Capitalism and Freedom Research Paper

  • Length: 8 pages
  • Sources: 4
  • Subject: Economics
  • Type: Research Paper
  • Paper: #90204053

Excerpt from Research Paper :

Freedom/Capitalism: Compare&Contrast

Freedom and Capitalism

Economists look at the state of the world economy and invariably come to different conclusions; the nature of a market economy is to be unpredictable. In today's economic environment, the battle is still waging between the various forms of capitalism, and the very definition of what it means to be free is being challenged from two viewpoints. First, we have the view that economic freedom, without government restraint, is the most important aspect of a forever strong and growing economy. This view is promoted by individuals such as Milton Friedman, an economic and social theorist first made famous in the 1960s with the publishing of Capitalism and Freedom. (Friedman, 1962) The second view is that of pursuing the social good, through government means and the control of corporate interests, in order to bring a stable and equal society while still pursuing free market principles. The anti-capitalism movement, as its known, is best supported by David McNally in the 1994 work Another world is possible: Globalization and Anti-Capitalism. (McNally, 2006) These two views contradict each other by using the same machination, capitalism, and the repercussions of their disagreements span the entire world.

This essay will be organized around the definitions and principles as put forth by Milton Friedman in Capitalism and Freedom, in order to better define the social issue of capitalism. Thus, we will begin by defining freedom, as Friedman thinks of it. Then we will discuss capitalism, and its intricacies. Then the essay will discuss the opposing viewpoint of McNally, and spend time focusing on the ideas of the anti-capitalism movement. The detail division of labor is an idea that first spread by the economist Adam Smith in his 1776 work, The Wealth of Nations. (Dhamee, 2005) It is best seen now in auto assembly plants in Detroit, where different divisions of laborers created separate parts for the final completion of a single product. This allowed for different divisions of laborers to create higher quality parts, and to learn processes that became essential to the creation of high quality parts. This allowed for high profitability of the parent organization, an idea perfected by Henry Ford. The detail division of labor has since been utilized in nearly every industrial and tech sector, with computers being a prime example. Each part within a computer is manufactured by a different company, often all in separate provinces of China, and then shipped for assembly in the United States. This is in conjunction with the software development, itself another type of detail division of labor with each program created by different laborers.

The problem with detail division of labor is its marginalization of the worker, often into menial tasks, and sometimes for hours and hours without end. Because of the vast quantities of products sold via the methods of detail division of labor, from automobiles to computers, many millions of people are subjected to the simple tasks they are responsible for in the process. This also means that each part of the process is broken up to its cheapest possible task, in order to get the cheapest type of worker to work on it. This is called deskilling workers, because firms are constantly looking for ways to cut costs, they see simplifying jobs as an important part of this method. Deskilling workers has led to the problem of outsourcing, which is why China has been so important to the ideas of Milton Friedman. Outsourcing has completely changed the idea of manufacturing and globalization, and has resulted in the reshaping of the world's labor forces out of Europe and America, and into East Asia. Labor has been the weak point of Milton's Economic Freedom principles, because labor is the least skilled part of the capitalist process. This is healthy overall, Friedman argues, because it means the free market is working to its peak strength, and new firms will be created to make up for the deskilling of labor and reorganization of the world's labor force.

Freedom and Capitalism as they Relate

Friedman is a believer in individual freedom, above all else. His freedom is that of the individual to make their own choices in order to improve or detract from their own well being. This Friedman is grounded in his thinking, and sees the world as a competitive and cruel place, with a weak society trapping its citizens by taxing and restricting them. Milton Friedman sees the principle of freedom as a guarantee that has made the United States great, and other Great Powers weak. This freedom is credited for the downfall of the Soviet Union, which collapsed in 1991 by not providing an economically viable environment within its social system. The expense of maintaining the Soviet Union's military in opposition to the extremely wealthy United States meant that the U.S.S.R. could not devote its resources to innovation, and therefore stagnation crept into the once powerful industrial strength of Russia. Milton Friedman also sees economic freedom as the movement of labor, in the ultimate use of the free market. Globalization is a good thing, because it allows firms to grow heedless of governments that apply rules against these firms. Friedman does not believe that the Central Bank is a good solution to the problem of deep recessions, as he believes that monetary policy and the control of money is far more important than the use of the budget to exact change. Milton Friedman's ideas of freedom greatly influenced the Presidency of Ronald Reagan, and the three presidents who followed, President George H.W. Bush, President Bill Clinton, and President George W. Bush. The purest form of capitalism is one in which complete freedom has come to the market, and where exceptional individuals can do whatever it takes in order to maximize wealth and success for a firm. Friedman believes that this sort of society is the best for humanity, and will result in the greatest level of technological and scientific progress.

David McNally is against the ideas of freedom as espoused by Milton Friedman, and instead believes in the idea of a socialist society as the utopian idea that man should pursue. McNally tries to remove the political system out of communism in order to only apply socialist principles as they apply to the system of capitalism. This means, in practice that McNally believes in greater taxes, a more balanced income distribution system, and strong government programs to support society with. This type of society can best be seen in Sweden, which is a sort of social-capitalist hybrid that works only because of the homogeneity of Swedish people. McNally goes further than the Swedish model, however, because he sees a complete de-commodification of the market as the idea model, with the complete absence of large firms, and the greater use of internationalism as a concept for political and social exchange. McNally also believes in the promotion of diversity, not only amongst peoples, but also economic diversity, which means allowing markets to flourish in areas of the world where they can. This idea still promotes competition, but removes the extreme exploitation that results from competition, and tries to develop a more cohesive world system. This economic model will result in a healthier and happier society, at the expense of a continually strong economy.

What Friedman means by Capitalism: The Dispossessed

Friedman's capitalism has never been fully formed, as no country has completely forsaken its role in controlling the economy in some way. There is one literary example where we can see an anarchic capitalist society, however, in Ursula Le Guin's The Dispossessed. In this book, Anarres, the planet at the center of the innovative idea of anarchistic society, is the ideal form of capitalism as thought of by Friedman. (Le Guin, 2011) In Urras, the author's home planet, he was limited in his ability to conduct scientific research because that research would go against the ideas of the society of Urras. In this world, freedom does not exist, because the author was not free to do what he pleased against the will of society. Thus, the author goes to Anarres in order to conduct his research. This is a world without a true government; several different ideas are formed on Anarres about property ownership, or lack thereof, and the structure of a society without any form of hierarchy. Although the book is a piece of science fiction, it carefully analyzes the political ideologies that are not present to be analyzed on Earth. In an ideal situation, the ideas of an anarchic system are perfect for the flourishing of a capitalist system, so long as law and order were established. Friedman sees nothing wrong with the use of labor as a means to gain wealth, and therefore a structure less society allows for complete manipulation of society without any level of prejudice to be a part of the manufacturing process. Because no government is able to hold back the ideas represented by the scientific research, an endless level of advancement is available, and…

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