Milton Friedman The relation between economic freedom and political freedom

The paternalistic "what your country can do for you" implies that government is the patron, the citizen the ward, a view that is at odds with the free man's belief in his own responsibility for his own destiny. The organismic, "what you can do for your country" implies that government is the master or the deity, the citizen, the servant or the votary. Free man recognizes no national purpose except as it is the consensus of the purposes for which the citizens severally strive.

The free man will ask "What can I and my compatriots do through government". The great threat to freedom is the concentration of power.

How can we benefit from the promise of government while avoiding the threat of freedom?
(1) The scope of government must be limited. It's function is to preserve law and order, to enforce private contracts, to foster competitive free markets. It may enable us to accomplish jointly what we would find it more difficult or expensive to accomplish severally, but we should be cautious before we do that.

(2)Government power must be dispersed.

Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power. The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.


The possibility of co-ordination through voluntary co-operation rests on the elementary--yet frequently denied---proposition that both parties to an economic transaction benefit from it, provided the transaction is bi-laterally voluntary and informed.

What makes specialization of function and division of labor go further?
Middlemen(lower the transactions costs) and money(neutral instrument).


The consumer is protected form the coercion by the seller because of the presence of other sellers with whom he can deal. The seller is protected form coercion by the buyer because of the presence of other buyers with whom he can sell.

Government is essential both as a forum for determining "rules of game" and as an umpire to interpret and enforce the rules decided on.