Monday, January 3, 2011 at 9:37PM AuthorGilad Atzmon

Given the severity and uncertainty of the economic crisis we are all experiencing, I suggest we look once more at the work of Milton Friedman, the leading economist and a staunch advocate of hard capitalism.

During the 1960s -80s Friedman was regarded by many academics, politicians and world leaders as the most important post- World War Two economist. Friedman was chief economic advisor to Ronald Reagan, Margaret Thatcher and Menachem Begin. He also went on record advising the Chilean military dictator Augusto Pinochet.

It is far from surprising to note that more and more commentators have realised in recent years that it was Friedman’s ideology and advocacy of free enterprise, zero governmental intervention and privatisation that has led to the current financial turmoil. It was Milton Friedman’s philosophy that also contributed to the transformation of the West into a service economy.

But Friedman wasn’t just an economist: he was also a devout Zionist and a very proud Jew. Friedman was interested in the role of the Jews in world finance and politics. He also attempted to analyse and understand the attitude of Jews towards wealth. In 1972 Friedman spoke to The Mont Pelerin Society about  “Capitalism and the Jews”. In 1978 he repeated the same talk, addressing  Jewish students at the Chicago University’s Hillel institute.

I’d suggest that Friedman deserves our immediate attention, since he contributed to the rise of an ideology and school of thought that bears some responsibility for the rearrangement (some might say dismantling ) of  the West’s economy.

The Jewish Paradox

Friedman was, no doubt, a sharp intellect, and could offer sharp and succinct criticism. Yet, Friedman was not entirely ‘a cosmopolitan’ in every sense of that word, since he was deeply involved in Jewish concerns and Zionist affairs, and he was deliberately open and transparent about being so.

In the talks he gave in 1972 and 1978, Friedman examined a unique Jewish paradox :  “Here are two propositions,” he said. “Each of them are validated by evidence yet they are both incompatible  one with the other.”

The first proposition is that “there are few peoples if any in the world who owe so great a debt to free enterprise and competitive capitalism as the Jews.“

The second proposition is that  “there are few peoples or any in the world who have done so much to undermine the intellectual foundation of capitalism as the Jews.”

How do we reconcile these two contradictory propositions?

As one may gather by now, Friedman, the free enterprise advocate, was clearly convinced that monopoly and government intervention were bad news in general; but, more crucially for him, they were also very bad for the Jews.

“Wherever there is a monopoly, whether it be private or governmental, there is room for the application of arbitrary criteria in the selection of the beneficiaries of the monopoly—whether these criteria be color of skin, religion, national origin or what not. Where there is free competition, only performance counts.”

Friedman, clearly prefers competition. According to him  “the market is color blind. No one who goes to the market to buy bread knows or cares whether the wheat was grown by a Jew, Catholic, Protestant, Muslim, or atheist; by whites or blacks.”

Friedman’s elaborates further: “Any miller who wishes to express his personal prejudices by buying only from preferred groups is at a competitive disadvantage, since he is keeping himself from buying from the cheapest source. He can express his prejudice, but he will have to do so at his own expense, accepting a lower monetary income than he could otherwise earn.”

“Jews” Friedman continues,  “have flourished most in those countries in which competitive capitalism had the greatest scope: Holland in the sixteenth and seventeenth centuries, and Britain and the U.S. in the nineteenth and twentieth centuries, Germany in the late nineteenth and early twentieth century.”

According to Friedman, it is also no accident that Jews suffered the most in Nazi Germany and Soviet Russia, for these countries clearly defied free market ideology.

One may suggest at this point, that though it is undoubtedly true that Jews suffered in Soviet Russia and in Nazi Germany, and though it is also true that these countries defied free market ideology — Friedman fails to establish a causal or even rational relationship between the opposition to the free market, and anti Jewish policies.

However, the message Friedman conveys is clear — Jews do benefit from hard capitalism and competitive markets.

Yet, Friedman is also genuinely intrigued by Jewish intellectuals’ affinity with anti-Capitalism : “Jews have been a stronghold of anti-capitalist sentiment. From Karl Marx through Leon Trotsky to Herbert Marcuse, a sizable fraction of the revolutionary anti-capitalist literature has been authored by Jews.”

How could that be, Friedman wonders? Why is it that, despite the historical record of the benefits of competitive capitalism to the Jews; despite the intellectual explanation of this phenomenon that is implicit or explicit in much liberal literature from at least Adam Smith onwards, the Jews have been disproportionately anti-capitalist?

Friedman considers some answers —

Rather often we hear from Jews on the left that their affinity to humanitarian issues is driven by their ‘Jewish humanist heritage’. More than once I myself have commented that this is an utter lie. There is no such a Jewish heritage. Driven by tribal precepts, both Judaism and ‘Jewish ideology’ are devoid of universal ethics. If there are some remote patches of humanism in Jewish culture, these are certainly far from being universal.

