Book summary “Capitalism and freedom”: summary

Introduction

You often watch governments expand their reach into everyday economic life while promising greater equality and security. You might wonder if these well-functioning regulations ultimately destroy the very liberties you value most. The state intervenes in schooling, currency, labor markets, and trade, leaving you with fewer choices.

Milton Friedman argues that competitive capitalism is an engine of economic prosperity and an indispensable condition for political freedom. You will discover that economic arrangements play a dual role in society. A free market creates a system of checks and balances that protects your personal liberty from governmental overreach.

The book examines the fundamental principles of a free society and applies them to persistent modern problems. You will explore the proper scope of government, the causes of economic instability, and the mechanics of international trade. Subsequent chapters analyze the failures of state-run education, the economics of discrimination, and the dangers of monopoly.

This text answers several vital questions about the organization of a free society.

• How can economic arrangements preserve your political freedom?
• What specific functions should a limited government retain?
• Why did government mismanagement cause the Great Depression?
• How can competitive markets eliminate discrimination and poverty without state coercion?

1. Economic Freedom and Political Freedom

You can coordinate the economic activities of millions of people in only two fundamental ways. The first method relies on central direction involving coercion, which is the technique of the army and the totalitarian state. The second method relies on voluntary cooperation through the marketplace, where both parties benefit.

Economic freedom is an indispensable means to achieving and preserving political freedom by preventing the dangerous concentration of power.

While intellectuals often dismiss economic freedom as merely material, ordinary citizens experience economic restrictions as direct violations of personal liberty. Competitive capitalism prevents the dangerous fusion of economic and political power by separating them.

After World War II, a British citizen was forbidden from spending a vacation in the United States due to exchange controls. This restriction represented an economic limitation no different in essence from a political ban.

Protection of Dissent

Inequality of wealth plays an essential role in preserving political freedom by providing independent patrons who can fund radical ideas. In a socialist society where all jobs are controlled by the state, proponents of radical change cannot raise funds or secure printing presses.

In a capitalist society, multiple independent foci of wealth enable dissidents to secure funding without persuading the majority first.

Figures such as Frederick Vanderbilt Field, Anita McCormick Blaine, Corliss Lamont, and Friedrich Engels acted as wealthy patrons supporting non-conformist movements.

Market Protection of Minorities

The impersonal market separates economic activities from personal characteristics, thereby protecting minorities from discrimination. Because market transactions are driven by commercial incentives rather than ideology, minority groups are shielded from prejudices.

During McCarthyism, individuals accused of subversion relied on the private market to earn a living when government employment was barred. A disproportionate number went into competitive sectors like small business and farming, where consumers do not know the political views of the producer.

Commercial incentives in a free market undermine collusive boycotts by making discrimination costly. When the film industry blacklisted writers suspected of communism, profit-seeking producers broke the boycott because acquiring the best script was vital for business success.

Dalton Trumbo, one of the Hollywood Ten blacklisted in 1947, won an Oscar under the pseudonym Robert Rich for The Brave One. The script was bought by producer Frank King, who stated they had an obligation to stockholders to buy the best script. A 1959 Time story reported that 15 percent of current Hollywood films were written by blacklist members.

2. The Role of Government in a Free Society

Absolute freedom is impossible because human freedoms conflict. Rules must define property boundaries and prevent physical coercion.

A free society requires government to act as an umpire to maintain law and order, enforce contracts, define property rights, and provide a monetary framework.

A Supreme Court Justice illustrated conflicting freedoms by noting that the freedom to move one's fist is limited by the proximity of another's chin.

Market vs Political Decision Making

The market functions as a system of proportional representation that permits diversity without conformity, unlike political voting which forces majority rule. Political channels require binary yes-or-no decisions and enforce substantial conformity, straining social cohesion. The market allows you to satisfy unique preferences without forcing the minority to submit to the majority.

Functions of Government

Government intervention is also justified on technical monopoly and neighborhood effect grounds. While government can occasionally help accomplish jointly what is harder to do severally, any expansion beyond its core functions concentrates dangerous political power.

Monopolies and Regulation

When technical conditions create a natural monopoly, society must choose among three imperfect alternatives: private monopoly, public monopoly, or public regulation. All three options have severe flaws. While public regulation is often invoked, regulatory bodies frequently end up captured to protect established enterprises from new market competition.

