Milton Friedman on Greed: Where In the World Do You Find These Angels?

This classic Milton Friedman interview has now been seen by many on the Web, but since it deals with topics commonly discussed on this blog I thought I’d post it for your weekend enjoyment.

Watch the video here:

Donahue’s first question is this:

Did you ever have a moment of doubt about capitalism, and whether greed is a good idea to run on?

Friedman responds with this:

Is there some society you know that doesn’t run on greed? You think Russia doesn’t run on greed? You think China doesn’t run on greed? …The world runs on individuals pursuing their separate interests. The great achievements of civilization have not come from government bureaus.

Friedman goes on to point out a few of these achievements (e.g. Einstein’s theory of relativity, Henry Ford’s automobile), and emphasizes that the historical record is clear on which system alleviates poverty more successfully.

But Donahue ignores the historical record, and backpeddles to the issue of virtue:

But it seems to reward not virtue as much as ability to manipulate the system.

When Donahue talks about people who “manipulate the system,” I can only assume that he’s referring to those who have found some way to offer value to society and have made a profit as a result.

To take Friedman’s example, Ford was rewarded by “the system,” and some may argue that his innovations required manipulation (I wouldn’t), but can we really hold that the automobile would have been invented if Ford’s end reward was merely “virtue” as defined by a government bureaucrat? Even if it were, would investors and employees join him in assuming the risk of his endeavor on similar grounds? This isn’t to say that economic pursuits can’t also be virtuous pursuits — indeed, for many of us economic pursuits are simply a way to provide for ourselves, our families, and often times our churches and neighbors. But as Friedman notes, freeing the individual and empowering consumer choice is the most efficient way to control the effects of greed in our economic pursuits.

Which leads to the main point I want to emphasize. Although Friedman sees greed as something we need manage and contain (through incentives and free trade), Donahue clearly believes that greed is something we can eradicate by elevating “virtue” through political means (i.e. manipulation and dictum).

I’ve mentioned this dichotomy before, but Thomas Sowell provides a bit more clarity in his book, A Conflict of Visions: Ideological Origins of Political Struggles. Sowell argues that humanity is (and always has been) competing between two fundamental visions, a constrained vision (a la Friedman), and an unconstrained vision (a la Donahue).

As Sowell explains:

The constrained vision takes human nature as given, and sees social outcomes as a function of (1) the incentives presented to individuals and (2) the conditions under which they interact in response to those incentives. . . .

In the unconstrained vision, human nature itself is a variable, and in fact the central variable to be changed.

Donahue’s fundamental problem, then, is that human nature cannot be forced to change, and even if it could, whose to say that the enforcer would remain “pure” in his societal manipulations?

As Friedman concludes:

Is it really true that political self-interest is nobler somehow than economic self-interest? …I think you’re taking a lot of things for granted. Just tell me where in the world you find these angels who are going to organize society for us?

As Christians, we all want to oppose greed. Some try to fight it in their personal lives as free individuals. Others try to fight it by supporting political systems that seize wealth from the (supposedly) greedy and redistribute it to the (supposedly) righteous.

Economist Milton FriedmanThere are plenty of Biblical problems with the second approach (institutionalized envy, prejudice, property violations, etc.), but I think the most paramount is its fundamental disregard for the way God sees humanity. Humanity consists of imperfectable and free beings, who can only be changed and saved through the Cross, not by government decree.

Many Christians fail to see such implications in a redistributionist political ideology, but I hope Friedman has illuminated them for you.

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  • Remnant Culture

    Watch this video in which Milton Friedman discusses greed and capitalism. What does it mean for Christians?

  • Ryan

    I do not believe that pursing self-interest and greed are the same thing. A person can certainly pursue a career or lifestyle without being “greedy”. I would like to listen to Donahue explain the virtues of imposing economic slavery on a nation.

    I suppose that some believe that the human experience can be perfected. That with enough legislation and intelligence, we can have a perfect world. Those people scare me. =D

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  • Tamlinearthly

    I’ve always found Friedman’s examples of supposed capitalist innovation suspect: Einstein was a socialist and Ford was a Nazi sympathizer who bought slave labor and beat his workers to death. So his go-to’s for this subject are one non-capitalist and one shining example of everything terrifying and destructive about capitalism?