Friedman, however, offered a further take on the subject: In direct reference to Lawrence Fuchs who argues that the anti-capitalism of the Jews is a “direct reflection of values derived from the Jewish religion and culture,” Friedman wonders — if Jewish culture is, indeed, inherently anti capitalist  (as Fuchs suggests) how is it then, that Jews failed to successfully combat Capitalism and free markets throughout their history?  Friedman analyses that whilst “Jewish religion and culture date back over two millennia; the Jewish opposition to capitalism and attachment to socialism, is at the most, less than two centuries.”

Being a sharp intellect then, Friedman managed to dismantle  Fuchs’s argument. He managed to counter the argument that Jewish culture is inherently socialist or humanist. If Judaism is, indeed, inherently and innately bound to such ethics, how is it that this humanism failed to become dominant throughout Jewish history?

Friedman also reflects in a surprisingly respectful manner, on the writing of alleged anti Semite Werner Sombart’s The Jews and Modern Capitalism. Sombart identifies Jewish ideology at the heart of capitalism. “Throughout the centuries, the Jews championed the cause of individual liberty in economic activity against the dominating view of the time. The individual was not to be hampered by regulations of any sort. I think that the Jewish religion has the same leading ideas as capitalism . . . “(1)

Though Jewish intellectuals at the time were largely unhappy with Sombart’s book, Milton Friedman is brave enough to admit that there is nothing in  Sombart’s book itself to justify any charge of anti-Semitism (though, he argues,  there certainly is in Sombart’s later work).  Friedman, a proud capitalist, tends actually to interpret Sombart’s book as “philo-Semitic”.

“If, like me”, says Friedman, “you regard competitive capitalism as the economic system that is most favorable to individual freedom, to creative accomplishments in technology and the arts, and to the widest possible opportunities for the ordinary man, then you will regard Sombart’s assignment to the Jews of a key role in the development of capitalism as high praise. You will, as I do, regard his book as philo-Semitic. “

Milton Friedman may even agree with early Marx, that Capitalism is Jewish ‘by nature’. Yet, while Marx believed that in order for the world to liberate itself from Capitalism  it had better emancipate itself from the Jews (3), for Friedman capitalism is of profound value and to be respected, and Jews should be praised for their inherent bond with this philosophy and its diverse ramifications. As far as Friedman is concerned, for Capitalism to prevail, Jews should continue to do what they are good at: and that is to trade freely in an open and competitive market.

Friedman seems to dismiss the presumed  ‘intellectual honesty’ behind Jewish affiliation with the left and anti capitalism: He tends to argue that the Jewish intellectual inclination towards the left is a direct outcome of some political and historical circumstances, rather than ethical or ideological choice. He explains that, in his view, Jewish affiliation with the left is the product of a particular occurrence in Europe in the nineteenth century.

“Beginning with the era of the French revolution, the European political spectrum became divided into a “Left” and a “Right” along an axis that involved the issue of secularism. The Right (conservative, Monarchical, “clerical”) maintained that there must be a place for the church in the public order; the left (democratic, liberal, radical) held that there can be no Church at all . . . .”

It was only natural, then, for the Jews to join the left — in fact Jews could only join the left.

“The axis separating left from right also formed a natural boundary for the pale of Jewish political participation. It was the left, with its new secular concept of citizenship, that had accomplished the Emancipation, and it was only the left that could see a place for the Jews in public life.”

Such a reasoning, then, views Jewish affiliation with the left as a politically opportunistic move instead of a form of ‘moral awakening’.

Such a reading of the ‘Jewish left’ reaffirms my own critical assessment. It also explains why some Jews join the left — they support cosmopolitanism, solidarity, an international working class; and yet, they themselves  often seem to prefer to operate within  ‘Jews only’ racially orientated  cells such as the Bund,  Jewish Socialists or even Jews For Boycott of Israeli Goods. Friedman’s  reasoning might also explain why so many Jews who had their roots in the so- called ‘left’,  ended up preaching moral interventionism and Neo Conservatism.(4)

Friedman argues also, that Jewish affiliation with the left might be better understood as an attempt to disown some anti Semitic stereotypes of the Jew as being  “a merchant or moneylender who put commercial interests ahead of human values.”

According to Friedman, the Jewish anti capitalist is there to prove that, far from being money-grabbing, selfish and heartless, Jews are really public spirited, generous, and concerned with ideals rather than material goods. “How better to do so than to attack the market with its reliance on monetary values and impersonal transactions and to glorify the political process, to take as an ideal a state run by well-meaning people for the benefit of their fellow men?”

And yet, in Friedman’s logic then, it is not a ‘moral awakening’ that moves the Jew to the left; it is neither humanism, nor solidarity and nor is it kindness, but, instead, it seems to be a desperate attempt to replace or amend the Jewish image.

Surprisingly enough, I find myself in total agreement with Friedman, though I would phrase it differently. I do differentiate between ‘the leftist who happen to be Jewish’- an innocent category inspired by humanism,  and ‘the Jewish leftist- which seems to me to be a contradiction in terms, for the left aims to universally transcends itself beyond ethnicity, religion or race.  Clearly ‘Jewish left’ is there to maintain a Jewish tribal ethno-centric identity at the heart of working class philosophy. ‘Jewish left’ is there to primarily serve Jewish interests

I noticed that Richard Kuper, the European Jewish activist behind the recent Jewish Boat to Gaza, was quoted as saying  that their  goal was to show that “not all Jews support Israeli policies toward Palestinians.”

