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The Machinery of Freedom: Guide to a Radical Capitalism Paperback – August 19, 1989
Among topics covered: how the U.S. would benefit from unrestricted immigration; why prohibition of drugs is inconsistent with a free society; why the welfare state mainly takes from the poor to help the not-so-poor; how police protection, law courts, and new laws could all be provided privately; what life was really like under the anarchist legal system of medieval Iceland; why non-intervention is the best foreign policy; why no simple moral rules can generate acceptable social policies -- and why these policies must be derived in part from the new discipline of economic analysis of law.
- Print length267 pages
- LanguageEnglish
- PublisherOpen Court
- Publication dateAugust 19, 1989
- Dimensions6.25 x 0.75 x 9.25 inches
- ISBN-100812690699
- ISBN-13978-0812690699
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Product details
- Publisher : Open Court; 2nd edition (August 19, 1989)
- Language : English
- Paperback : 267 pages
- ISBN-10 : 0812690699
- ISBN-13 : 978-0812690699
- Item Weight : 15.1 ounces
- Dimensions : 6.25 x 0.75 x 9.25 inches
- Best Sellers Rank: #2,318,934 in Books (See Top 100 in Books)
- #825 in Radical Political Thought
- #3,569 in Civil Rights & Liberties (Books)
- #9,535 in History & Theory of Politics
- Customer Reviews:
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About the author

I am an academic economist recently retired after a career first as an economist and then as a law professor; I have never taken a course for credit in either field. My specialty for the past thirty some years, has been the economic analysis of law, the subject of my book _Law's Order_.
I created and taught two new law school seminars at Santa Clara University. One was on legal issues of the 21st century, discussing revolutions that might occur as a result of technological change over the next few decades. Interested readers can find its contents in my _Future Imperfect_. Topics include encryption, genetic engineering, surveillance, and many others. The other seminar was on a variety of unfamiliar legal systems. Topics included the legal systems of modern Romany, Imperial China, Ancient Athens, the Cheyenne Indians, ... . It was the basis for my most recent nonfiction book, _Legal Systems Very Different from Ours_.
I have been involved in recreational medievalism, via the Society for Creative Anachronism, for over fifty years. My interests there include cooking from medieval cookbooks, making medieval jewelry and furniture, telling medieval stories around a campfire, creating a believable medieval Islamic persona, and fighting with sword and shield. My wife and I have self-published two books coming out of that hobby, _A Miscellany_ and _How to Milk an Almond, Stuff an Egg and Armor a Turnip: A Thousand Years of Recipes_.
My involvement with libertarianism goes back even further. I have written on the possibility of replacing government with private institutions to enforce rights and settle disputes, a project sometimes labelled "anarcho-capitalism" and explored in my first book, _The Machinery of Freedom_, first published in 1972 and now in its third edition.
My first novel was _Harald_, published by Baen books. Most of my interests feed into it in one way or another, but it is intended as a story, not a tract on political philosophy, law or economics. It is not exactly a fantasy, since there is no magic, nor quite a historical novel, since the history and geography are invented. The technology and social institutions are based on medieval and classical examples, with one notable exception.
My second novel, _Salamander_, is a fantasy. The setting is about fifty years after the magical equivalent of Newton, the mage who took the first large steps to converting magery from a craft to a science. The plot deals with some of the consequences. I have now published _Brothers_, the sequel to _Salamander_.
My web page, www.daviddfriedman.com, contains the full text of several of my books, most of my published articles, and much else. My blog, Ideas (daviddfriedman.blogspot.com), contains fourteen years worth of essays on a wide variety of subjects.
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This book is the best book to explain the benefits of Anarcho-Capitalism. Moreover, Friedman outlines a society distinct from Rothbard's version. Rothbard would have a common legal system agreed upon by all first, and then have private enterprise provide the rest. Friedman explains how even the justice system can and should be subject to competition!
He gives pragmatic arguments for the crucial part: getting from here to there. This is why you will see that Anarcho-Capitalism is the only logical conclusion of a belief in freedom and free markets. Every other (failed) Utopian political book never describes how to actually get to the utopia. They just assume it's possible to give everyone what they need and that "someone" will provide it for them. Friedman convincingly shows how his system is the ideal one.
