Capitalism and Freedom

In Capitalism and Freedom, Milton Friedman warned that heavy government involvement in the economy would reduce our freedom. Friedrich Hayek made a similar argument in The Road to Serfdom.

I have always found this argument to be plausible, but at times I’ve wondered if it is truly persuasive.  Throughout my life, European governments have been fairly large as a share of GDP, and yet Europe still seems relatively free, at least compared to some of the more authoritarian parts of the world.  Recent events, however, have made me more receptive to the Friedman/Hayek position, particularly the regulation of social media platforms.  Here’s David Rose:

If the government directly punished free speech, it would arouse an immediate reaction among voters. Instead, the government works quietly behind the scenes like a mob boss, who effectively says “Nice social media platform you got there. It’d be a shame if something happened to it.”

All the government has to do to debase our right to free speech is to make it more costly than otherwise. The more we have allowed government to enmesh itself into our lives, the greater the risk to us of speaking against the government through actions and inactions that we will likely have no way to prove were motivated by an effort to shape or suppress our speech. . . .

The root of the problem isn’t any given court’s ability to deal wisely with any given misdeed, it is the ability of the government to impose costs without accountability. 

People often cite China as an exception to the capitalism promotes freedom hypothesis.  But is it?  Over the past 40 years:

1.  China has regressed in terms of free speech (and speech was far from free back in 1984.)

2.  Chinese people are freer to have more than one child.

3.  Chinese people are freer to live where they choose.  (“Hukou” restrictions remain, but are getting weaker every year.)

4.  Chinese people have more freedom to date whomever they choose.  (Gays are no longer subject to arrest.)

5.  There is far more economic freedom to start businesses, travel, and enter different professions. 

I am certainly not arguing that China is a good example of capitalism promoting freedom.  It is not.  But notice that even in the worst case for Friedman’s hypothesis, the one cited by almost every opponent of neoliberalism, the effect of capitalism on freedom is ambiguous—gains in some areas and losses in others.