The free market is not only a more efficient decision maker than even the wisest central planning body, but even more important, the free market keeps economic power widely dispersed.
Interpretation
The free market is better at making decisions and distributes economic power more fairly than central planning.
Milton Friedman emphasizes the superiority of the free market over central planning in decision-making. He argues that not only does the market provide more efficient outcomes, but it also ensures that economic power is not concentrated in the hands of a few, thus promoting fairness and widespread prosperity in society.
In practice
Discussing economic policies at a university lecture.
The economic miracle that has been the United States was not produced by socialized enterprises, by government-unon-industry cartels or by centralized economic planning. It was produced by private enterprises in a profit-and-loss system. And losses were at least as important in weeding out failures, as profits in fostering successes. Let government succor failures, and we shall be headed for stagnation and decline.
Universities exist to transmit knowledge and understanding of ideas and values to students not to provide entertainment for spectators or employment for athletes.
There is no place for government to prohibit consumers from buying products the effect of which will be to harm themselves.
There is one and only one social responsibility of business - to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.
The great danger to the consumer is the monopoly -whether private or governmental. His most effective protection is free competition at home and free trade throughout the world. The consumer is protected from being exploited by one seller by the existence of another seller from whom he can buy and who is eager to sell to him. Alternative sources of supply protect the consumer far more effectively than all the Ralph Naders of the world.
The strongest argument for free enterprise is that it prevents anybody from having too much power. Whether that person is a government official, a trade union official, or a business executive. If forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, are willing to buy, or else they have to go into a different business.
It has often been found that profuse expenditures, heavy taxation, absurd commercial restrictions, corrupt tribunals, disastrous wars, seditions, persecutions, conflagrations, inundation, have not been able to destroy capital so fast as the exertions of private citizens have been able to create it.
What many economists fail to understand is that poor people are no less concerned about improving their lot and that of their children than rich people are.
Global capital markets pose the same kinds of problems that jet planes do. They are faster, more comfortable, and they get you where you are going better. But the crashes are much more spectacular.
China adopted a capitalist system in the 1980s, and they went from a 60% poverty rate to 10%.
There is no easy fix or youth unemployment. Partnership between the public and private sectors can make a big difference.
It is my guiding confession that I believe the greatest error in economics is in seeing the economy as a stable, immutable structure.
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