his responsibility and he’s to be charged
with it- to a belief that after all… it’s society that is responsible. If you adopt
the view that everything belongs to society, then it belongs to nobody. Why should I have
any respect for property if it belongs to everybody? If you adopt the view that no man
is responsible for his own behavior, because somehow or other society is responsible, well
then, why should he seek to make his behavior good? Now of course- don’t misunderstand me,
on a scientific level it’s true that what we are is affected a great deal by the society
in which we live and grow up. Of course, all of us are different than we would have been
if we had grown up in a different society. So I’m not denying in the slightest the effect
on all of us of the social institutions within which we operate both on our values and on
our opportunities. But I am only saying that a set of social institutions which stresses
individual responsibility, which stresses the responsibility of the individual- given
the kind of person he is, the kind of society in which he operates-to be responsible for
himself, is the kind of a society which is likely to have a much higher and more responsible
moral climate than the kind of society in which you stress the lack of responsibility
of the individual for what happens to him. Let me note the schizophrenia in the talk
about social responsibility. There is always a tendency to excuse the people who are harmed
by what happens, or the people who are regarded as the victims; there is always the tendency
to excuse them from any responsibility. They didn’t riot in Harlem because they had no
control over their emotions, because they were bad people or because they were irresponsible
people- no. They rioted because of what society did to them. That’s the argument, but nobody
ever turns it around and argues the other way. If the people who rioted are innocent
of guilt because of the society that did it to them, then aren’t the people who are singled
out as the oppressors also free of guilt? Do you hear these same people say, “Oh, no,
we mustn’t blame those bad people who trampled the poor under their feet because they’re
not doing it out of their own individual will. Society is forcing them to do it.” If you
are going to use the doctrine of social responsibility, you ought to be even-handed both ways. It
excuses both the victim and the person who is- I can’t say responsible because that would
be inconsistent- the person who is alleged to be responsible for the victimization. And
similarly, you must be even-handed on both sides. We must all of us be individually responsible
for what we do to our fellow men, whether that be harm or good. There is an additional reason why you have
had a decline in the moral climate. You’ll pardon me for returning to my discipline of
economics, but there is a fundamental economic law which has never been contradicted to the
best of my knowledge and that is, if you pay more for something there will tend to be more
of that something available. If the amount you are willing to pay for anything goes up,
somehow or other somebody will supply more of that thing. We have made immoral behavior
far more profitable. We have, in the course of the changes in our society, been establishing
greater and greater incentives on people to behave in ways that most of us regard as immoral.
On each of us separately, we’ve all been doing it. One of the examples that has always appealed
to me along these lines is the example of Great Britain, not now but in the nineteenth
century and eighteenth century. You know, in the eighteenth century Britain was regarded
as a nation of smugglers, of law avoiders, of people who broke the law. In the nineteenth
and early twentieth century, Britain got the reputation for being the most law-abiding
country in the world. An incorruptible civil service: everybody knew about the fact that
you couldn’t bribe a civil servant in Britain the way you could one in, say, Italy or New
York. How did that come about? How did a nation of smugglers, with no respect for the law,
get converted into a nation of people obedient to the law? Very simply: by the laissez faire
policy adopted in the nineteenth century which eliminated laws to break. If you had complete
free trade, as you did after the abolition of the Corn Laws, there was no more smuggling.
It was a meaningless term. You were free to bring anything into the country you wanted.
You couldn’t be a smuggler; it was impossible. If you didn’t need a license to establish
a business, you didn’t need a license to open up a factory, what was there to bribe a civil
servant for? The civil servants became incorruptible because there was nothing to bribe them for. Now of course, these patterns- there is a
cultural lag, as you have all learned in your anthropology courses, and these patterns,
once they develop, last for a while. But what has been happening in Britain in the last
30 and 40 years as Britain has been moving away from essentially laissez-faire and toward
a much more controlled and centralized economy? This reputation for law obedience is disappearing.
You have had repeated scandals about ministers of the government, about members of Parliament,
about civil servants who have been bribed, about the rise in gang warfare, and the rest.
Why? Because you are establishing an incentive; you’ve got more laws to break now. It’s much
more fundamental. When the only laws are those laws which everybody regards as right and
valid, they have great moral force. When you make laws that people separately do not regard
as right and valid, they lose their moral force. Is there anybody in here who has a
moral compunction to speeding? I am not saying you may not have a prudential objection to
speeding- you may be afraid you’ll get caught. But does it seem to you immoral to speed?
