Jennifer Burns, Milton Friedman: The Last Conservative.

A biography of the economist, released in 2023, which calls itself “the first full-length biography of Friedman based upon archival research.”1 In terms of his economic ideas, it focuses on two things: Chicago Price Theory, which is “the analysis of rational human choice under conditions of scarcity” (i.e. “microeconomics”), and Monetarism, which is characterized by an insistent focus on money and, more specifically, on the overall quantity of money in the economy.2

In 1951, Friedman wrote an article called “Neo-Liberalism and its Prospects” for a Norwegian magazine. Burns’ summary is this:

“We have a new faith to [offer],” Friedman wrote, answering Hayek’s call for ideas that would stir the imagination. Echoing The Road to Serfdom, Friedman distinguished this new faith from laissez-faire, which he called “a negative philosophy.” Where an earlier generation of liberals believed “the state could do only harm,” new liberals “must explicitly recognize that there are important positive functions that must be performed by the state.” What were these positive functions? Friedman was more specific than Hayek. He continued to believe preventing monopoly was important, lauding the Sherman Antitrust Act. There was a role for the state in providing monetary stability, he noted, an implicit argument against goldbugs like Hazlitt. And he assigned government a responsibility to relieve “acute misery and distress,” noting, “Our world has become too complicated and intertwined, and we have become too sensitive, to leave this function entirely to private charity or local responsibility.” Although Friedman did not mention the Great Depression, he was pushing back against the ideas of men like the former president Herbert Hoover, who believed relief was the role of states and municipalities. Equally he was countering the Hayek of the early 1930s, who would leave the Depression to run its course. These were the demarcation lines between liberalism old and new.3

Friedman’s article is interesting to read from the current political perspective. Now, the term “neoliberal” most often comes up in conversations where the left and the consensus liberals are trying to determine who stands where. In contrast, Friedman’s purpose in 1951 was to define a political project that gave a positive role for the state to an otherwise libertarian system, clarifying the various subgroups among a broad “right”. And he hoped to clear up some of the perennial confusion among Republicans about the details of free enterprise:

the Republicans profess to be in favour of free enterprise and strongly opposed to a drift toward socialism. Yet their published program favours protective tariffs, agricultural subsidies and support of the prices of agricultural products as well as a number of other measures that can fairly be termed collectivist in their implications.4

The environment in which he’s arguing is defined by two propositions. The first is that the details of the two American political parties are probably less salient than the “underlying trend of opinion”. The second is that this trend, in his mind, was on the verge of trending towards enterprise, individual freedom, and limited government.

While the trend of legislation is still strongly toward collectivism, I have the feeling that this is no longer true of the underlying trend of opinion. […] The stage is set for the growth of a new current of opinion to replace the old, to provide the philosophy that will guide the legislators of the next generation even though it can hardly affect those of this one.5

The new political system (or“faith” as he calls it) will need to avoid both the failures of the collectivist systems, and, the “basic error in 19th century individualist philosophy”:

This philosophy assigned almost no role to the state other than the maintenance of order and the enforcement of contracts. It was a negative philosophy. The state could do only harm. Laissez-faire must be the rule. In taking this position, it underestimated the danger that private individuals could through agreement and combination usurp power and effectively limit the freedom of other individuals; it failed to see that there were some functions the price system could not perform and that unless these other functions were somehow provided for, the price system could not discharge effectively the tasks for which it is admirably fitted.6

The new faith is “neo-liberalism”, with the hyphen. What is new in neoliberalism is the centrality of competition as the guiding economic principle (rather than laissez-faire) and the explicit recognition “that there are positive functions that must be performed by the state”. Friedman sees the role of the state as “maintaining law and order”, doing “public works”, “[relieving] acute misery and distress”, and, in the interest of establishing an environment conducive to market competition, preventing monopoly and providing monetary stability.7

Burns’ book begins with Friedman’s childhood and early career.
Friedman’s first vote for president was for Roosevelt in 1936, half “a partial endorsement of the early New Deal” and half in solidarity with Roosevelt’s friendliness towards Jews which was particularly striking in the political climate of the time.8 He worked in the Division of Tax Research in the Treasury Department during the Roosevelt administration, where he did his part to raise the funds needed to wage a war against Hitler. “Over the course of World War II, total federal revenue would expand from $6.5 billion to $45 billion by 1944”.9 Friedman was picked to go to congress and to make the case for new taxes. He worked to greatly expand the income tax, which he favored over sales taxes for generating more revenue: “Friedman critiqued the sales tax for ‘bearing most heavily on the persons who can least afford to pay.’ The income tax, he told Congress, was better because it ‘permits the cost of the war to be distributed explicitly in a socially desirable manner.’”10

