What Philosophy Can Do by Gary Gutting

Author:Gary Gutting
Language: eng
Format: epub
Publisher: W. W. Norton & Company
Published: 2015-04-16T04:00:00+00:00

RETHINKING CAPITALISM

After the Great Depression, the New Deal, and the remarkable surge of postwar prosperity, it seemed that the United States was well on its way to a quasi-socialism that would subject the capitalist economic system to strong governmental constraints. Since the election of Ronald Reagan in 1980, a countermovement toward unfettered (laissez-faire) capitalism had become a major political force. This political movement received support from a number of conservative intellectuals. One of the most important was Milton Friedman, perhaps the most lucid and persuasive of those arguing that capitalist enterprises best served society by maximizing their profits. Thus far we have been constructing the case for restraining profits. If Friedman can establish his point, we’ll need to rethink the account we have been developing about the relation of happiness, work, and capitalism.

We can best appreciate Friedman’s case if we start from the fact that a society requires both an economic system to exchange goods and a political system to make laws. Friedman agrees with the liberal idea that the ultimate goal of a society should be the freedom of individuals to pursue happiness as they conceive it. But, he points out, there is a fundamental tension between any political system and individual freedom, since political decisions cannot represent the will of each individual.

In an absolute monarchy, everyone must conform to the will of the monarch; in a democracy, everyone must conform to the will of the majority; and any intermediate system will involve the conformity of one group to the will of another group. But capitalism, Friedman maintains, is a system that allows individuals to decide for themselves. What we buy and sell from one another is up to each of us. To use Friedman’s example, a democratic political system that decides what color ties men should wear could result in the requirement that everyone wear the color favored by the majority. Using the capitalist system allows for competition among tie manufacturers that will likely result in a range of colors corresponding to the subjective tastes of different individuals.

It follows that, whenever possible, we should let the economy rather than the government make decisions. In particular, we should involve the government as little as possible in decisions about what people buy or sell. In many cases, people will use economic transactions to maximize their own profit. (This will typically apply to both buyers and sellers, since I buy because I prefer what you are selling to what I pay for it, and you prefer what I pay to what you are selling.) This is what capitalism is made to do: create more value for both parties in the transaction.

Friedman’s position derives from his view of what profit really is. We often think of profit as a gain for the business owner to be spent however the owner likes. But Friedman suggests instead seeing profit as simply a resource for further production, meant to continue the process of creating more and more value for society. From this standpoint, diverting profit

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