Freedom and Capitalism: Friedman vs. McNally Compared

Introduction

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, there is 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 about a stable and equal society while still pursuing free market principles. The anti-capitalism movement, as it is known, is best represented by David McNally in the 1994 work Another World Is Possible: Globalization and Anti-Capitalism (McNally, 2006). These two views contradict each other while using the same mechanism — capitalism — and the repercussions of their disagreements span the entire world.

This essay is organized around the definitions and principles put forth by Milton Friedman in Capitalism and Freedom, in order to better define the social issue of capitalism. It begins by defining freedom as Friedman conceives of it, then discusses capitalism and its intricacies, before turning to the opposing viewpoint of McNally and the ideas of the anti-capitalism movement.

The detail division of labor is an idea first advanced by the economist Adam Smith in his 1776 work The Wealth of Nations (Dhamee, 2005). It is perhaps best observed in automobile assembly plants in Detroit, where different divisions of laborers create separate parts that are combined into a single finished product. This arrangement allowed different groups of workers to produce higher-quality components and to master processes essential to that quality. In turn, it enabled high profitability for the parent organization — an idea later perfected by Henry Ford. The detail division of labor has since been adopted in nearly every industrial and technology sector, with computers being a prime example. Each component within a computer is manufactured by a different company, often in separate provinces of China, and then shipped for final assembly elsewhere. Software development represents yet another form of detail division of labor, with each program created by different groups of workers.

The problem with the detail division of labor is its marginalization of workers, often confining them to menial tasks for long hours. Because vast quantities of products are sold via this method — from automobiles to computers — many millions of people are subjected to the narrow, repetitive tasks assigned to them within the process. This also means that each stage of production is reduced to its cheapest possible task, so that the least costly type of worker can be employed. This is called deskilling: firms constantly seek ways to cut costs, and simplifying jobs is a central part of that strategy. Deskilling has in turn contributed to outsourcing, which is why manufacturing in China has loomed so large in discussions of Milton Friedman's ideas. Outsourcing has fundamentally transformed manufacturing and globalization, reshaping the world's labor forces away from Europe and North America and toward East Asia. Labor has been the weak point of Friedman's economic freedom principles, because labor is the least-skilled component of the capitalist process. This is healthy overall, Friedman argues, because it means the free market is working at peak efficiency, and new firms will emerge to compensate for the deskilling of labor and the reorganization of the global workforce.

Works Cited

Dhamee, Y. (2005, April 15). Adam Smith and the division of labor. Retrieved from http://www.victorianweb.org/economics/division.html

Friedman, M. (1962). Capitalism and freedom. Chicago: University of Chicago Press.

Le Guin, U. (2011). The dispossessed (5th ed.). New York: Harper Voyager.

McNally, D. (2006). Another world is possible (Revised expanded ed.). Winnipeg: Arbeiter Ring.