Friedman, Markets and Planning: A Comment

After reading Milton and Rose Friedman’s latest book, The Tyranny of the Status Quo, the New York Times reviewer remarked: ‘for Milton Friedman the world is a simple place; if only a robot controlled the money supply … the economy would prosper’, so long as the government did not interfere. It is this belief in laissez-faire which Friedman takes to an extreme. While he is prepared to recognize that ‘the market is simply incapable of doing some things’, that there are what he calls ‘neighbourhood effects’ or ‘externalities’, he at once warns us that ‘government attempts to deal with such externalities typically turned out to do more harm than good’. ‘Every system’, writes Friedman, ‘is something of a mixed system’, of commands and voluntary cooperation, ‘the problem is one of proportion’, but he firmly believes in ‘keeping commands to a minimum’. As can be seen from the preceding quotation, that minimum is really minimal. National defence is the one exception that he quotes. He is on public record as opposing even the Food and Drug administration. The market will take care of (almost) everything. If one were to accept his assumptions, then indeed deregulation should be the name of the game, and state planning will appear an unnecessary and harmful interference with natural economic laws, whose untrammelled working leads almost by definition to the best of all possible worlds.