When Friedman voted for Roosevelt in 1936, the Federal government spent an equivalent of about 9 percent of GDP. By the early 80’s, it was spending more than 20 percent.11 At the start of his career, he pushed those around him, often conservatives, to take seriously the questions of poverty and social inequality, emphasizing methods of easing poverty that did not hamper the free competition of the market or otherwise distort the price mechanism. At the first meeting of the Mont Perelin society in 1947, for example, “Friedman insisted poverty was a critical issue for the group to tackle. Partially this was because other proposals to raise low incomes—like labor unions—had negative consequences for the competitive order. But he also insisted that poverty was a basic social reality liberals needed to address.”12

By the 70’s, Friedman had arrived at the position most associated with him:

Early in his career Friedman and his allies, like Aaron Director, had taken pains to clarify they were not fundamentally anti-government. But after watching both the Democrat Lyndon Johnson and the Republican Richard Nixon expand the scope and scale of federal action, Friedman was beginning to sound more like the anti-government right he had once rejected. “Our basic long-term need is to stop the explosive growth in government spending,” he wrote in 1975. “I am persuaded that the only effective way to do this is by cutting taxes—at any time for any excuse in any way.” The fundamental dynamic of government was growth, he now believed.13

The most effective engine for this transformation, he thought, would be a non-reactionary, “positive” conservatism:

In the 1940s, fighting “reaction” meant joining Mont Pelerin Society efforts to craft a “new liberalism.” In the 1950s, it meant distinguishing the Republican Party from Joseph McCarthy. In the 1960s, Birchers [i.e. members of the John Birch Society] were the problem.14

On the last point, he found common cause with William F. Buckley, Jr., who was also trying to drive the Birchers out.15 And, while they ultimately failed, Friedman’s way of thinking has had a long-term impact on American politics writ large:16

The coordinated fusillade [of present-day anti-Friedman writers] betrays an anxiety of influence, implicitly acknowledging how fundamental Friedman’s style of economic analysis and his skepticism about government regulation have become to liberals as well as conservatives. One sign of a political order, notes the historian Gary Gerstle, “is the ability of the ideologically dominant party to bend the opposition party to its will.” By Gerstle’s reckoning, Friedman-inspired neoliberalism became truly powerful only when it captured the Democratic Party in the 1990s. Nor is this influence a vestige of the past. There are echoes of Friedman in supply-side liberalism, a new intellectual movement that stresses how regulation has hamstrung not private economic activity but the public sector, including the capacity to build needed housing and infrastructure.17

The book covers all the other stuff you’d expect: monetarism, Civil Rights, the chapter in Chile, his take on the consumption function.

In their twilight years, Milton and his wife Rose (who is given some attention in the book along with Milton’s long-time research partner Anna Schwartz) settled in at Sea Ranch, the experimental housing community on the Northern Californian coast which arrives at its beautiful, understated uniformity by way of a 150 pages worth of HOA rules, regulations and restrictions.18

Tyler Cowen, The Complacent Class: The Self-Defeating Quest for the American Dream.

This is a weird book. The general premise—that contemporary society, especially among the relatively wealthy, is constitutionally more conservative than previous generations—seems plausible enough. The argument for his normative gloss—that this complacency is “dangerous” and has “sapped us of the pioneer spirit”—is in some cases so poorly articulated that it’s difficult not to conclude that Cowen is writing esoterically, especially since he is so inclined to find Straussian readings in others.1920

Arthur Melzer, in his excellent Philosophy Between the Lines, gives the following hints that one may be confronting a text with esoteric meaning:

[…] Or [the author] can place stumbling blocks in the reader’s path that compel him to stop and wonder what the writer is really up to, such as unexplained digressions, surprising omissions, unnecessary or slightly altered repetitions, and implausible blunders, such as errors of fact, patent contradictions, and misquotations.21

But, for the most part, to give a Straussian reading of a text is as interesting and as edifying as telling someone else about a dream you had, so I won’t do that here.

