In the past few decades there has been a sea change in the direction of the ideas of the public. The climate of opinion has moved sharply toward belief in a greater role for free markets and belief that big government is the problem and not the solution.
On the other hand, in the world of practice—the world in which we live—we are now farther from a free society than we were 30 or 40 years ago. The world of ideas has gone one way, and up to now the world of practice has gone the other way. And those two movements, though superficially contradictory, are closely connected. In my opinion, the major reason that we have made progress in the world of ideas is precisely because we have regressed in the world of practice.
Consider first the world of ideas. I recently wrote a new preface for a reissue of my wife's and my book Capitalism and Freedom, originally published in 1962. Referring to the time when the lectures incorporated in the book were given, I wrote: "It is hard even for persons who were then active, let alone for the more than half of the current population who were then less than 10 years old or had not yet been born, to reconstruct the intellectual climate of the times. Those of us who were deeply concerned about the danger to freedom and prosperity from the growth of government, from the triumph of welfare-state and Keynesian ideas, were a small beleaguered minority regarded as eccentrics by the great majority of our fellow intellectuals."
One bit of evidence in support of that description of the intellectual climate at the time is the treatment that our book received. Here was a book directed at the general public that was destined to sell more than 400,000 copies in the next 18 years, written by an established professor at a leading university and published by a leading university press. Yet it was not reviewed in a single popular American publication. It was not reviewed in the New York Times, the New York Herald Tribune (which was in existence then), or even the Chicago Tribune, or in Time or Newsweek. It was reviewed by the London Economist and by the major professional journals. But it is inconceivable that a book of the same kind on the other side of the subject by an economist of comparable professional standing would have received a similar silent treatment.
By contrast, as evidence of the change in the intellectual climate of opinion, consider the very different reception of the book my wife and I published in 1980, Free to Choose, which was reviewed by every major publication. As further evidence, consider the comments Heritage Foundation president Ed Fuelner recently made at a dinner there. He drew a sharp contrast between the few and sparse "think tanks'' on our side some three decades ago and the number now. He could mention only four that existed back then: the Hoover Institution, which is still here today; ISI, at that time called the Intercollegiate Society of Individualists, which has changed its name but kept the initials; an embryonic AEI (American Enterprise Institute), as he described it; and CSIS (Center for Strategic and International Studies). He should also have included Leonard Read's Foundation for Economic Education (FEE), which really originated in Los Angeles with Leonard's work at the Los Angeles Chamber of Commerce.
By contrast Ed reeled off a long list of additional institutions currently devoted to developing and spreading the idea of limited government and free markets, plus a host of others trying to translate ideas into action. Similarly with respect to publications, the only one he could think of that was devoted to promoting the ideas of freedom 30–40 years ago was FEE's Freeman. Today we can list a whole series of publications on that general side, though with great differences in specific areas—National Review, Human Events, The American Spectator, Policy Review, and REASON. But I belabor the obvious in stressing how great has been the change in the intellectual climate of opinion.
The more interesting question is, why has there been so great a shift in the attitudes of the public? I'm sorry to confess that I do not believe it occurred because of the persuasive power of such books as Friedrich Hayek's Road to Serfdom or Ayn Rand's Fountainhead or Atlas Shrugged or our own Capitalism and Freedom. Such books certainly played a role, but I believe the major reason for the change is the extraordinary force of factual evidence—and that is the link between the world of ideas and the world of practice.
The great hopes that had been placed in Russia and China by the collectivists and socialists turned into ashes. It is very hard today for the pilgrims who seek the new future to find much sustenance in places like Russia and China—indeed, the only hope in those countries comes from China's recent moves toward the free market. The pilgrims today are driven to going to Nicaragua and Cuba. Similarly, the hopes that were placed in Fabian socialism and the welfare state in Britain or the New Deal in the United States were disappointed. One major government program after another started with the very best aims and with noble objectives and turned out not to deliver the goods.
Hardly anyone today anywhere in the world will say that the way to get efficient production is through nationalized enterprises or that the way to solve every social problem is to have government throw more money at it. In that area we have won the battle. The left is intellectually bankrupt. The neoconservatives are correct in defining themselves as (modern) liberals mugged by reality—still retaining many of their earlier values but driven to recognize that they cannot achieve them through government. Somewhat reluctant libertarians, at least on economic issues, but largely libertarians nonetheless.
In this country, the Vietnam war helped undermine belief in the beneficence of government. And most of all, as the great British constitutional lawyer A.V. Dicey predicted nearly 75 years ago, the rising burden of taxation produced a reaction from the general public against the growth of government and the spread of its influence.
Ideas played their part. But they played their part not by producing a reaction against the spread of government but by determining the form that that reaction took. The role we play as intellectuals is not to persuade anybody but to keep options open and to provide alternative policies that can be adopted when people decide they have to make a change.
What about the world of practice? We are farther from our ideal of a free society than we were 30–40 years ago in almost every dimension. Take the most obvious: in 1950 spending by federal, state, and local governments was 25 percent of national income; in 1985 it was 44 percent. And in order to get a real basis of comparison, in 1930 it was 15 percent. Everybody in the country is working today until nearly the middle of June to pay for the expenses of government before they can start paying for their own expenses. It was bad enough 35 years ago when people were working until after April Fool's Day.
In the past 30 years, a host of new government agencies has been created. We now have a Department of Energy, a Department of Education, a National Endowment for the Arts and another for the Humanities, EPA, OSHA, and on and on. We have a whole sequence of additional agencies whereby civil servants decide for us what is in our best interest. In Capitalism and Freedom we listed 14 "activities currently undertaken by government in the U.S., that cannot…validly be justified in terms of the principles" of a liberal society. This list is far from comprehensive. And only one of those activities—military conscription—has been terminated.
