Capitalism and Freedom Term Paper

Term Paper Capitalism and Freedom, written by Milton Friedman, seems to focus significantly on the connections between the economics and politics, and the effect that those have in various aspects of society. This relationship was referred to throughout the book, and the topics Friedman discusses ranged between governmental control of money, to foreign policy and trade and the effect that has on our economy. Through the course of the book, Friedman constantly refers to his “classical liberal” view, which focuses on the freedoms and power of the individual in society.

Friedman shows his support of this view during the book using the idea of a laissez-faire government. For Freidman, government involvement in issues regarding society should be minimized, and the government should only really use their power to assist society when things are not going well. Friedman believes that government should only be the most basic form of overseer of the nation. The thought of the free market driving the economy strongly prevails within the book. He claims that the government should only be there to reduce the inevitable rises and falls of the economy when it is free market based.

This way, the changes in the market will be able to remain less drastic. Friedman refers to the capitalist system as an unstable form of economy, and that government should be more of a support structure, rather than the basis of the economic system. He strongly believes that too much governmental influence would restrict our rights and liberties. This belief was one of his main focuses through the entire book.

Friedman states in the introduction “Our minds tell us, and history confirms, that the great threat to freedom is the concentration of power. (Pg. 2) Friedman’s second main point was that the free market system promotes innovation and advancement by providing competition. People have motivation when they are working against someone else toward the same goal, unlike the socialist form of economy, which results in a lack of incentive due to the lack of a reward. Capitalism provides opportunities to improve and expand ideas into more effective and more efficient ones; a fantastic example of this is today’s cell phone.

Without the capitalist economy, the cell phone would still be the most basic of telecommunication devices to speak with a person in a different location. Instead, however, it has evolved into a tool that can be used to do nearly everything. From looking up the definition of socialism on the internet to having your phone be your personal assistant, even to typing this paper, they have become extreme devices of ingenuity. What is the reason for the expansion of a basic communication gadget into a computer we can fit into our pocket?

It is people trying to improve ideas to sell their products to society. The general public would not buy a product if it wasn’t as good as the next one, and the people producing would not make any profit if no one is purchasing their products. Thus, new ideas and innovations are born in order to be successful in a capitalist system. I believe that the inverse is the socialist system, in which labor and innovation are meant for the “betterment of society” instead of for the opportunity to gain recognition and success for our advancements.

This dispersion of credit to the entirety of civilization defeats any reason to come up with new ideas and improvements for anything. As we discussed in class, people become more efficient because they work to be better than someone else. Friedman constantly refers back to the point of government operating at only the most basic level. His view of a perfect government is of one that is seemingly non-existent. Government should focus on making the lives of the individuals of the nation better, instead of taking that responsibility into their own hands to define what “better” really is.

Friedman claims that a free market economy creates “unanimity without conformity” (Pg. 23) and believes that government involvement results in a kind of forced conformity by turning what they believe is best for society into law. However, he also states that there is a framework that acts as a sort of “rules of the game. ” (Pg. 25) Government should be the interpreter of these rules, and step in when there is a disagreement, or disruption within the market. It seems to me that Friedman believes that this applies to only most situations, where it is possible for individuals to affect the outcome.

An example where representation may not be heard from every individual, but will affect everyone is national defense. Even though individuals opinions may be heard, the ultimate decision for how national defense should be set up and operate is by the government. Even though people have a say, not everyone can affect it, and once it is in place it is difficult for individuals to change it. This does, however, reinforce government’s role in protecting our liberties. Even if people don’t want national defense, it is, in a sense, divided evenly among everyone.

Another example of this is the issue of social security. The government has in place a policy of money being taken out of pay, to be put into somewhat of a retirement fund. Whether people like it or not, they are legally required to pay their social security. On the other side of this, I believe that there is no greater check on government than people bringing forth their ideas. The government needs to take in the ideas of many different groups, and use the diversity of those ideas to create solutions.

Political parties are possibly the best example of this, due to the fact that in order to be elected into offices, they must appeal to a large portion of society. I feel that a recent example is the conservative’s shift from pro-life to pro-choice. More people have been leaning toward pro-choice, so the republican platform was altered to appeal to the majority. Government and politics shifted to resemble the views of the nation. In a socialist or communist society, however, the government would take the entire control of these views, and the thoughts of the majority would probably not be heard.

This brings me back to the fact that the capitalistic view brings about much more freedom than just what comes in the market, but also within politics. The necessity of appealing to the majority results in competition, which results in the approach to perfection of efficiency and also to bring about “unanimity without conformity” by letting everyone’s views be heard and a general consensus made about which decision is best for society as a whole. Once this decision is made, Friedman believes that the government should do what they can to uphold what was decided by the nation as a whole.