The Interstate Commerce Commission originally protected the public from railroad monopolies, but later became an agency protecting railroads and truck companies from new market competition.

Neighborhood Effects

Neighborhood effects occur when individual actions impose uncompensated costs or benefits on third parties, sometimes justifying government action though intervention carries risks. While city parks are justified by neighborhood effects because charging individual users is unfeasible, national parks have few entrances where admission fees can easily be collected and therefore do not require government operation.

Yellowstone National Park and the Grand Canyon have restricted entrances where toll gates are already operated, proving private enterprises could readily manage them.

3. Control of Money and the Great Depression

Severe economic contractions and the Great Depression were primarily caused by government mismanagement of monetary policy rather than any inherent instability in the private enterprise economy.

Arguments blaming the free market for boom and bust cycles are misleading. Government agencies tasked with monetary responsibility converted moderate contractions into major catastrophes through inept actions.

Monetary Policy and the Great Depression

Historical comparisons show that the economic period following the establishment of the Federal Reserve was significantly more unstable than the period preceding it. Comparing the period from just after the Civil War to 1914 with the period from 1914 onward reveals greater instability in money stock, prices, and output after the Federal Reserve was created, including the severe contractions of 1920-21, 1929-33, and 1937-38.

Between 1879 and 1913, the United States was on a gold standard close to automatic. Gold accounted for 10 percent to 20 percent of the money stock, while 80 percent to 90 percent consisted of silver, fiduciary currency, and bank deposits not matched by gold reserves.

Discretionary Monetary Authority

Monetary policy must steer between the impractical ideal of an automatic gold standard and the dangerous assignment of wide discretionary powers to a central bank. Neither a purely automatic gold standard nor an independent central bank with wide discretionary powers has proved to be a satisfactory solution for maintaining a stable economic environment.

The Great Depression and Central Bank Errors

The Federal Reserve failed to act as a lender of last resort during the banking panics of the Great Depression, allowing the money stock to collapse. When a wave of bank failures triggered liquidity crises, the Federal Reserve stood idly by or raised discount rates instead of providing liquidity, causing the money supply to plummet by a third.

The Reserve System allowed a decline in the money stock of 3 percent from August 1929 to October 1930. The failure of the Bank of the United States on December 11, 1930, with over $200 million in deposits, served as a critical catalyst for widespread liquidity panics because its name led many to regard it as an official bank.

Total commercial bank deposits dropped by 15 percent in the six months from August 1931 through January 1932. From July 1929 to March 1933, the total fall in the United States money stock reached one-third, culminating in the Banking Holiday of 1933.

Proposed Monetary Rule

To prevent irresponsible political tinkering, monetary policy should be governed by fixed legislative rules rather than human whim. Just as the First Amendment protects rights against majority whims, legislating a general rule for monetary policy prevents decision-makers from making cumulative errors when handling each case separately.

The optimal monetary rule under current knowledge is a legislative directive instructing the monetary authority to achieve a steady, specified percentage growth rate in the stock of money. Instead of targeting a price level, the rule should dictate that currency outside commercial banks plus all commercial bank deposits grow month by month at a steady annual rate.

• The suggested annual percentage growth rate for the stock of money ranges between 3 and 5.

4. International Financial and Trade Arrangements

Freely floating exchange rates and unilateral free trade provide the proper market counterpart to monetary rules without government intervention.

Imposing direct controls on foreign exchange is the most effective stepping stone to convert a free market economy into an authoritarian state. This initial restriction on foreign exchange inevitably leads to import rationing, domestic production controls, and a never-ending spiral of government intervention that destroys free enterprise.

Hjalmar Schacht invented full-fledged exchange controls and inconvertibility of currencies in the early years of the Nazi regime.

A country facing an international payments deficit must adjust through one of four mechanisms: reserve flows, domestic price changes, exchange rate adjustments, or direct trade controls. Because double-entry bookkeeping requires payments to equal receipts, a deficit must trigger adjustments.

President Kennedy stated in December 1961 that his administration had no intention of imposing exchange controls, devaluing the dollar, raising trade barriers, or choking off economic recovery.

Freely floating exchange rates provide the only proper free-market counterpart to monetary rules, resolving balance of payments automatically without government intervention. Unlike pegged rates that invite trade restrictions and authoritarian controls, a market-determined exchange rate fluctuates to ensure that international payments and receipts naturally balance.

Canada utilized a flexible market rate for its dollar from 1950 to 1962, demonstrating how a free exchange rate can operate.