Maybe. If so, you are a small minority. I have never yet found anybody who regarded
it as immoral to violate the foreign exchange regulations of a foreign country. Here are
people, who would never dream for a moment of stealing a nickel from their neighbor,
who have no hesitancy on manipulating their income tax returns so as to reduce their taxes
by thousands. Why? Because the one set of laws have a moral value that people recognize
independent of the government having passed these laws; the other set do not appeal to
people’s moral instincts. Let me give you some more examples from the
United States. Prohibition of liquor, which was attempted as you know, had disastrous
effects on the climate of law obedience and morality. Something which had been legal to
buy and drink, some alcoholic beverages, became illegal and you converted law-abiding citizens
into bootleggers. I heard over the “60 Minutes” program last Sunday night a great story on
“butt legging.” This had to do with the fact that the New York State tax on cigarettes
is very much higher than the tax on cigarettes in the state of South Carolina. So you have
people going down to South Carolina, buying the South Carolina low-taxed cigarettes, and
smuggling it into New York State, forging New York state tax stamps on them, and then
selling them publicly. A large fraction of all cigarettes sold in New York state are
butt legged. Now there you have provided an incentive for people to break the law, so
they break the law. It’s like Prohibition in a different form. The obvious answer is
for New York State to lower its taxes and you will eliminate butt legging overnight,
and be able to take whatever may be the number of policemen who are devoted to enforcing
that kind of thing, you will be able to take them and turn them to useful work. I go back, however, to the essence of capitalism
and its relevance to the question of humanity. As I say, the essence of a capitalist system
in its pure form is that it is a system of cooperation without compulsion, of voluntary
exchange, of free enterprise. Now I hasten to add, no actual system conforms to that
notion. In the actual world you are always dealing with approximations, with more or
less. In the actual world you always have impediments and interferences to voluntary
exchange. But the essential character of a capitalist system is that it relies on voluntary
exchange, on your agreeing with me that you will buy something from me if I will pay you
a certain amount for it. The essential notion is that both parties to the exchange must
benefit. This was a great vision of Adam Smith in his Wealth of Nations that individuals
each separately pursuing their own self-interest could promote the social interest because
you could get exchange between people on the basis of mutual benefit. Now, I want to emphasize
to you here, for this purpose, that this notion extends far beyond economic matters narrowly
conceived. That’s really the main point I want to get across here, and I want to give
you some very different kinds of examples. Consider the development of language- the
English language. There was never any central government that dictated the English language
and set up some rules for it. There was no planning board that determined what words
should be nouns and what words adjectives. Language grew through the free market, through
voluntary cooperation. I used a word, you used a word; if it was mutually advantageous
to us to keep on using that word we would keep on using it. Language grows, it develops,
it expands; it contracts through the free market. Consider the body of common law, not
legislative law which is a very different thing, but the body of common law. People
voluntarily chose to go to a court and allow the court to adjudicate their dispute. In
the process there arose and developed the body of common law. Again, no central plan,
no central coordination. You are here in an academic institution. How did scientific knowledge
and understanding arise? How do we get the development of science? Is there somehow or
other a government agency that decides what are the most important problems to be studied,
that prevents cooperation? Unfortunately there are developing such agencies, but in the history
of science that isn’t the way science developed. Science developed out of free market exchange.
It developed on occasion with the patronage of an authority, but voluntary cooperation
among the scientists. I read voluntarily the work that is done by economists in other lands;
they read my work, they take the parts of it they like, they discard the parts they
don’t, and in the process you build a more and more complicated system through free voluntary
exchange based on the principle of mutual benefit. Similarly to a free market in ideas.
Again, that is a free market of exactly the same kind as the economic market and no different.
The two are very closely interrelated. Is it a violation of the free market in goods
or the free market in ideas if a country, as Great Britain did immediately after the
war, has exchange controls under which no citizen of Britain may buy a foreign book
unless he got authorization from the Bank of England to acquire the foreign currency?
Is that a restriction on economic freedom, or is it a restriction on the free market
in ideas? I want to give you a final example which goes
back to the fundamental question we’ve been raising, and that is voluntary charitable
activity. I want to ask you a question. Go back to the nineteenth century in the United
States. It was a period when you had about the closest approximation to a capitalist
society you can imagine, in which the federal government was spending roughly an amount
equal to roughly 3 percent of the national income, almost entirely on the army and navy;
state and local governments were spending about 6 or 7 percent of the national income,