A couple of others have shown some slight improvement—airlines have been deregulated, and regulation Q, which limited the interest rates that banks could pay on deposits, was eliminated. But most activities have been made more extensive, and many new ones have been added.
Contrasting 1985 with 1950 is unduly pessimistic in some ways because there has been a change—ideas have started to have an influence. But the most you can say is that the rate of expansion of government spending has been slowed down, not reversed. Government spending as a fraction of income has continued to go up; only the rate of increase has slowed down. We're going to hell a little more slowly, but we're still going in that direction.
There have been a few victories. We did, after all, get rid of the CAB that regulated the airlines. We did get rid of military conscription—that's something truly to celebrate. But the improvement has been meager. The most one can say is that no major new spending programs have been passed in the last six years. The increase in government spending, outside the military, has been predominantly the effect of earlier programs. So we can be a bit more optimistic by narrowing our focus and looking at the last five or six years.
I do not cite the contrast between the world of ideas and the world of practice as a reason for either dismay or pessimism; on the contrary, it reflects a typical situation. There always is and always has been a long lag between a change in the climate of opinion and a change in actual policy. Let me cite Dicey again. In his great book Law and Public Opinion in the Nineteenth Century, he wrote: "The opinion which changes the law is in one sense the opinion of the time when the law is actually altered; in another sense it has often been in England the opinion prevalent some twenty or thirty years before that time; it has been as often as not in reality the opinion not of the day but of yesterday." History suggests that trends in practice lag long after trends in opinion.
Take the situation in 1776, the year in which Adam Smith published The Wealth of Nations, with its case for free trade—and also, interestingly, the year of the Declaration of Independence in this country. It was 70 years before the Corn Laws were abolished in Britain and free trade was achieved. Yet Adam Smith started to win the battle in the world of ideas in the 18th century. The belief in laissez-faire and free markets lasted for 75 to 100 years, until the 1870s or so. Policy followed, but it didn't really start rolling until early in the 19th century. And it continued rolling in the same direction after a new trend started in the world of ideas—a trend away from free markets and laissez-faire and toward Fabian socialism and the welfare state.
That trend of opinion also lasted for nearly 100 years, into the 1950s or '60s, but it too influenced policy only after a long lag. In Britain the change in policies did not occur until just before World War I, say 1908–1914. In the United States the change did not occur until the New Deal in 1933. The same thing is happening now. Ideas, the climate of opinion, started to change in the 1940s or '50s—slowly at first. The trend of opinion has been gathering strength, and it will continue to do so. But policy has been lagging behind and has only recently started to move in the same direction.
The real lesson to be drawn from this contrast between what has been happening in the world of ideas and what has been happening in the world of practice is that we cannot afford to relax our efforts and coast in the belief that the job is done. On the contrary, the truly hard job lies ahead. Of course we want agreement with our ideas—but primarily as a step toward the translation of those ideas into practice. We want to promote an expansion of the freedom of individuals to use their resources in accordance with their own values.
Although we are no longer an isolated remnant or simply a kooky group of people, we are still fighting against the odds. And the odds include most of us as well. We must not kid ourselves; we must not suppose that we are different from the rest of our fellow citizens. I include in the odds that we are facing all the businessmen who are in favor of freedom for everyone else provided they can get special taxes or a tariff or regulatory treatment for themselves. We have to face the problem of the intellectuals, our colleagues at the universities and academies, who are in favor of freedom for themselves provided they can control everybody else.
More important, we are battling the economic inertia that derives from the interest every one of us has in retaining any privilege or benefit he has been able to accumulate and has come to regard as his right. Each of us is capable of truly believing that what is good for us is good for the country and thereby justifying a special exception to the general rule we profess to favor. Over and over I am impressed by the letters I receive from people who say, "Oh, I agree with you thoroughly, I agree with your views, but…" And it's that "but." The most extreme case I had recently was somebody who agreed fully with me about free trade but thought the bee industry was an exception. His excuse was the importance of having bees to pollinate fruit trees and other plants.
So it would be a mistake to suppose that because we have largely won the intellectual battle, because the left is intellectually bankrupt, we have also won the practical battle, the battle of changing the policy of the country and moving in the right direction. We are very far from that. Certainly most of us, including myself, are disappointed in how little we have managed to accomplish in the past six years under circumstances that could not have been more favorable. We have had a president who, though you may disagree with some of his particular positions, is clearly committed to reducing the size and scope and role of government and who has been willing to stick to his principles—the first president in my lifetime (and I suspect in yours) who was elected not because he said what the people wanted to hear but because the people had come to want to hear what he had been saying for a long time.
And yet in the period of his ascendancy the most we have succeeded in doing is preventing the growth of government from increasing still more. In some areas we have moved forward, but we certainly have not achieved as much as most of us had hoped.
But this is not a reason for distress. It is in line with what history tells us: these movements do not come easily and overnight, but once you get started in a certain direction you tend to keep on going that way. The prospect is bright, but only if we continue trying to spread our ideas and persuade ourselves, more importantly than anyone else, to be consistent with the beliefs we profess.
Milton Friedman, who received the 1976 Nobel Prize in economics, is the author of numerous books, including Capitalism and Freedom and Free to Choose, also the title of his 1980 TV series. This article is adapted from his address at the Reason Foundation's Welcome-to-Los Angeles banquet in October 1986.
This article originally appeared in print under the headline "Where Are We on the Road to Liberty?".