Government price supports for gold function like agricultural price supports and inevitably create either market surpluses or shortages. When the official price was set above market value, it caused a massive surplus and gold flooded the United States. Later, as other prices doubled or tripled while the official gold price remained fixed, it created a severe shortage.

The price of gold was set at $35 an ounce in 1934, which initially tripled the U.S. gold stock within six years. Later, this fixed price created a shortage for the same reason rent ceilings cause housing shortages.

Nations should move to free trade unilaterally through gradual tariff reductions rather than relying on slow reciprocal negotiations. Tariffs harm the country imposing them just as much as they harm trading partners. Unilateral elimination of trade barriers benefits the domestic economy immediately.

Britain successfully moved to free trade in the nineteenth century by unilaterally repealing the corn laws.

Fiscal Policy

Using the federal budget as a balance wheel to stabilize short-term economic fluctuations has consistently failed and fueled the expansion of the welfare state. Politicians respond slowly to recessions and fail to cut spending during expansions, introducing an inflationary bias and enlarging the scope of federal intervention.

A sharp economic contraction occurred in 1937 to 1938 after initial pump-priming efforts failed to eliminate unemployment, leading to the discredited theory of secular stagnation.

The simple Keynesian multiplier analysis claiming that government spending reliably expands national income ignores critical offsetting factors such as private diversion and borrowing constraints. Empirical evidence suggests that an increase in government expenditures tends to crowd out private expenditures almost equally, adding close to zero real net expansion.

When government builds a road that private enterprise would have otherwise built, private expenditures drop to offset the government increase.

5. Fiscal Policy and Education

5. Fiscal Policy and Education

Government intervention in education is justified on two grounds: neighborhood effects regarding general citizenship and paternalism toward children. A stable democracy requires a minimum degree of literacy and shared values, generating benefits for society beyond the individual child. This neighborhood effect justifies requiring a minimum amount of schooling and financing it when parents cannot pay directly.

Nationalizing the education industry through direct state administration is unnecessary and harmful; instead, governments should provide vouchers for parents to spend at approved private or public schools.

While the state may subsidize education to ensure a minimum standard, actual school administration should be handled by private enterprises or nonprofit institutions competing for students. This market mechanism increases parental choice, improves quality, and avoids the forced conformity of a centralized system.

The United States educational program for veterans after World War II provided a maximum sum per year that could be spent at any qualifying institution of choice.

The Role of Government in Education

General education for citizenship requires minimum standards without demanding monolithic state control. You can observe how direct state provision eliminates competition and traps families in assigned districts. Educational services should instead be decentralized. Approved educational services can include independent schools operating for profit or supported by endowments.

Schooling at College and University Level

Subsidizing higher education through state-run institutions that charge low tuition creates unfair competition for private universities and misallocates public funds. Public expenditures on higher schooling should not be restricted to state-administered colleges. Instead, subsidies should be given directly to individuals as scholarships tenable at any institution, forcing state universities to charge full costs and compete on equal terms.

The state of Ohio grants a four-year scholarship to students attending the University of Ohio but provides nothing for students attending private institutions like Oberlin College or Western Reserve University.

Vocational and Professional Schooling

Vocational and professional training represents an investment in human capital, which suffers from underinvestment due to imperfections in the capital market. Unlike physical capital, human capital cannot be used as direct collateral for fixed money loans because individuals cannot be bought and sold in a free society. To solve this, governments or private institutions should offer equity financing where individuals agree to pay a specified percentage of future earnings above a base sum.

6. Capitalism and Discrimination

Capitalism and Discrimination

Economic freedom reduces discrimination through market competition. In a free market, economic efficiency is separated from irrelevant characteristics like race or religion. An entrepreneur who discriminates limits choice and pays a higher price for labor or goods compared to competitors who ignore such traits.

Competitive capitalism naturally discourages discrimination because prejudiced business owners impose higher costs on themselves by limiting their pool of efficient workers and customers.

You see this dynamic operate across different contract arrangements and status arrangements. The preservation of Jews through the Middle Ages was possible because of the market sector where they could operate despite official persecution.

Fair Employment Practices Legislation

State intervention often worsens social tensions under the banner of equality. Fair Employment Practice Commissions interfere with freedom of contract and mistakenly attempt to use state coercion to eliminate negative harms derived from personal tastes.