One odd digression regards the mind-numbing substances. Cowen, who doesn’t drink alcohol, notes that Americans just don’t do crack like they used to:22

American citizens chose the one [drug]—marijuana—that makes users spacey, calm, and sleepy. LSD attracted great interest in the 1960s for its ability—for better or worse—to help users see and experience an entirely different world, often with different physical laws. That is now out of fashion. Crack cocaine, a major drug of the 1980s, can rile people up, but for a few decades now it’s been losing ground to heroin and other opioids, which relieve pain and induce a dreamlike stupor and passivity.23

Literature, too, has lost its rough edges:

Herman Melville’s Moby-Dick was an epic novel of adventure, global travel, and a risky quest to confront God by hunting a vicious white whale. Jack Kerouac entitled his 1957 manifesto On the Road to reflect an ethos of travel, discovery, and rootlessness, a vision also reflected in the 1969 road movie Easy Rider. But starting in the late 1980s, things changed, including in American literature. Today’s top novels are more frequently about well-educated, dysfunctional people who live in Brooklyn or the suburbs and who are not entirely happy with their rather well-heeled lives24

(Kerouac, at the end of his short life, had somewhat changed his tune. In 1968, he was extremely drunk on Firing Line and burped, “I believe in order, tenderness, and piety.”25)

On bombing and rioting:

The defining feature of these groups of people is, most of all, the lack of a sense of urgency. Our current decade can be understood by comparing it to the 1960s and early 1970s. The Watts riots of 1965 put 4,000 people in jail and led to thirty-four killed and hundreds injured; during an eighteen-month period in 1971–1972, there were more than 2,500 domestic bombings reported, averaging out to more than five a day. I’m not advocating these tactics, of course. My point is that, today, there is an entirely different mentality, a far more complacent one, and one that finds it hard to grasp that change might proceed on such a basis. Yet in the 1960s and 1970s, not only did riots and bombings happen, but large numbers of influential intellectuals endorsed them, defended them, and maybe led them to some degree. Back then the privileged class was not always so complacent because a large number of those individuals were far more willing to disrupt the social order.26

Cowen rejects rioting and bombings out of polite deference while avoiding much talk about whether they achieved their goals. Unless one’s goal is disruption per se, I’m not sure how much there is to recommend the disheveled and confused bombings that happened in the 60’s and 70’s.27

A few months ago, I read Virginia Postrel’s book, The Future and Its Enemies.28 In it, she separates “dynamists” from “stasists”, separating those who are interested in a changing and dynamic world and those who, either from a reactionary conservative impulse or from a technocratic inclination towards social control, would prefer that change either didn’t happen at all or did so in an extremely controlled manner. Postrel’s book is an argument for the benefits of dynamism.

In a superficial way, the arguments are similar: each author warns of danger in complacency and stasis. What stands on the other side of the dichotomy is subtly different, and makes, in my mind, the difference between a reasonable thesis and an unreasonable one. Where Cowen argues for (at his best) “innovation” and (at his worst) change-for-its-own-sake, Postrel’s focus is on the “unbounded process of exploration and discovery”.29 Where Postrel’s book aims itself at the attitude people have towards others, either laissez-faire or not, Cowen’s book is simply impatient that people have chosen safer or more reliable ways of living for themselves. I wonder why Cowen cannot always find minimally appealing ways to describe the objects of his praise.

Lots of the book is dedicated to the way that Cowen thinks these changes towards stasis are affecting, or are reflected in, economic measurements like GDP or TFP (total factor productivity). In the end, he says that he is a “happiness optimist but a revenue pessimist”, which is to say that more static, comfortable lives may make us happier in ways that will not improve revenue, GDP, or sales.30 Take the example of Spotify: “Revenue is down for the music companies and for some artists, but the listening experience has never been better.” Consumer surplus, of course, is not counted in GDP.31

The Spotify model doesn’t apply to those products where American consumers spend most of their money: rent, healthcare, education, transportation, food.32 Where are our hovercars? 80 percent of the value of the S&P 500 is in intangible assets; it used to be 20 percent.33

The Complacent Class was published in 2017, and in the intervening time, the question of tangible American accomplishment has become a popular topic.34 Two years after the book came out, Cowen wrote an article for the Atlantic with Patrick Collison: “We Need a New Science of Progress”.35 The book can be read as a prelude to the “Abundance”, or “Progress Studies”, or “YIMBY” version of our current political moment, all of which fundamentally argue that America will need to become bolder with everything that is not software.36

We may not have hovercars, but we do have self-driving cars. Aren’t these a clear sign that society is starting to stretch out and modify the tangible world with a bit more vigor? Self-driving cars require much more than the software and machine learning models that power them. They require better sensors, new cultural attitudes, and new legal attitudes.37 They are in many ways the biggest leap towards a futuristic present in decades, but Cowen finds reason to complain.

America’s future is likely to bring a much greater use of driverless cars, which will be a major gain in terms of safety and convenience. But just think of the reorientation in terms of cultural and emotional significance: It will be the cars controlling us rather than vice versa. The driver of the American car used to drive an entire economy, but now the driver will be passive, and what will the culture become?38

Only through a very distorted lens is the driver with his hands on the wheel, causing tens of thousands of avoidable deaths a year, considered more ambitious than those that did decades of technical, mechanical, and legal work to get functional driverless cars on the road.39 What’s going on here?