mostly on schooling. Very little of what has come to be regarded as welfare activities.
Yet the nineteenth century was a period of the greatest burst of voluntary charitable
activity that we have seen in this country or any other country at any other time. When
was Cornell established? How? It was established by the voluntary benefaction of the man who
gave you your name sometime in- what was it? – The 1860s. That period of the nineteenth
century saw the emergence of a host of private colleges- universities throughout the country.
My own University of Chicago was established in 1890 by voluntary eleemosynary activity.
It was also the period which saw the growth and development of the nonprofit charitable
hospital. It saw the establishment of foreign missions, of the Society for the Prevention
of Cruelty to Animals, of the Boy Scouts. You name it, there is hardly a voluntary activity-
the Carnegie Libraries, the free public libraries. Why was it that voluntary activity flourished?
Because again the free market, voluntary cooperation among people- cooperating to pursue their
common interests- is a far more effective and efficient way of producing charitable
results than any other known to man. I ask you, what is the common element in all
of these cases I have mentioned: language, common law, scientific knowledge, ideas, charitable
activities? The development of an elaborate and complex structure without any central
planning and without coercion. No central planning in language, in common law, in scientific
knowledge, in ideas, in voluntary activity, and yet you developed complex mechanisms,
complex structures, with order, with structures which after the event you can analyze in logical
terms. Without coercion, you have progress through harmony rather than the attempt to
impose progress through coercion. Capitalism is often reproached as being materialistic.
It is often reproached as erecting money as a chief motive, but yet again, look at the
facts. I may say, you know, money is not a very noble motive but it’s cleaner than most.
But look at the facts. Who has produced the great achievements of mankind? Can you name
me a great play that has been written by a government committee? Can you name me an invention that was produced by a government bureau? The great works that are the great achievements
of mankind have all been the achievements of individuals–of a Shakespeare or a George
Bernard Shaw. George Bernard Shaw is a beautiful example because, of course, as you know he
wrote the famous book The Intelligent Woman’s Guide to Socialism. He regarded himself as
a socialist but his career and his performance is a striking demonstration of the virtues
of the capitalist system he opposed. Again, in science it’s Einstein, Copernicus, Galileo…
who are the great contributors of scientific ideas not through government central organization
but mostly in spite of it. In Galileo’s case, as you know, despite persecution by the centralized
authorities of his time. Again, in the area of charity, Florence Nightingale was not a
government civil servant. She was a private individual, human being, who was seeking to
achieve the objectives she held dear; she was pursuing her self-interest. The plain fact is that in any society, whatever
may be its form of organization, the people who are not interested in material values
are a small minority. There are no societies in the world today that are more materialistic
than the collectivist societies. It is the Russian society, it is the Chinese society;
it is the Yugoslav society that put all their stress on materialism, on achieving economic
goals and five-year plans that destroy the non-materialistic achievements of mankind.
Why? Because they are in a position to suppress minorities. What we want for a society that
is at once humane and gives opportunity for great human achievements is a society in which
that small minority of people who do not have materialistic objectives, who are interested
in some of these other achievements, have the greatest degree of freedom. And the only
society that anybody has ever invented, that anybody has ever discovered, that comes close
to doing that is a capitalist society. When you hear people objecting to the market or
to capitalism and you examine their objections, you will find that most of those objections
are objections to freedom itself. What most people are objecting to is that the market
gives people what the people want instead of what the person talking thinks the people
ought to want. This is true whether you are talking of the objections of a Galbraith to
the market, whether you are talking of the objections of a Nader to the market, whether
you are talking of the objections of a Marx or an Engels or a Lenin to the market. The problem is that in a market society, in
a society in which people are free to do their own thing, in which people make voluntary
deals, it’s hard to do good. You’ve got to persuade people and there’s nothing in this
world harder. But the important thing is that in that kind of society it’s also hard to
do harm. It’s true that if you had concentrated power in the hands of an angel he might be
able to do a lot of good, as he viewed it, but one man’s good is another man’s bad. And
the great virtue of a market capitalist society is that by preventing a concentration of power,
it prevents people from doing the kind of harm which really concentrated power can do.
So that I conclude that capitalism per se is not humane or inhumane; socialism per se
is not humane or inhumane. But capitalism tends to give free rein, much freer rein,
to the more humane values of human beings. It tends to develop a climate which is more
favorable to the development on the one hand of a higher moral atmosphere of responsibility
and on the other to greater achievements in every realm of human understanding. Thank
you.