FEPC laws penalize employers who conform to customer or coworker prejudices. These rules harm business owners while failing to address the underlying social tastes that generate prejudice.

• Majorities can use such legislation to enforce mandatory discrimination.
• The Hitler Nuremberg laws and laws in Southern states imposing special disabilities upon Negroes are examples of state action similar in principle to FEPC.
• State coercion substitutes arbitrary legal mandates for voluntary economic incentives.

Segregation in Schooling

Government-administered schools create rigid social conflicts over racial integration. Government-administered schools force a choice between enforced segregation or enforced integration.

A voucher system permits parents to choose mixed, segregated, or specialized private schools. This mechanism allows integration to occur gradually through changing community attitudes instead of legal force.

The state of Virginia adopted a voucher plan, and one of the first requests was a parent transferring a child from a segregated to an integrated school because it was educationally superior. Educational choice allows you to pursue quality and tolerance simultaneously without centralized bureaucratic coercion.

7. The Threat of Monopoly

Enterprise monopoly is relatively unimportant for the economy as a whole, whereas governmentally enforced cartels and protective regulations have proliferated widely.

You consistently overestimate the prevalence of enterprise monopoly due to the visibility of big manufacturing and absolute size growth. Studies by G. Warren Nutter and George J. Stigler indicate that roughly one-quarter of the economy was governmentally operated or supervised as of 1939.

At most one-quarter and perhaps as little as 15 percent of the remaining private economy was monopolistic as of 1939, while at least three-quarters and perhaps as much as 85 percent of the private sector was competitive as of 1939. Observers confuse absolute size with market share. You focus on manufacturing while ignoring massive competitive sectors like wholesale trade.

Wholesale trade is twice as important as automobile production but is rarely listed by individuals because it is highly competitive and has no single famous corporate face. There are some four million separate operating enterprises in the United States, and some four hundred thousand new enterprises are born each year.

Monopoly in Labor

Labor unions primarily benefit high-paid workers at the expense of disadvantaged workers, raising specific wages while reducing employment opportunities and depressing wages in non-union sectors. Roughly a quarter of the working population is included in labor unions.

• 10 to 15 percent of the working population had wage rates raised by 10 to 15 percent due to unions.
• 85 or 90 percent of the working population had wage rates reduced by some 4 percent due to union distortions.

Government and Government-Supported Monopoly

Direct government monopolies are relatively narrow, but governmentally established and enforced cartels and protective regulations have proliferated widely at both federal and local levels. Local jurisdictions enforce similar restrictions through taxi medallions and building codes that restrict entry and waste resources.

The Texas Railroad Commission limits oil well production days to control prices under the guise of conservation. Independent taxi medallions command high prices:

• $20,000 to $25,000 for a medallion in New York;
• $15,000 for a medallion in Philadelphia.

Social Responsibility of Business and Labor

The doctrine of the social responsibility of business and labor is a fundamentally subversive concept that misunderstands a free economy and logically leads to a centrally controlled police state.

In a free economy, the sole social responsibility of business is to use its resources to increase profits within the rules of the game via open and free competition. If business executives act as civil servants who must manage prices or wages for national goals, economic decision-making is co-opted by the state.

President Kennedy forced the cancellation of a steel price increase in April 1962 through public displays of anger and threats of antitrust suits and tax audits, illustrating the terrifying concentration of state power.

8. Occupational Licensure

Occupational licensure functions similarly to the medieval guild system, restricting individual freedom of trade under the guise of public protection.

While the Western world celebrated the abolition of guilds by the mid-nineteenth century, modern states have increasingly restricted various trades through mandatory state licenses. Although justified as protecting the public from incompetence, these laws are invariably pushed for by members of the occupation themselves and controlled by internal licensing boards, effectively creating a producer monopoly. 75 percent of occupational licensing boards are composed exclusively of licensed practitioners.

By 1952 more than 80 separate occupations were licensed by state law. Walter Gellhorn's research notes that over 80 occupations were state-licensed by 1952, including such surprising fields as well diggers, tile layers, and hypertrichologists in Connecticut who remove excessive hair.

Policy Issues Raised by Licensure

State intervention in occupations can be categorized into three distinct levels:

• registration;
• certification;
• licensure.