Since it is quite old (some original parts are from the 70's), some of the points are blatantly obvious, and some are tragic in that they are still problems even now.
Don't listen to the people blasting this book for not fitting their preconceived notions of anarchy or political treatises. This is a economics book first and foremost, with political ramifications. At least read the Wikipedia on Anarcho-Capitalism before you blast it for having institutions. The whole point is that institutions will continue to provide services; it's just that those institutions will be privately owned and ran like a business, i.e. to make profits by pleasing customers.
David Friedman is a highly respected economist and legal scholar. His other books are required reading in Econ and Law classes, as well as at (good) law programs. This book shows you the only logical conclusion of many things you already believe. If you'd rather have a consequentialist justification, this system is the most beneficial from a utility standpoint, the most efficient, and many other superlatives...
Bottom line, read this book if you're at all interested in Capitalism, Liberty, Classical Liberalism, Economics, Law, etc. If you're not, read it anyway and it will make you care. One of my favorite books of all time.
At several points in his essays, Friedman acknowledges that libertarianism and land ownership have some degree of contradiction, but he fails to explore that point beyond acknowledging the morally bankrupt position that all of us have benefitted from those who originally seized the land by force. It is certainly the case that those who laid claim to unproductive, unwanted land, and brought it to life, have earned the right to call that land their own. Unless, of course, that land was brought to life by slaves or indentured servants, or that land was no so “unwanted” by indigenous peoples.
I bring this up partly to demonstrate Friedman’s open-mindedness on every bit of libertarian and anarcho-capitalist ideology. He challenges all of the orthodoxy, but unfortunately seems to retreat back to comfortable positions before a real resolution can be found. There is also nothing exciting in his treatment of children, the enfeebled, and disabled (charity will take care of the problem), the artistic class (hit them with the double whammy of elimination of intellectual property), or those left jobless by technology (it didn’t work that way in the past, so it won’t in the future).
He does have a novel way of mitigating the contradiction between libertarianism and children: set the age of majority at 9. While I’m the first to admit that most child predator laws primarily terrorize adults and punish the very children they are supposed to protect, setting the age of majority before puberty is an invitation for the sexual and physical exploitation of children. This is especially true where the lack of a basic income in conjunction with free market principles will lead many of these emancipated nine year olds into the mines, sweatshops, and brothels.
Freidman holds tight to anarchist principles. “All things that governments do can be divided into two categories – those we can do away with today, and those we hope to be able to do away with tomorrow. Most of the things our government does are in the first category.” I certainly agree that placing limitations on government is a necessity if there is to be a future. However, eliminating every last ounce of the state leaves me feeling quite vulnerable. Friedman does himself no favors by describing a feudal Icelandic system of private enforcers, and private laws designed from the bottom up by communities. I am not working for a future where, in another life, I might be born into a community where I would be stoned to death for refusing to wear a burka. And I shudder to imagine how victims of domestic violence would fare in such a system of cowboys and outlaws.
Free markets require very strong laws against fraud and extortion. These must be written and enforced from the top-down. That is not to say that a community or family cannot freely live with a different culture, but the right to be exiled in lieu of the local punishment must be enshrined in the constitution. If a community outlaws marijuana, and sentences you to 30 days in jail for possession, then, if you value the community you can serve your time. Otherwise, you can be exiled and serve no time. If the community proscribes that your hand be chopped off for theft, then, if you value the community, you can submit to the amputation, otherwise, you can be exiled and serve a short penitentiary sentence for the same theft. It is precisely the freedom bottom-up communities enjoy in a free society that mandates a top-down state apparatus to protect a constitutionally enshrined bill of rights. Nor does Freidman address the problem of domestic child abuse. Unless he is willing to sacrifice all the human rights of a child, the requirement for a nanny state, the dreaded social worker, will not wither away completely. To his credit, Freidman does not accept the blarney that in a free society, everybody will just be so wonderful that these problems will just go away. “Human beings and human societies are far too complicated for us to have confidence in a priori predictions about how institutions that have never been tried should work.”
