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CAPITALISM AND EQUALITY

Everywhere in the world there are gross inequities of income and wealth. They offend most of us. Few can fail to be moved by the contrast between the luxury enjoyed by some and the grinding poverty suffered by others.

CREATED EQUAL

In the past century a myth has grown up that free market capitalism—equality of opportunity as we have interpreted that term—increases such inequalities, that it is a system under which the rich exploit the poor.

Nothing could be further from the truth. Wherever the free market has been permitted to operate, wherever anything approaching equality of opportunity has existed, the ordinary man has been able to attain levels of living never dreamed of before. Nowhere is the gap between rich and poor wider, nowhere are the rich richer and the poor poorer, than in those societies that do not permit the free market to operate. That is true of feudal societies like medieval Europe, India before independence, and much of modern South America, where inherited status determines position. It is equally true of centrally planned societies, like Russia or China or India since independence, where access to government determines position. It is true even where central planning was introduced, as in all three of these countries, in the name of equality.

Russia is a country of two nations: a small privileged upper class of bureaucrats, Communist party officials, technicians; and a great mass of people little better than their great-grandparents did. The upper class has access to special shops, schools, and luxuries of all kind; the masses are condemned to enjoy little more than the basic necessities. We remember asking a tourist guide in Moscow the cost of a large automobile that we saw and being told, "Oh, those aren’t for sale; they're only for the Politburo." Several recent books by American journalists document in great detail the contrast between the privileged life of the upper classes and the poverty of the masses. Even on a simpler level, it is noteworthy that the average wage of a foreman is a larger multiple of the average wage of an ordinary worker in a Russian factory than in a factory in the United States—and no doubt he deserves it. After all, an American foreman only has to worry about being fired; a Russian foreman also has to worry about being shot.

China, too, is a nation with wide differences in income?between the politically powerful and the rest; between city and countryside; between some workers in the cities and other workers. A perceptive student of China writes that "the inequality between rich and poor regions in China was more acute in 1957 than in any of the larger nations of the world except perhaps Brazil." He quotes another scholar as saying, "These examples suggest that the Chinese industrial wage structure is not significantly more egalitarian than that of other countries." And he concludes his examination of equality in China, "How evenly distributed would China's income be today? Certainly, it would not be as even as Taiwan's or South Korea's. . . . On the other hand, income distribution in China is obviously more even than in Brazil or South America. . . . We must conclude that China is far from being a society of complete equality. In fact, income differences in China may be quite a bit greater than in a number of countries commonly associated with ‘fascist?elites and exploited masses."

Industrial progress, mechanical improvement, all of the great wonders of the modern era have meant relatively little to the wealthy. The rich in Ancient Greece would have benefited hardly at all from modern plumbing: running servants replaced running water. Television and radio—the patricians of Rome could enjoy the leading musicians and actors in their home, could have the leading artists as domestic retainers. Ready-to-wear clothing, supermarkets—all these and many other modern developments would have added little to their life. They would have welcomed the improvements in transportation and in medicine, but for the rest, the great achievements of Western capitalism have redounded primarily to the benefit of the ordinary person. These achievements have made available to the masses conveniences and amenities that were previously the exclusive prerogative of the rich and powerful.

In 1848 John Stuart Mill wrote: "Hitherto it is questionable if all the mechanical inventions yet made have lightened the day's toil of any human being. They have enabled a greater population to live the same life of drudgery and imprisonment, and an increased number of manufacturers and others to make fortunes. They have increased the comforts of the middle classes. But they have not yet begun to effect those great changes in human destiny, which it is in their nature and in their futurity to accomplish."

No one could say that today. You can travel from one end of the industrialized world to the other and almost the only people you will find engaging in backbreaking toil are people who are doing it for sport. To find people whose day's toil has not been lightened by mechanical invention, you must go to the noncapitalist world: to Russia, China, India or Bangladesh, parts of Yugoslavia; or to the more backward capitalist countries—in Africa, the Mideast, South America; and until recently, Spain or Italy.

CONCLUSION

A society that puts equality—in the sense of equality of outcome—ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interests.

On the other hand, a society that puts freedom first will, as a happy by-product, end up with both greater freedom and greater equality. Though a by-product of freedom, greater equality is not an accident. A free society releases the energies and abilities of people to pursue their own objectives. It prevents some people from arbitrarily suppressing others. It does not prevent some people from achieving positions of privilege, but so long as freedom is maintained, it prevents those positions of privilege from becoming institutionalized; they are subject to continued attack by other able, ambitious people. Freedom means diversity but also mobility. It preserves the opportunity for today's disadvantaged to become tomorrow's privileged and, in the process, enables almost everyone, from top to bottom, to enjoy a fuller and richer life.

 

From Free To Choose by Milton Friedman

 
 

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