Professor Irwin accomplishes a great deal in this short book. He re-examines the dreadful episode of the Great Depression, 1929-33, indeed the entire decade of the 1930s. His particular focus is on the collapse of global trade, and he offers an alternative explanation for that collapse from the standard one. He enlarges our understanding of trade and trade policy in that era. His contribution is the more notable because he unites two fields that are typically kept separate: international trade and international finance. His analysis relies on a trilemma articulated by Milton Friedman: “fixed exchange rates, stable internal prices, unrestricted multilateral…
A Practice to Justify a Theory of Freedom: Friedman’s Engagement with a Collectivist World
Milton Friedman’s Capitalism and Freedom is a modern classic. Along with F.A. Hayek’s The Road to Serfdom, Friedman’s 1962 book introduced many readers to classical liberal or libertarian ideas. Friedman stated his philosophy of freedom, and filled in the details with many examples and applications. He not only taught the reader the meaning of freedom, but how to apply the freedom philosophy to real-world issues.
For its time, it was a radical book. At the end of the second chapter, he identified 14 activities that could not be justified by classical liberal principles. These included all manner of price, wage and rent controls. But they also included social security, occupational licensure and national parks. It is a gutsy modern-day libertarian who would take on the national parks.
Included on the list of 14 indefensible activities was also peacetime conscription. In 1962, compulsory military service had reflexive and unthinking support. Friedman’s personal campaign against the practice helped lead to its abolition. Martin Anderson helped persuade Richard Nixon on the issue. For those who think the work of academics has no practical impact, Friedman’s work on conscription stands in refutation.
It is no exaggeration to say that two-and-one-half billion people today are enjoying a degree of freedom and prosperity that might not have happened, at least not when it did, but for the work of Milton Friedman and like-minded free-market economists. I am talking here of the opening up of the Chinese and Indian economies (and others in what used to be called the Third World). In the very first chapter, Friedman makes the case for the importance, indeed the primacy, of economic freedom over political freedom.