100 thoughts on “Milton Friedman Speaks – Is Capitalism Humane?

  • Jordan Peterson offers groundbreaking advice today, yet it was common knowledge a few decades back just like Milton's ideas

  • Damn, Milton Friedman was a Savage! Terrible how young people are being persuaded by idiots into believing that Capitalism is bad and Socialism is the way to go…

  • If anyone is watching this in 2019,you owe it to yourself to share this gem as much as possible.We do not want these intellectuals with the "death wish" to run any country.

  • At the end Friedman says: "And the great virtue of a market capitalist society is that by preventing a concentration of power, it prevents people from doing the kind of harm which really concentrated power can do."

    What about the growing concentration of wealth and the power that it obviously provides? What about the concentration of power in the hands of increasingly bigger global corporations that already can blackmail federal governments? What invisible hand can protect us against abuses of power by those dragons? The statement of Milton Friedman quoted above is rather idealistic, I'm afraid.

  • No wonder the youth Gen X and Z are becoming more and more dubious and untrusty to the "intellectual Marxist loving global class" of life long tenure-seeking professors. Couple it with the internet and we have the problems that lead to this stagnation, worldwide. I think we have to rethink education, the Prussian Caserm system does not work anymore. We also have to do away with these denomination "Master" "Ph.D.". Iv seen kids that over think this so-called Ph.D. in a landslide. The Internet has changed everything and we are causing more damage trying to keep the old system intact.
    Example, Kid goes to the Psychologist, Kid knows more than the psychologist about his field.
    This is happening everywhere economy and and and.

  • capitalist ideological manipulation worse than social oppression, coz. some of one (capitalist) is unblatant, the other (social) one is nude.

  • My labor and the fruits of my labor belong to me. The only system that you can come close to guaranteeing this is capitalism

  • Today it is the western world that is afflicted with the diseases, that he was accusing Russia of having then !!

    Life comes full circle indeed.

  • Mr. Friedman would be shouted down from the stage in todays campus's because he would 'trigger' so many emotions.I miss the individual that speaks the truth no matter how negatively it might be received.  We can never correct anything with out knowing the truth first.'Truth is NOT a left wing value.' Dennis Prager and I think it is true, just listen to the leftist politician promising all will be well if I give you free stuff!

  • I really don't mean to be disrespectfull, Friedman surely knew more about this world than I do, but isn't it wrong to compare socialism to Russia or China communism right away? It's like I say capitalism is bad becouse look at The Brazilian military government (1964-1985).

  • What do we have to gain from the greatest economists? Milton Friedman is one of them. The others? Stay tuned.

  • People equate neoliberalism with capitalism but capitalism begins with saving seed from one harvest to reinvest in another and neoliberalism builds on the bulwark of private ownership and scroogelike attitude to tax and the public sphere. Friedman similarly misunderstands Socialism which he conflates with totalitarianism. Australia values Socialistic polices that tame the mighty capital machine. Scandinavian countries have strong socialistic cultures.

  • "the great works that are the great achievements of mankind are all the works of individuals" — this of course omits the founding of the United States, the abolition of slavery in North America, and the destruction of totalitarianism first in WW2 and then in the Cold War that followed. All these achievements were the work of committees and governments.