Friedman does a good job at exposing the myth of today’s entitlement programs. He demonstrates that so many programs that seem to benefit the poor actually take from the poor and give to the rich. Social Security is such a system and “state universities…subsidize the schooling of the upper classes with money, much of which comes from relatively poor taxpayers.” He could go further and show how today’s entitlement programs discourage work, discourage savings, and encourage isolation to maximize benefits. Perhaps because he is not an advocate of universal entitlement, he suggests the “modern liberal” position that immigrants be denied welfare for 15 years, implicitly endorsing welfare for citizens. Thus he compromises his own position that needs based welfare is inimical to freedom, because he won’t acknowledge that basic income from land rental is a fundamental right probably because he eschews the minimal state apparatus needed to enforce such a mechanism.
Freidman, like most libertarians, fails to recognize the wisdom of Karl Marx. While his solution is way off base, Marx’s analysis of capitalism is far closer to reality than most free marketers are willing to admit. Freidman acknowledges that modern liberals argue that Marx’s predictions have been mitigated by “strong labor unions, minimum wage laws, and progressive income taxes.” Writing at a time when the rich were getting richer and the poor were likewise getting richer, it was easy for Friedman to counter this argument. Today, with labor unions in shambles, minimum wages not keeping pace with inflation and the rich paying a far lower percentage of taxes than 40 years ago, and with the rich getting richer, the poor most assuredly getting poorer and the middle class being decimated, the facts are strong evidence to the liberal arguments. The predicted alienation of the worker and fetishism of commodities are also facts of life. What Friedman and other libertarians need to understand is that this doesn’t mean that collusion with labor unions, minimum wage laws, and taxing the rich are good ideas. But is does mean that a basic income, funded by an LVT, is a requirement of a free society in order to dispose of Marx’s contradictions once and for all.
Friedman argues correctly that the laws supposedly designed to protect the American people from monopolies were actually designed to protect monopolies from the American people. There is no such thing as an “evil monopoly” except those monopolies protected by the armed force of the state. The ICC (Interstate Commerce Commission) and CAB (Civil Aeronautics Board) were designed to enforce monopoly pricing. Revulsion over crony capitalism is the germ that unites, right and left, modern liberals and classical liberals, the 99 %. That germ can grow massive when the classical liberals acknowledge that basic Income (universal entitlement) funded by an LVT is a fundamental right.
Friedman, like most libertarians, is at a loss when trying to figure out how to get from here to there. He suggests education, as if the special interests will give up their fiefdoms because they are “educated” to do so. For that matter, all the contradictions of libertarianism that Friedman is smart enough and open minded enough to show us, will only serve to frighten off the left half of the country even more. Thus education will actually diminish libertarian appeal. Revolution, of course, will very likely NOT lead to a libertarian society and probably will lead to something much worse than we have today.
The AFFEERCE solution is to build a nation within a nation, back a virtual currency with land, use the LVT to purchase more land to be placed under an LVT. After achieving a certain land mass, use the LVT to subsidize citizenship (lifetime entitlements) in Dutch auctions. By building a prosperous sub-nation as a private corporation and a central bank where the virtual currency is backed by land and U.S. debt, the universal entitlements are offered free to the rest of the nation in exchange for passage of a set of constitutional amendments in a process called capitulation. The plan relies on common human emotions to facilitate change from start to finish.
Friedman talks about alternate currencies backed by gold or a basket of commodities. He ignores land which is the essence of what should back a currency. Land value as measured by the LVT is exactly the productivity of the nation. The VIP, the AFFEERCE virtual currency is backed by land or land equivalents in other currencies. This is the essence of doing business and growth during pre-capitulation and at capitulation. Post capitulation, there is a projected .2 percent annual deflation. If deflation exceeds this target, new virtual currency will be created to match the new productivity of the land.
Like AFFEERCE, Friedman recommends jitney cabs as a solution to urban transportation, indeed all personal transportation. Writing in a time before biometrics, he does not have a VIP identity, and must rely on identity cards to insure passenger and driver safety. He also shows how privatizing streets can increase the efficiency of the roads. The innovation that most impressed me, probably because I never considered it was the use of voluntary arbitration for all corporate law. While the idea of enforcers and protectors for the victims of domestic abuse or rape makes me ill, the same system, for corporations, seems to be a match made in heaven.
