This week in my course on liberalism we’re reading Milton Friedman. I’m really enjoying watching the PBS documentary “Free to Choose.” Here is a bit where Friedman discusses gambling, and the benefits of risk-taking:
The corresponding text from the book Free to Choose:
“Still another facet of this complex issue of fairness can be illustrated by considering a game of chance, for example, an evening at baccarat. The people who choose to play may start the evening with equal piles of chips, but as the play progresses, those piles will become unequal. By the end of the evening, some will be big winners, others big losers. In the name of the ideal of equality, should the winners be required to repay the losers? That would take all the fun out of the game. Not even the losers would like that. They might like it for the one evening, but would they come back again to play if they knew that whatever happened, they’d end up exactly where they started?”
Of course one issue is that people choose to visit Las Vegas and play Baccarat; they don’t have a similar choice about whether to play the economic game, in daily life. Also they don’t necessarily start out with equal piles of chips, if children are being raised in private families. In addition, however, people may object to competition itself, to economic life being organized so that they have to compete against others in order to flourish. Milton Friedman’s teacher Frank Knight captured this sentiment in a very nice passage from his essay “The Ethics of Competition”:
“Turning to look for motives attached to production as an activity rather than to the product, the most obvious is its appeal as a competitive game. The desire for wealth takes on more or less of the character of the desire to capture an opponent’s pieces or cards in a game. An ethical criticism of the industrial order must therefore consider it from this point of view. In so far as it is a game, what kind of game is it? There is no doubt that a large amount of radical opposition to the system arises in this connection. The propertyless and ill-paid masses protest not merely against the privations of a low scale of living, but against the terms of what they feel to be an unfair contest in which being defeated by the stacking of the cards against them is perhaps as important to their feelings as the physical significance of the stakes which they lose. In a higher social class, resentment is aroused in the hearts of persons who do not like the game at all, and rebel against being compelled to play it and against being estimated socially and personally on the basis of their successor failure at it.”
That’s from pp.603-4 of the version that’s in the Quarterly Journal of Economics, Vol. 37, No.4, 1923.
Knight was no fan of socialism, but he showed a keen understanding of the sources of opposition to capitalism.