Registration simply requires listing names and is sometimes justified for taxation, anti-violence policing, or fraud prevention. Certification allows anyone to practice an occupation but officially designates who possesses certain skills, leaving consumers free to hire uncertified practitioners. Licensure is the strictest form, legally prohibiting anyone without a license from practicing under threat of fines or jail. Accountancy in most states uses certification, allowing anyone to practice but reserving the CPA title for those who pass exams.

Producer groups exert disproportionately more influence on legislation than consumers because producer interests are concentrated while consumer interests are widely dispersed. Every individual is both a producer and a consumer, but people specialize heavily in their productive trade and care deeply about its specific rules. Consumers use millions of items casually and infrequently. Consequently, producer groups have a strong incentive to lobby for protective legislation, whereas the public interest remains unorganized and silent.

Medical Licensure

The American Medical Association acts as a powerful trade union that controls the number of physicians primarily by regulating admissions to medical schools. State laws require medical practitioners to graduate from an approved school and hold a license. Nearly all states delegate this approval power to the American Medical Association's Council on Medical Education and Hospitals. By controlling school accreditation, the AMA restricts the number of entrants into the profession, driving up training costs and eliminating potential competitors before they ever apply for a license. Nearly 100 percent of entrants into medical school have had four years of college despite legal minimums requiring only two years.

During the Great Depression in the 1930s, the AMA's Council wrote to medical schools warning that too many students were admitted, prompting schools to promptly reduce admissions.

Medical licensure ultimately lowers both the quantity and the meaningful quality of medical care while stifling medical research and experimentation.

By restricting the supply of physicians and expanding the definition of unauthorized practice to tasks technicians could perform, licensure creates artificial shortages and reduces total man-hours of care. Furthermore, by forcing conformity to prevailing orthodoxy and shutting out independent practitioners or alternative systems like chiropractic and osteopathy, it reduces the rate of growth of medical knowledge.

9. The Distribution of Income

The Distribution of Income

In a free market, payment according to what one produces is necessary for the efficient allocation of resources without government compulsion.

If you do not receive the full value of what you add to the product, you base exchanges on what you receive rather than what you produce. This breaks voluntary cooperation and resource efficiency. The marginal product principle acts as an essential tool for social stability and resource coordination through equalizing differences and net advantages.

More advanced capitalist countries pay a smaller fraction of total income for the use of physical capital and a larger fraction for human services compared to underdeveloped nations. As countries grow richer, their primary wealth lies in the productive capacity of residents rather than accumulated physical property.

In underdeveloped countries like India and Egypt, approximately half of total income is property income. In the United States, roughly one-fifth of total income is property income.

High nominal rates of graduated income and inheritance taxes fail to significantly reduce inequality because they stimulate tax avoidance and create arbitrary distortions. Nominal tax progressivity is undermined by loopholes like percentage depletion, capital gains preferences, and tax-exempt municipal bonds.

Percentage depletion allowances in the oil industry provide a particularly easy route to receiving tax-free income and accumulating new wealth. Steep rates discourage risk-taking and productive activities, making tax avoidance essential for economic well-being while imposing administrative waste.

Social Welfare Measures

Public housing programs often worsen housing conditions and increase neighborhood delinquency by destroying more dwelling units than they construct. Because public housing clears more blighted areas than it builds new homes, it raises population density per dwelling unit. Income limitations concentrate broken families and problem children within housing projects, overloading local schools and amplifying neighborhood effects.

Minimum wage laws tend to increase poverty by pricing low-skilled workers out of the job market and forcing them into less remunerative activities or relief rolls. Employers cannot be forced to hire everyone at the mandated rate. Consequently, minimum wage legislation raises unemployment, disproportionately harming those who can least afford lost income.

Old-Age and Survivor’s Insurance (OASI) combines compulsory annuity purchases, government nationalization of the provision, and arbitrary income redistribution. These three elements are analytically distinct and need not be combined. The system redistributes wealth from young participants entering early to older participants entering late, regardless of personal wealth, financed by a regressive flat payroll tax. Sixteen million persons receive benefits under OASI.

Compulsory government-run retirement annuities rely on paternalism that overrides individual freedom under the false assumption that citizens cannot be trusted to plan for the future. The belief that large fractions of the population would become public charges drew its main plausibility from the unprecedented high unemployment of the Great Depression. More than one-seventh of the labor force was unemployed in every year from 1931 through 1940.

10. The Alleviation of Poverty

Existing government welfare and agricultural programs are vastly more extravagant and wasteful than necessary to effectively eliminate absolute poverty.