What I appreciated most in the Machinery of Freedom, was Friedman’s realization of Gödel’s truth that no system is both consistent and complete. His examination of the meaning behind property rights exposed all the internal contradictions that so many libertarians choose to ignore. I doubt you will ever see Friedman sporting an A = A license plate or sticker. Legitimate rights can be in conflict which is why a minimal state will never wither away. Half the time Friedman seems to acknowledge this, and the other half of the time he tries to wish it away. You can feel the conflict in the pages of the book.
He is also conflicted on the question of morality, which is understandable in this materialistic age. After decimating the philosophy behind libertarianism, he concludes that there is no fundamental moral basis for the new society. Then he concludes that simply can’t be true. As an example, the torture of children is wrong, today, yesterday, and always. Friedman ends the second edition with a discussion of the intellectual C.K. Chesterton, a libertarian Catholic. Despite the atheist and agnostic tendencies of most libertarians, Friedman seems to understand that there is an enlightenment associated with this new society. There is a moral purpose in our quest. He identifies as a Catholic without God.
In some of the more recent essays for the latest edition, he tries to further justify his feudal system of enforcers, protectors, and outlaws. That was a disappointment. It is certainly a direction I did not wish to see him go.
Top reviews from other countries
Friedman writes "I hold that there are no proper functions of government. In that sense I am an anarchist." A government, Friedman states, is an agency of legitimised coercion. He acknowledges that most libertarians (such as his father, e.g. in Capitalism and Freedom) believe in limited government, not in no government at all, but unlike mainstream anarchists (if I may put it that way) Friedman does believe in the right to own, enjoy and protect private property. Libertarian society, free from coercion, is his aim, and anarcho-capitalist institutions are the means he thinks most likely to achieve that aim.
The first two parts of the book cover what might be called standard libertarian theory: why private property is the basis of freedom, why the free market is more efficient and ultimately results in greater prosperity, and why most social care programmes that claim to be transferring wealth from the rich to the poor or to protect the disadvantaged do no such thing and often result from compromises made to satisfy competing interest groups. He gives a series of measures that would limit the size and power of government, incremental measures to move in the direction of a freer society.
Part III is where the book gets really interesting, as Friedman starts to explain anarchy as he proposes it. Here he goes further than anything Milton Friedman or many others go, suggesting ways in which those functions that even libertarians would reserve to government might be turned over to the private arrangements of consenting people acting voluntarily: the administration of justice, law and order, national defence, the provision of large scale "public good". These make for pretty challenging ideas for most: the police, for example, would be replaced by a market of competing protection agencies.
In the fourth (and final) part of the book, which he describes as an expanded postscript for libertarians, he devotes his longest chapters to an economic analysis of law and explains how justice worked in a private market in mediaeval Iceland. The economic analysis of law is Friedman's specialism, and I shall in due course read his more recent book "Law's Order: What Economics has to do with the law and why it matters". He deals also with whether there can be a libertarian foreign policy, concluding that foreign policy cannot really be conducted in accordance with libertarian principles without it amounting to surrender (or a nuclear tripwire) and that a policy of only very reluctant intervention would be the next best thing. (In quoting him in the title of this review, by the way, do not think that Friedman was concerned that only the US Government would implement an interventionist foreign policy poorly; his criticism would apply to all governments, especially (and perhaps ironically) to democratic ones.) He also proposes a system of private money based on a basket of commodities and partial reserve banking, although he concludes that one based on gold would be better than "government money" but that he did not think that we would see the back of the latter for some time to come.
Being something of a cynical old authoritarian at heart (better one hundred years of tyranny than one day of anarchy, etc) I am far from convinced that very many of the anarcho- ideas would work, but it is certainly interesting reading. Friedman does not think that this would, in any case, be achieved quickly: rather, as the role of government was progressively reduced he thinks that its reason for existence would gradually wither away to nothing as everyone found better, more efficient, free market solutions. I would, however, be happy to proceed gently along the same path as David Friedman, and if we could get to a stage where government had been reduced to a bare minimum, to think again as to whether we could proceed to do without it altogether.
