Milton Friedman on the Fallacy of Greed

This article is based on an interview between Phil Donahue and Milton Friedman during 1979. This interview was conducted in relation to skepticism over Milton Friedman’s book “Capitalism and Freedom” (1962) where he advocates minimizing the role of government in a free market as a means of creating political and social freedom. In this interview Friedman is forced to defend his stance on greed as a means of achieving societal benefits, and arguing the fallacy of defending virtue as a means of monetary reward.

Donahue begins his segment by painting a broad picture of the current state of the world, economically speaking. He explains that due to a concentration of power, enhanced by greed, the masses are kept from attaining individual wealth. That there are “so few haves and so many have-nots.” His first question posed is did Friedman, after taking into account all of the less fortunate, ever doubt capitalism, and is greed in itself a “good idea?”

Friedman begins by addressing the misnomer of greed. First he poses the question, “Is there a nation in the world that does not run on greed” and for that matter “what constitutes greed?” We obviously never fault ourselves for personal greed, but rather default to those that have better economic standing as greedy individuals. Capitalism is a system in which individuals are allowed to pursue their own self-interests, and from these various transactions compel the market to become efficient and innovative. Neither Ford nor Einstein created their great accomplishments due to the mandate of a bureaucrat.

Referring to the plight of the masses of poor, “In the only cases where the masses escaped the poverty you speak of you find both free trade and capitalism.” Once free trade principles and capitalism are established in a region individuals are given the ability to act more freely. “Record of history is clear that there is no alternative way so far discovered that improves the lot of ordinary people that can hold a candle to the productive abilities unleashed by the free enterprise system.”

Donahue presents his second question toward the end of the piece, does the system of capitalism reward virtue as much as the ability to work the system? Friedman addresses the question quite bluntly with a question, “Who rewards on virtue?” Is political self-interest somehow nobler than economic self-interest? Friedman argues to Donahue that he is “taking things for granted”, but is referring to the broader base of American society. That the capitalist system is a method in which the majority of power is secured to the individual, and through mutual benefit achieved through transactions society is able to progress. Opposed to some ambiguous “angels” that may develop society.

The capitalistic structure of the United States economy is not a zero-sum game in which there is one winner and one loser. Through compromise a mutual benefit can be accomplished. Due to this truism no other economic system has created so much wealth in regards to living standards and personal purchasing power. Also, the capitalist system has raised a considerable segment of the poverty-stricken out of despair.

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About Timothy D. Vallario

My name is Timothy D. Vallario, and I was born and raised in Morris County, NJ. I am now 18 and attending American University. I plan to major in Communications, Legal Institutions, Economics, and Government (CLEG) major in the School of Public Affairs, and a second major in Finance from the Kogod School of Business. I am a member of the American University Republicans and a member of US Foreign Policy Association. I enjoy politics and business.
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