In 1961, governments spent $33 billion on direct welfare payments and programs. This spending could finance massive outright cash grants to the lowest income segments of the population. There were 57 million consumer units in the United States at the time. That total outlay amounted to nearly $6,000 per consumer unit for the 10 percent with lowest incomes.

A negative income tax is the most mechanically sound and efficient method to alleviate poverty through cash subsidies without distorting market functioning.

You can integrate poverty relief directly into the current federal income tax system. Individuals whose income falls below exemptions and deductions receive a subsidy at a fixed rate. Consider a system structured around a $600 exemption per person under the federal income tax plus a minimum 10 percent flat deduction.

With a 50 percent subsidy rate, an individual with no income receives $300. This ensures a basic floor under every person's net income while preserving the incentive to earn extra dollars.

Liberalism and Egalitarianism

An uncompromising pursuit of material equality or equality of outcome via state coercion inevitably conflicts with individual freedom.

While a liberal values equality of rights and equality of opportunity, egalitarians defend taking from some to give to others on grounds of justice. This forces a choice between freedom and enforced material equality. It makes it impossible to be both a liberal and an egalitarian in that sense.

Conclusion

Intellectuals historically favored state intervention by comparing the imperfect reality of the free market against a hypothetical ideal of government control.

Decades of actual experience with government intervention now permit a realistic comparison between the actual operation of the market and the actual effects of state programs versus their intended goals. Major government reform initiatives of past decades have systematically failed to achieve their stated objectives and instead generated opposite results.

Railway regulation designed for consumer protection became an instrument shielding railroads from new rivals at consumer expense.

Government programs fail because they attempt to force individuals to act against their own immediate interests, provoking powerful resistance from millions. Instead of establishing frameworks that eliminate conflict or relying on persuasion, state programs substitute the values of outsiders for those of participants. State help kills self-help.

Conclusion

The economic and political frameworks unite to dismantle state interventionism by establishing that competitive capitalism serves as the sole foundation for individual liberty. When you remove government from the allocation of resources, monetary management, and social provision, you prevent the dangerous accumulation of power that inevitably leads to tyranny. The market mechanism operates through voluntary exchange and decentralized prices to coordinate human action without coercion. Centralized planning and paternalistic welfare programs fail because they substitute bureaucratic arbitrariness for the wisdom of millions of interacting individuals. You must recognize that the scope of government should be strictly limited to maintaining law and order, defining property rights, and adjudicating disputes.

To apply these market principles in your own civic life, you can follow practical rules derived from the text.

1. Demand the abolition of occupational licensure and professional entry barriers to restore your right to work and contract freely.
2. Support the implementation of school voucher systems to introduce market competition and parental choice into education.
3. Advocate for freely floating exchange rates and the dismantling of tariffs to allow international trade without political friction.
4. Replace existing welfare programs with a negative income tax to alleviate poverty while preserving incentives for self-reliance.
5. Oppose governmentally granted monopolies, protective cartels, and industry subsidies that enrich special interests at your expense.
6. Restrict the monetary authority to a fixed rule of money supply growth to prevent inflation and economic depressions.
7. Insist that the government act solely as an umpire rather than an active participant in economic production.

10 Key Ideas

1. Economic freedom is an indispensable means to achieving and preserving political freedom by preventing the dangerous concentration of power.
2. A free society requires government to act as an umpire to maintain law and order, enforce contracts, define property rights, and provide a monetary framework.
3. Severe economic contractions and the Great Depression were primarily caused by government mismanagement of monetary policy rather than any inherent instability in the private enterprise economy.
4. Freely floating exchange rates and unilateral free trade provide the proper market counterpart to monetary rules without government intervention.
5. Nationalizing the education industry through direct state administration is unnecessary and harmful; instead, governments should provide vouchers for parents to spend at approved private or public schools.
6. Competitive capitalism naturally discourages discrimination because prejudiced business owners impose higher costs on themselves by limiting their pool of efficient workers and customers.
7. Enterprise monopoly is relatively unimportant for the economy as a whole, whereas governmentally enforced cartels and protective regulations have proliferated widely.
8. Occupational licensure functions similarly to the medieval guild system, restricting individual freedom of trade under the guise of public protection.
9. In a free market, payment according to what one produces is necessary for the efficient allocation of resources without government compulsion.
10. A negative income tax is the most mechanically sound and efficient method to alleviate poverty through cash subsidies without distorting market functioning.