  • 43:02 "when you hear people objecting to the market, or to capitalism, and you examine their objections, you will find that most of those objections are objections to freedom itself. what most people are objecting to is that the market gives the people what the people want, instead of what the person talking thinks the people ought to want"
    absolutely brilliant

  • He was my favorite when I was in college in the early 80's and is still so today. I love watching him speak. He completely enjoys his subject! Watch him SMILE as he talks!

  • It is senseless to ask if capitalism or communism or any other system is moral or not. It is inhumane people, who get inside the system and do harm.

  • Friedman's mistake is a typical one made by a United States citizen raised and educated in the U.S of A university system. He arrogantly assumes that the capitalist system, is a philosophy like socialism, liberalism, communism or fascism etc.As a social democrat, and I guess that makes me a right of centre socialist, I strongly defend the capitalist system. This is not to be confused with a strong belief in a 'freedom of enterprise' system. They are two very different systems, not philosophies of life and society. Unfortunately, U.S.A citizens are taught from the cradle, to believe that no Government, at any level, should have rule over business and the creation of wealth, within a given society or country. They believe that the boards and directors of companies, should be the ones to determine the moral direction and social development of that society or country, for the 'pursuit of happiness' through the attainment of business wealth. Ref U.S.A constitution.As a student of history, I continually observe that business, with little Gov't oversight and regulation, will always assume and make decisions that favour the very top elite, that is, the board of directors and the companies senior managers. As a result the particular enterprise does become corrupt, selfish and negligent in it's social responsibilities, to the very community and country, which by that countries very constitution and foundation laws, allow that same enterprise/business to exist, in the first place. Athens was a city state that we all recognise as that place and society, that gave us the beginnings of western democracy, the fine arts, philosophy etc.. etc. Yet it had a strong senate legislator and would often hold public referendums on very important decisions. Why? Because Athenians recognised the true natural human state of fear, envy, loathing and lust etc. and sought to establish laws and regulations that governed to a reasonable degree, the way individuals and groups conducted themselves within Athenian society, so that in the long run it would be to , as much as humanly possible, the primary benefit of all living within the Athenian state. This, whilst neighbouring states and countries continued to enforce dictatorships, and other forms of highly restrictive and non-representative governance.The Athenian state was not perfect, but as human beings we are not perfect. This is why we have instituted laws and regulations to govern how we drive on the roads or conduct ourselves whilst traveling on airplanes etc. Otherwise their would be total chaos, resulting in many casualties. We do this for the good of all citizens, not just the very few.But argue in the U.S.A that their should be 'enough' regulation and oversight by the Federal government, to restrict monopolize, duopolies, insider trading, set up watch dogs and strong senate committees with actual teeth and you will be shot down by not just those very few who benefit from the existing institutionalised 'free enterprise' system, but by the great majority of this same countries own citizens who, not only do not benefit, but are most often hard pressed by this very immoral system and foundationally corrupt philosophy. Yes, I am a social democrat, who believes in the capitalist system, but one that is regulated by a government "of the people, by the people, and for the people". in a fair and just manner for the growth of both sound and honest business. Not just for the few corrupt elite colluders, in business and politics, which as we see clearly today, lead to a greatly indebted and fragile economy.Mr Friedman can talk about corruption in Russia and China, and yet does not broach the heavily institutionalized corruption and immorality in his own countries system. What he is vainly attempting to do, is make other societies and countries appear worse than his own. Therefore his country, must have the only one true and best guide to follow as an example, of a well ordered and moral society. History has shown that, especially since this lecture, that the U.S.A has very little in the way in either moral fibre or sound  ethical business practices. Think of the 'Dot Com' or '2008' crash. Lies, deceit, greed and corrupt collusion between business heads and Government.He often condemns Russia and China for its philosophical failure to recognise and embrace "voluntary exchange", and so he and we all rightfully should. However, his indirect defence of his own countries claiming of the high moral ground, where this is concerned, is rather absurd and typically arrogant. History has demonstrated through time and time again, that due to the heavy failings of human nature, that neither 'free enterprise' or so called communist philosophy can operate, at all. It just cannot. So we must find, encourage and defend the best compromise of all the 'isms' that we could institute democratically, for a fair and righteous outcome for all citizens. That philosophy is Social Democracy, supported by a truly representative senate, independent legal system, freedom of religion and a sensible and honestly regulated capitalist system for 'doing' business or "voluntary exchange". It is but a dream I had for my own country, Australia. But unfortunately, Australia has consistently chosen to follow the U.S A path of selfish greed, motivated by envy and fear. As a result it's economy and therefore social fabric will soon tear and collapse under the burden of both personal and national dept. Then they will look at the inept Government, who gave them exactly what they were asking for, and angrily demand they explain "why they got it so wrong"? But it wasn't the corrupt Gov't or the greedy and treasonous business people. It was the ordinary citizen's themselves who willingly upheld and supported the failed philosophy of liberalism and the U.S.A version of 'free enterprise'.Milton Friedman, is a true American, ignorant and arrogant. Unfortunately, American mothers keep breeding them."Those who fail to study and learn from history, are doomed to repeat the follies and failures of the past".

