The End of Friedmanomics
Zachary D. Carter/June 17, 2021
When he arrived in South Africa on March 20, 1976, Milton Friedman was a bona fide celebrity. He had been invited by the University of Cape Town to deliver a series of lectures on economic policy, but his itinerary was jammed with interviews, fetes, and gaudy extravagances fit for a senator or Hollywood royalty. Newspaper reporters harangued him, the crowded pre-cable TV spectrum reserved room for his insights, and he spent so much of the ensuing three weeks being whirlwinded by the local elite that he barely carved out time to enjoy the wildlife.
A 42-page travelogue recorded by Friedman recounts the experience. Milton and his wife, Rose, slept late after their arrival, savoring an afternoon walk along the glittering Sea Point Promenade in the shadow of Lion’s Head mountain before dinner with the chairmen of a burgeoning fashion chain and a prominent investment house. Two newspaper interviews the next day were followed by an evening at the Dutch country estate of tobacco magnate Anton Rupert. Cocktails at the U.S. Embassy, lunch with the chairman of Mobil Oil South Africa, and a black-tie dinner with the head of the De Beers diamond monopoly would ensue.
After two decades on the intellectual front lines of American politics, Friedman was a bestselling author and no stranger to fine living. But he was astonished by both “the extraordinary affluence of the White community” and the “extraordinary inequality of wealth” in South Africa. Friedman was not a man to scold opulence, and yet he found the tension permeating apartheid South Africa palpable in both taxicabs and hotel ballrooms. The “hardboiled attitudes” of Mobil chairman Bill Beck and his friends were difficult for him to endure. The “complete segregation” of the population was “striking.”
All of which makes a contemporary reading of Friedman’s Cape Town lectures a harrowing experience. His first speech was an unremitting diatribe against political democracy—an explicit rejection of, in Friedman’s words, “one person, one vote,” delivered to a nation in which more than half of the population was disenfranchised by race. Voting, Friedman declared, was inescapably corrupt, a distorted “market” in which “special interests” inevitably dictated the course of public life. Most voters were “ill-informed.” Voting was a “highly weighted” process that created the illusion of social cooperation that whitewashed a reality of “coercion and force.” True democracy, Friedman insisted, was to be found not through the franchise, but the free market, where consumers could express their preferences with their unencumbered wallets. South Africa, he warned, should avoid the example of the United States, which since 1929 had allowed political democracy to steadily encroach on the domain of the “economic market,” resulting in “a drastic restriction in economic, personal, and political freedom.”
The idea that America experienced an erosion of political liberty amid the destruction of Jim Crow is simply impossible to take seriously. Between 1929 and 1976, in addition to the advances in civil rights, explicitly racist immigration quotas were eliminated, prohibition was repealed, and legal barriers to birth control were abolished, as poverty rates plunged across demographic groups and American income inequality reached the lowest levels on record. And yet, as he toured South Africa, Friedman did not retreat from his conviction that the state had dealt a perilous blow to American freedom. In a conversation with the courageous anti-apartheid politician Helen Suzman, Friedman expressed his belief that “a laissez-faire economic policy” was “the only way in which you could get a multiracial community going” in South Africa. And the free market had to be insulated from democratic pressure. The burgeoning activist movement to “urge all foreign enterprises to boycott investment in South Africa,” Friedman believed, would ultimately serve to “hurt the Blacks, not to help them.”
Friedman did not subscribe to biological theories of racial inferiority. His time in South Africa does not instruct us on his moral character or any unique failures of political judgment. It offers instead a window into the deepest currents of his intellectual contributions. The program Friedman prescribed for apartheid South Africa in 1976 was essentially the same agenda he called for in America over his entire career as a public intellectual—unrestrained commerce as a cure-all for inequality and unrest.
That this prescription found political purchase with the American right in the 1960s is not a surprise. Friedman’s opposition to state power during an era of liberal reform offered conservatives an intellectual justification to defend the old order. What remains remarkable is the extent to which the Democratic Party—Friedman’s lifelong political adversary—came to embrace core tenets of Friedmanism. When Friedman passed away in 2006, Larry Summers, who had advised Bill Clinton and would soon do the same for Barack Obama, acknowledged the success of Friedman’s attack on the very legitimacy of public power within his own party. “Any honest Democrat will admit that we are now all Friedmanites,” he declared in The New York Times.
No longer. In the early months of his presidency, Joe Biden has pursued policy ambitions unseen from American leaders since the 1960s. If implemented, the agenda he described in an April 28 address to Congress would transform the country—slashing poverty, assuaging inequality, reviving the infrastructure that supports daily economic life, and relieving the financial strains that childcare and medical care put on families everywhere. It will cost a lot of money, and so far at least, Biden isn’t letting the price tag intimidate him. “I want to change the paradigm,” he repeated three times at a press conference in March.
But the real turn is not about deficits or spending levels. It is the relationship between economic policy and democracy itself. For Friedman, liberty lived in the marketplace, rendering government a necessary evil under the best of circumstances. Today’s Democrats, by contrast, have reclaimed state power as an essential component of self-government. When he laid out his agenda in April, Biden declared “it’s time to remember that ‘We the People’ are the government—you and I. Not some force in a distant capital. Not some powerful force that we have no control over. It’s us.”
The new consensus on Friedman’s work among economists has essentially reversed Summers’s verdict from 2006. “Almost nothing remains of his intellectual legacy,” according to Columbia University economist Jeffrey Sachs. “It has proven to be a disastrous misdirection for the world’s economies.”
In 2021, 15 years after his body gave out, Milton Friedman is finally dead.