John LeCarré, Call for the Dead.

The first of the George Smiley novels. A very short one that nonetheless requires a three-page long section in the main text with the header “What We Know” to explain what has happened. A first look at Smiley:

It was long after midnight when Smiley’s telephone rang. He got up from the armchair in front of the gas fire and plodded upstairs to his bedroom, his right hand gripping the banisters tightly as he went. It was Peter, no doubt, or the police, and he would have to make a statement. Or even the Press. […] He hated the Press as he hated advertising and television, he hated mass-media, the relentless persuasion of the twentieth century. Everything he admired or loved had been the product of intense individualism. That was why he hated Dieter now, hated what he stood for more strongly than ever before: it was the fabulous impertinence of renouncing the individual in favour of the mass. When had mass philosophies ever brought benefit or wisdom? Dieter cared nothing for human life: dreamed only of armies of faceless men bound by their lowest common denominators; he wanted to shape the world as if it were a tree, cutting off what did not fit the regular image. 40

John LeCarré, A Murder of Quality.

Dear Miss Fellowship,

I don’t know if you are a real person but it doesn’t matter, because you always give such good, kind answers. It was me who wrote last June about the pastry mix. I am not mad and I know my husband is trying to kill me.41

The second of the series; not a spy book at all. Instead, Smiley heads to a small university town to solve a standard small-town murder at a British public school. Somewhat oddly—LeCarré calls it a “flawed thriller” in his new introduction for it42—the local police don’t seem to mind the help.

LeCarré hated his time at public school: “Sherborne in my day had been rustic, colonialist, chauvinist, militarist, religious, patriotic and repressive. Boys beat other boys, housemasters beat boys, and even the headmaster turned his hand to beating boys when the crime was held to be sufficiently heinous or school discipline was thought to be slipping. I don’t know whether masters beat masters but, in any case, I loathed them, and I loathed their grotesque allegiances most of all. To this day, I can find no forgiveness for their terrible abuse of the charges entrusted to them.”43

“Miss Fellowship”, who received the letter from the woman who thought herself to be in imminent danger, is Alisa Brimley, a former member of the intelligence service and friend of Smiley. LeCarré provides an interesting lesson in epistemology while mocking (I think) the British yearning for the simplicity stark hierarchies furnish.

In that moment of shock and astonishment one phrase forced itself upon [Brimley’s] mind: “The value of intelligence depends on its breeding.” That was John Landsbury’s favourite dictum. Until you know the pedigree of the information you cannot evaluate a report. Yes, that was what he used to say: “We are not democratic. We close the door on intelligence without parentage.” And she used to reply: “Yes, John, but even the best families had to begin somewhere.”44

John LeCarré, The Spy Who Came In From The Cold.

The third of the Smiley novels and the first whose character and sense matches those of the rest of the series, which get increasingly long and more involved. Double agents, the Germans, tribunals and all that.

John LeCarré, The Looking Glass War.

A spy book, full of blubbering, inept spies, which was written to be a comic, subversive counterpoint to the previous book, The Spy Who Came in from the Cold. While LeCarré had meant for The Spy to show the realities of the spy apparatus, he felt in retrospect it had failed to do so honestly:

I was eager to find a way of illustrating the muddle and futility that were so much closer to life. Indeed, I felt I had to: for while The Spy had been heralded as the book that ripped the mask of the spy business, my private view was that it had glamorised the spy business to Kingdom Come. The brilliance of my British Intelligence mastermind, Control, was like a fan letter to the British secret establishment[…]

So this time, I thought, I’ll tell it the hard way. This time, cost what it will, I’ll describe a Secret Service that is really not very good at all; that is eking out its wartime glory; that is feeding itself on Little England fantasies; is isolated, directionless, overprotected and destined ultimately to destroy itself.45

But the cynical application of what works is given a believable, romantic philosophical gloss which is hard to totally reject. LeCarré, who likes the Germans at least when it comes to literature, quotes Goethe disagreeably quoting the Gospel of John:

‘I mistrust reasons. I mistrust words like loyalty. And above all,’ Haldane declared, ‘I mistrust motive. We’re running an agent; the arithmetic is over. You read German, didn’t you? In the beginning was the deed.’46

This is a theme for him. The same quote—“In the beginning was the deed.”—appears again, two books later, in The Honourable Schoolboy:

Relax, he thought. You’re thinking too much. Don’t think: do. In the beginning was the deed. Who had said that to him once? Old George, for God’s sake, quoting Goethe. Coming from him, of all people!47