Friedman provides an extensive bibliography that is unusual on two counts: he comments, sometimes at length, as to how quoted works have influenced his thinking and, secondly, he quotes many works of fiction, including much science fiction, in which libertarian and anarcho-capitalist ideas have been expounded. Robert A Heinlein, as it happens, is one of the four people to whom the book is dedicated (the others being his father, Friedrich Hayek and Robert Schuchman (who he?)); this was a little of a surprise to me as Heinlein has been criticised for some fiction that appeared to extol the virtues of authoritarianism bordering of fascism - Starship Troopers, for example. I shall have to read some Heinlein again, as well as Friedman's own fantasy novel, Harald, if Amazon can find it for me.
Friedman writes in a provocative and entertaining style, although the often very short chapters gave me the impression of reading a series of newspaper articles. I did particularly like: "The direct use of physical force is so poor a solution to the problem of limited resources that it is commonly only employed by small children and great nations."
Dazu werden in Teil I die Grundlagen für das Privateigentum gelegt (Sinn: Konflikte bei knappen Ressourcen regeln); das beinhaltet eine Diskussion von Rechten, Steuern, Monopolen, Verträgen, Raumfahrt, Drogen und Zinsen.
Im Teil II wird erklärt, wie man die bestehende Gesellschaft verbessern kann. Hier geht es u. a. um Schulgutscheine, Einwanderung, Sozialismus, Jugend und Umwelt.
Teil III zeigt, wie eine anarchokapitalistische Regierung aussehen könnte. Dort ist alles privatisiert, auch Rechtsprechung und Verteidigung. Bei der Finanzierung und Organisation der Verteidigung gegenüber Staaten sieht der Autor auch die größten Hindernisse.
Teil IV ist eine Zutat der zweiten Auflage. Die Begründung der privaten Rechtsprechung ist schwierig. Auch die Außenpolitik erscheint teils problematisch. Geld soll wieder privat erzeugt werden; Goldstandard und 100-Prozent-Reservehaltung erscheinen dem Autor nicht für notwendig.
Die Anhänge enthalten Statistiken und Literaturhinweise.
Dieses Buch benutzt wirtschaftswissenschaftliche Begründungen, weil der Autor philosophische Begründungen für unzureichend hält. Die Begründungen des Autors laufen deshalb auf Utilitarismus hinaus (was den meisten nützt, ist gut), obwohl er eine Umverteilung von Einkommen ablehnt. Das lässt sich am besten an einem Beispiel aus der Rechtssprechung zeigen, dass in abgewandelter Form auch im Buch diskutiert wird.
Angenommen, auf einem belebten Marktplatz erscheine ein Amokläufer, der mehrere Menschen erschießen möchte. Ich weiß, dass ein Anwohner ein Gewehr hat, mit dem ich den Verbrecher aufhalten könnte. Der Besitzer des Gewehres pocht jedoch auf sein Recht des Privateigentums. Darf ich das Gewehr nun benutzen oder nicht? Der Autor bietet zwei Möglichkeiten: (1) Beim so genannten Naturrecht ist das Recht auf Privateigentum absolut und ich darf das Gewehr nicht benutzen; unter (2) utilitaristische Erwägungen helfe ich mehr Menschen als ich schade, sodass das Recht auf Privateigentum vorübergehend nicht gilt. Mich hat das nicht überzeugen können, denn mit (2) kann ich fast alles rechtfertigen. Ich würde Methode (1) bevorzugen und sie ein wenig abändern: Ich verhindere den Mord und werden danach wegen Hausfriedensbruch angeklagt. Dann bezahle ich wahrscheinlich angesichts der Umstände eine kleine Geldstraße und eine Leihgebühr für das Gewehr. Diese Kosten hole ich mir aus dem Eigentum des Mörders zurück und erhalte vielleicht auch Unterstützung von dem Menschen, deren Leben ich gerettet habe.
Mir hat das Buch teilweise gut gefallen. Die Argumente sind praktisch relevant, jedoch immer utilitaristisch und teilweise unzusammenhängend. Wer eine philosophische und wirtschaftswissenschaftliche Argumentation auf der Grundlage des Naturrechts sucht, dem empfehle ich Rothbard: "Ethics of Liberty" / "Ethik der Freiheit", welches meines Erachtens überzeugender, rigoroser und folgerichtiger ist.