  • YouTube – Austrian economist with an inaccurate model of how money works and who HATES TAKERS. ESPECIALLY ROBIN THE HOOD TAKERS! https://tinyurl.com/yx8uc25x With the inaccurate, neoclassical-model of HOW MONEY WORKS, the only two ways a Sovereign government (which issues currency) may pay for public goods & pay for public services are:

    1. For that Sovereign govt. to use eminent domain & purchase the private-sector-owned production-means which that Sovereign govt. needs to produce those public goods & produce those public services. Thereby, moving production-means from private sector ownership to government employee ownership.

    2. For the Sovereign government to leave ownership of the production-means with a private owner & then to tax money from that private owner. (see ROBIN THE HOOD).

    This is an inaccurate understanding of HOW MONEY WORKS when there is a fiat currency issued by a Sovereign government.

    This inaccurate understanding of HOW MONEY WORKS does easily explains the confusion which gives rise to resentment from someone who is a HAVE & who does not wish to become a HAVE-NOT or become a TAXED-TO-DEATH-HAVE-LESS.

  • Back in 1972 I attended a special lecture, only a limited number of attendees, and after the lecture I stood up and asked Milton how the amount of money in circulation was affected by these credit cards, plastic money. Not everybody had a credit card in 1972, and many merchants didn’t take them. The gasoline companies had them and American Express and Diners club, and that was about it. He responded that they didn’t make any contribution to M1, M2, or M3. Ha ha. I have the last laugh. There is over a trillion $ in float on credit cards today, more than M3. Milton stated that when he grew up in Chicago, his parents ran a bill at the grocery store and then at the end of the month his father went and paid the bill. Ha ha again. Milton had no idea people would apply for, and receive many many credit cards, charge them up to the limit, and then pay only the monthly minimum, allowing hundreds of thousands of dollars to float in debt for years. Issuing a credit card is like printing $7,500 of money. The person who receives that card immediately goes and spends it to the limit, then pays off some of it, then charges it up again.

  • The 2020 Democratic Presidential candidates must not have seen this video. Now they are claiming that Capitalism is racist. Where has this country gone?

  • 1:37
    Old Argument: Economic Organization
    • Widespread support for a “vague system” labeled “Socialism”

    4:33 Russian Mathematician, Shafa Revitch
    6:04 Moral Values And Economic Systems
    7:54 Fine Intentions, Fine Objectives, Poor Results

    Socialism sees more economic inequality than Capitalism

    14:28 Values and Relations between people

    16:54 Henry David Thoreau

    19:20 Taxation is Theft.
    Assume good motives.
    Using Force eliminates good motives
    “Power corrupts. Absolute power corrupts absolutely”

    22:00 Benito Mussolini, bribed
    Hitler was a sincere fanatic
    Ralph Nader was sincere, but he was dangerous

  • Soviets tried to conduct “good” collectivization in the late1930s and killed a couple of million Ukrainians in the process. Personally I think stalin did it on purpose. He had other “good” intentions.

  • Western countries are developed because they steal raw materials from the countries they colonized and sell weapons to both sides on war torn zones and in most of the wars there’s western influence. They stole all the esoteric knowledge and information and precious metals and slaughtered millions and millions of indigenous people and this guy thinks that the west has more freedom. Well these westerners can’t sleep without sleeping pills, look at the stress level of the general population, taxation on every little things. Boom and bust every decade, billionaires get bailed out and rest just bankrupted. There used to be a time when dad could feed whole family and now mom dad working over-time and still there’s difficulty in making ends meet. So congratulations west for your freedom. In socialism propaganda is force-fed whereas in capitalism people willfully accept the propaganda.