Another focus that Milton Friedman addresses is how economics and politics are very closely related. Some form of democracy is required in order to have a capitalist system, and according to Friedman, “a society which is socialist cannot also be democratic. ” (pg. 8) On the more extreme side, it would be impossible for a governmentally communist society to have any sort of true fiscal democracy. There would be no way for the government to fully control and oversee the market, and also have people be working to gain their own personal achievement and success.

This reiterates my point that capitalism brings about innovation. If the government is in total control of where money is distributed, and restrictive of what ideas are valid and reasonable, than there is no incentive for people to become more efficient. This also brings up the point that capitalism becomes efficient in areas that are necessary at the time, due to what society is in need of. A very good example of this is the opportunity cost curve that we have discussed in class. Opportunity cost being the benefit or loss of choosing the next best option for doing something.

Instead of using our typical “guns and butter” example, maybe the opportunity cost within the capitalist system could be related to improving the technology of computers verses increasing the efficiency of cars. We may be able to significantly improve computers over the next few years, but if it is more necessary than maybe it would be better to shift some of those resources away from the computer technology business and into the automobile market. People in the market will be competing to improve on other’s ideas in that market, and improvements increase.

This is why the capitalist system, although the most unstable, is also the most efficient. Resources can be shifted based on the needs of society, and those resources can be adapted to improve what is necessary for the improvement of certain goods and ideas that will be most beneficial to that society. This could not be accomplished under the set rules and regulations of a communist or socialist government. I agree with nearly everything that Friedman said. The capitalist system is the best form of economic structure.

With the heightened competition and working for personal gain, the capitalist system promotes the most advancement in efficiency and adaptability. The fact that government involvement is minimal just helps to advocate that the ideas and innovations of the innovation should be the driving force behind the growth and evolution of a nation. As was said by Friedman in the introduction of the book, “The great advances of civilization, whether in architecture or painting, in science or literature, in industry or agriculture, have never come from centralized government. (Pg. 3)

He also reinforces this in the conclusion of the book by stating “The greater part of the new ventures undertaken by government in the past few decades have failed to achieve their objectives. ” (Pg. 199) He then goes on to focus on what has been accomplished in society, such as higher standards of living, less class separation, and less disadvantages to minority groups, and claims that “this has been the product of the initiative and drive of individuals co-operation through the free market. ” (Pg. 00)

With too much government interference, the incentive to work becomes diminished and the factors involved with labor become less fulfilling for individuals because they are not being recognized or awarded for their achievements. People enjoy working and improving when they want to work, or when it is necessary to work, and not when government tells them to work. Government is vital, however, to the survival of a capitalistic society. Without the aid of government acting as an “umpire” for the “rules of the game” (Pg. 25) society would essentially fall apart.

The government is necessary to be the mediator of what is going on in the market, but not to control what is going on in the market. The government helps to regulate the rules that society makes as a whole, and helps to promote “unanimity without conformity” by allowing peoples voices to be heard, and their ideas and words being taken into consideration to create effective solutions for society as a whole. Friedman’s view of the “classic liberal” is very influential on the style of capitalism he refers to throughout Capitalism and Freedom.

This not only refers to capitalism in an economic sense, but also to the freedom of the individual politically within that capitalistic system. The freedom of individuals in societies today revolve around their ability to innovate and to become more perfect, as promoted by a capitalistic system in which the government provides mediation and support for the classical liberal views of society. AP Economics Term Paper – 100 points Due Date – November 18, 2011 Requirements * Typed 5 – 7 pages (no title page needed), double spaced, 12 point font, regular margins.

If you don’t meet this requirement, your grade will the lowered by 25 points. * Book must be from syllabus or approved by Mr. Herdegen * Tell Mr. Herdegen what book you will pick by November 4. Grading * A clear paper with an appropriate focus on economic issues or concepts from your book. Don’t try to cover too much, but rather one or a few of the “big ideas” from the book. It would be wise to focus some of your writing on the part of the book you are going to present to the class.

Be sure to define economic terms that are not common vocabulary (opportunity cost) or have special definitions (i. e. capital). * Some analysis on how the book relates to our class (Colander, class discussions, concepts). If your book is more macro, you can still apply the general economic concepts (i. e. scarcity, incentives, efficiency, ect. ) in your writing. Do not just summarize the book, you must connect the book to our class. * Your opinion on the author’s views about economics.

Some questions to possibly answer are: How can the study of economics help society? What does the author believe should be done? What role does the author believe the government should play in the economy? What kinds of public policy does he/she advocate and why? After explaining the author’s position, give your own reasons for why you support or do not support the author. It would strengthen your paper to include personal knowledge or even content from other classes. * Grammar and spelling (can lose up to 10 points) Plagiarism will result in having to do the paper over again, with the new version being deducted 20 points. **Turn in this sheet with your paper or it will not be graded.