It seems to me that the message Kuper conveyed was pretty clear: Rather than being driven entirely by a genuine care for the Palestinians in Gaza, the Jewish boat was also engaged in a symbolic exchange.  It was also there to save the image of the Jews rather than solely providing humanitarian support. This fact alone may explain why the Jewish boat hardly carried any humanitarian aid for the Gazans. Rather than a ‘humanitarian aid mission for the Palestinians,’  it was probably also an ‘image rescue for the Jews’.

Seemingly then, Friedman managed to resolve the paradox between his two initial propositions (Jews being the benefactors capitalism vs. Jews being profoundly anti-capitalist) by offering an historical and political explanation: Jews or Jewish intellectuals are not really against capitalism; it was just the “special circumstances of nineteenth-century that drove Jews to the left, and the subconscious attempts by Jews to demonstrate to themselves and the world the fallacy of the anti-Semitic stereotype.” It was neither ideology nor ethics.

This interpretation explains why left Zionism was doomed to disappear. During his talks, Friedman reviewed the right/left political division in Israel. He noticed that two opposing traditions were at work in the Jewish State: “an ancient one–going back nearly two thousand years– of finding ways around governmental restrictions (and) a modern one– going back a century– of belief in “democratic socialism” and “central planning.”  Friedman was clever enough to gather already in 1972 that it is the “Jewish tradition”, rather than ‘socialism’, that would prevail. Friedman noticed already in the 1970’s that Israel was capitalist to the bone. He predicted that the short phase of Zionist ‘pseudo socialism’ was foreign to Jewish culture.

Yet. It isn’t just Israeli left that was doomed to die. Friedman’s reading of Jewish culture also explains why the Bund (5) died; it didn’t really spread to the West; it also explains why the legendary Mazpen and other Jewish tribal anti Zionist revolutionary groups have never attracted the Jewish masses.

Self-Fulfilling Prophecy

Friedman is not free of fault. In spite of his succinct reading of the Jewish left/right divide there are a few crucial points that have to be made about Friedman’s reading of Jewish culture, and his reading of capitalism.

Friedman argues that the free market and competition is good for the Jews. Yet he is also adamant that Government intervention is a disaster that leads to anti Semitism and other forms of institutional bigotry. If Friedman’s model is valid, then Jews in the West had better brace themselves, for Western Governments are currently intervening in the markets  in a desperate attempt to slowdown the inevitable collapse of what is left of our economy and relative wealth.

If Friedman’s model is correct, and intervention is indeed bad for the Jews, then anti Jewish bigotry could be immanent, especially considering the gigantic bailout  intervention schemes put up  by states in an attempt to save what remains of the Western economy.

But it goes further — it is also plainly clear that the bailout schemes are there to amend a colossal disaster caused by the endorsement of Friedman’s own ideology. We are all paying a very heavy price for free enterprise, hard capitalism, or, in general, the ideologies Friedman was so enthusiastic about.

There is something  Friedman didn’t tell his listeners in  the 1970s — He himself probably did not realise the full meaning of his economic model. He himself did not realise that the adoption of his philosophy by Ronald Reagan and Margaret Thatcher would eventually bring the West to its knees.  He himself did not realise that it was his own advocacy of hard capitalism that would lead Western continents to poverty and deprivation. He perhaps did not realise back in the 1970s that it was his model that would eventually eliminate productivity, and every positive aspect of the welfare state. Milton Friedman did not realise at the time that service economy that suited some ethnic minorities for two millennia wouldn’t necessarily be a successful model once adopted into a macro model. As Friedman had gathered, throughout their history Jews and other ethnic minorities were very effective operating as service economy within competitive and productive markets. However, Jews and other ethnic or religious  minorities did well  because others were there to work around them. The transforming of the West into a service economy driven by relentless greed, a process that followed Friedman’s economic precepts, is now proving to be a disaster. It means poverty and global depression. It is translated into alienation from labour and productivity.

Friedman may have been correct when he predicted that governmental intervention may lead to anti Semitism — yet, he probably failed to realise that it was largely his own intellectual  heritage that would be responsible for the current financial disaster. It is in fact his own economic model and  prophecy that could also introduce Jews to far more suffering.

(1)( (pg’109-110)

(2)ibid 174

(3)“What is the secular basis of Judaism? Practical need, self-interest. What is the worldly religion of the Jew? Huckstering. What is his worldly God? Money. Very well then! Emancipation from huckstering and money, consequently from practical, real Judaism, would be the self-emancipation of our time.” Karl Marx On The Jewish Question, 1844

(4)David Miliband, David Aaronovitch and Nick Cohen are all  good  examples of the above.

(5) East European  Jewish Socialist Party was formed in 1897 as the tthe General Jewish Labour Bund of Lithuania, Poland and Russia.