  • Anything that’s grown or found in the ground should be regulated by a socialist system. Anything created or altered should be managed by a capitalist system.

  • Let's see, 100 million civilian deaths in Socialist controlled governments in the 20th century, but yeah let's teach socialism to the kids.

  • "Men love to exercise power over other men and whenever they have the power to do so they do" Adam Smith. He also said "Landlords love to reap where the have never sown" Landlords have power and with that power the restrict the "Market" and make it unfree. Today landlords cover all sorts of people who can demand rent for something you need and they do – so Friedman is telling fairy tales. There is no morality in Capitalism or in any other system that allows the few to exercise power over the many no matter how subtly.

  • Socialism as an idea was built on a scam to begin with the people who invented and implemented socialism had no intention in the well being of the masses it's all about keeping and gaining power if that means stealing property or land or killing millions when something is built on lie it will always fail and people will die and live in poverty

  • "We have made immoral behavior far more profitable" True THEN, true NOW… PANTFA, BLM, AOC, ILLEGAL ALIENS, Baltimore, Chitcago, San Franfeces and SmelLA

  • I couldn't find the date of this speech. He refers to Soviet Russia and Yugoslavia, and his example of income inequality is outdated–and the reverse of today's wealth gap in the U.S. Recent years subvert his main argument.

  • A genius captured in a videotape. What a privilege is to see and hear this titan in his own words. Hope commie democrats don’t take down this great video from the web. As they are marxists who don’t like freedom and free thinking.

  • the question is this: Is MAN humane? Given that he is not whatever system in place will be exploited in an evil manner precisely it is MAN who is inhumane.

    as for the evil of capItalism look to the horror of laissez faire capitalism, capitalism at its purest, in the industrial Revolution

  • Slavery was strictly based on Capitalism. One of the most violent hate crimes in US history. Modern slavery, again about Capitalism. Selfishness and Greed just name a few, keeping this respectful. This man lechers on the truth nicely in a soft tone. Talks, lechers, summits are no longer considered as options. Capitalism not only enslaves the poorest of people but kills. Yes I said it. Money, and if you are NOT a part of the categorized structures in this America, if you have a good head on your shoulders you can easily become a victim of Capitalism in this country. I can go on and on about this. I leave you to think.

  • No Friedman. Moral values are not a free for all. There are constraints including but not limited to survival, average length of a human life and ability to work together and so on to pursue value or meaning with the time we are given. I think from 07.00 of the video and forward it is his weakest point.

  • What I find most frightening is 40 years later things haven’t changed in fact… it’s worse… and arguably more frightening. The man is a genius! Was a genius! A loss to humanity that such a great thinker wasn’t replaced.

  • When Friedman says that 'capitalism prevents the concentration of power' he is either simply totally wrong, or else he is being totally disingenuous (and I suspect the latter!)

    Capitalism has a centripetal force which concentrates money in the hands of 'the few', at the expense of 'the many', as we are currently witnessing… The rich get richer while now everyone else is getting poorer.

    Since money IS power, it's clear that capitalism DOES concentrate power in the hands of the few and the sustained harm the ultra-rich 'few' are currently doing to the rest of society is now blatantly obvious.

    Who does he think he's kidding?

  • While suggesting that the level of incarceration is greater in Russia than it is in 'western countries in which we have grown up regarding freedom as our natural heritage', he is totally ignoring the fact that the USA now has a greater level of incarceration than any other country in the world, and that the USA also now openly practices torture (but euphemistically calls it 'enhanced interrogation'…) I can't help but wonder if perhaps Mr Friedman is living in a different world from the rest of us… Perhaps he's really from a parallel universe… He's certainly not describing the world I (and, I strongly suspect, the rest of 'We the People') live in. I'm beginning to thing that this dude lies for a living. But of course, he IS an 'economist'.

  • I hope the younger generations understand this New socialist phenomenon is nothing new. There NO SUCH THING AS DEMOCRATIC SOCIALISM.

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