Classes and Crashes Freedom of Work

Masters are always and everywhere in a sort of tacit, but constant and uniform combination, not to raise the wages of labour ... Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen ... It is not, however, difficult to foresee which of the two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the others into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes, or at least does not prohibit their combinations, while it prohibits those of the workmen.

Adam Smith

Experience demonstrates that there may be a slavery of wages only a little less galling and crushing in its effects than chattel slavery, and that this slavery of wages must go down with the other ... those who would reproach us should remember that it is hard for labor, however fortunately and favorably surrounded, to cope with the tremendous power of capital in any contest for higher wages or improved condition.

Frederick Douglass

In the twenty-first century a rising wave of men and women globally are seeing alarming failures of our social system, and frustration is growing because many people don't feel free to fix things. Americans told the Gallup opinion polling agency in 2014 that they are less and less happy with their "freedom to choose what you do with your life," with reported satisfaction dropping to 79 percent. A BBC World Service poll also found people's belief that media are free has fallen around the world, with confidence in the UK, US and Germany falling below 50 percent. Less than half of respondents felt free to safely express their opinions online, not only in Russia and China, but also Australia and Mexico. These tumbling numbers are leading people around the world to search for answers about their weakened freedoms.

One heavily promoted road to freedom follows figures like Milton Friedman and Friedrich Hayek, whose ideas are reliably featured on more conservative media like US talk radio and New Corporation properties from the UK to Brazil. Friedman's central claim was that capitalism, or a "free market" system, leaves consumers "free to choose" among different goods and jobs, while Hayek is most associated with a complementary opposition to government policies like income taxes or broader social "planning," which many would now call "big government." Hayek held that these policies were in fact a "Road to Serfdom," because they meant more government power in the economy, threatening to reduce us to the condition of unfree "serfs" — the helpless economic semi-slaves of the feudal economic system that preceded capitalism.

But while this view has continued to be promoted on the most dominant commercial media, there are some problems. The issue reviewed in this chapter is the problem of power — whether authority is mainly held by government, as Friedman and Hayek claim, or whether large amounts of money could also mean significant social power. An honest look at these subjects can help us understand a puzzling statement by billionaire Nick Hanauer, a hugely successful investor and a cofounder of Amazon.com. In an article written for "My Fellow Zillionaires," Hanauer disagrees with these prominent economists when they dismiss income inequality — the gap between the incomes at the top of society and the average household. Hanauer credits his business success to his strong foresight, and writes that today he sees "pitchforks" because "inequality is at historically high levels and getting worse every day," warning that the US and the world are turning into "a feudal society."

So which is the real road back to the Dark Ages and a loss of freedom? Is it growth of government functions in society, the regulations and taxation that Hayek claimed would lead to "serfdom?" Or is it the growth of towering fortunes and corporate empires that is reducing us to "a feudal society," as the billionaire Hanauer suggests? Let's cross-examine the case for capitalism and see if the books have been cooked.

Atlas Hugged

One of the greatest advocates for the libertarian view of capitalism was the economist Milton Friedman, Nobel Prize winner and maybe the most respected conservative economist in the US. Friedman was an informal economic adviser to conservative US president Ronald Reagan, who said in an interview with the libertarian magazine Reason that "I believe the very heart and soul of conservatism is libertarianism." Reagan himself wrote a warm blurb for Friedman's book Free to Choose and recorded an endorsement video for Friedman's TV series based on the book, calling the show "something of rare importance." Friedman's policy views had an enormous impact across political lines and media platforms.

And despite his death in 2006, Friedman has remained prominent in today's conservative media. The right-wing radio icon Rush Limbaugh said on his talk program that "Milton Friedman should be the Bible for young people, or anybody, trying to understand capitalism and free markets." When Friedman died, William F. Buckley, considered the dean of conservative intellectuals until his own death in 2008, wrote an obituary of Friedman in the most respected right-wing magazine in the US, National Review. He said:

The period since 1980 has been the Age of Friedman economically ... The Age of Friedman began approximately in 1979–80 when his disciples, Margaret Thatcher and Ronald Reagan, took power ... And these two leaders embarked on economic policies, broadly inspired by his theories, that have given their countries a quarter century of fast economic growth interrupted only by two short and shallow recessions in the U.S.

Considering the $12 trillion financial cataclysm and semi-depression that followed later in 2008, this warm praise is the tiniest bit ironic now.

So what is this Age of Friedman? Friedman himself proudly summarized in The Wall Street Journal the Reagan administration policies he had helped create, including "slashing taxes" and "attacking government regulations," a trend called "deregulation" which has continued to this day. Based on the Friedmans' ideas becoming a major global policy inspiration, the Review said of Friedman and his wife and frequent coauthor, Rose, "These two great champions of freedom should recognize that they have won. The course of history is firmly on their side." So today's main economic policy trends, strongly in the direction of tax reduction and economic deregulation, are parts of this Age of Friedman.

Friedman's basic view was that freedom is promoted by markets, which are social arrangements for the buying and selling of goods and services. To visualize a market, you can picture yourself at a mall, or a farmer's market, or shopping online. This "market freedom" had a huge importance, as Friedman wrote in his influential book Capitalism and...