Justin Fox makes his debut at the Harvard Business Review blog with a Milton Friedman laced argument against the recent Supreme Court decision on limiting the free speech of corporations. Fox argues that if Milton Friedman is correct about how a firm should behave, then they are unlike individuals who have diverse and conflicting beliefs and interests, but are beholden only to the profit motive. And such mad beasts should not be allowed to have sway in the laws the regulate them.

Given all of his citations of Milton Friedman I thought it would be useful to revisit what Friedman actually thought about campaign finance laws, and the free speech rights of corporations. Here he is discussing the matter in an interview with Russ Roberts from 2006:

Russ Roberts: Issue by issue, it’s easy to make the case for discretion. When you see the cumulative effect of going issue by issue, you really can make the case for principles. You give the example in the book of freedom of speech. Obviously, a lot of Americans are against freedom of speech.

Milton Friedman: Oh, sure.

Russ Roberts: And if you went issue by issue, you’d find a lot of speech that would be voted down as not appropriate and yet we sustain it through enough people believing that it’s a good thing.

Milton Friedman: But even here, with the campaign finance laws, we’re reducing freedom of speech drastically.

Russ Roberts: That gets back to your point about businesses wanting government to protect them. In this case, the business is the industry of government. Politicians like the protection that campaign finance laws gives them.

Milton Friedman: Yeah.

Russ Roberts: That’s a very tough one when they regulate themselves. They do tend to be a little self-interested there. It’s very sad.

Milton Friedman: But how do we get that repealed? What politician is going to come up and make a big fight on repealing the McCain-Feingold legislation.

Russ Roberts: Although the Supreme Court occasionally does speak up and suggest that this is not really consistent with the Constitution.

Friedman clearly sees campaign finance laws as restrictions of the free speech rights he presumes corporations to have. Interestingly, he also sees the primary purpose of these laws as protectionism for politicians, in kind with the sorts of protectionism other industries lobby for.

I couldn’t find any other writings by Friedman on campaign finance, but from his comments above I can imagine he would see removing these laws as allowing political influence be more competitive. You see, contra Fox, through lobbying and other means industries already have a good deal of sway in designing the “rules of the game” in which they operate. Unlike these surreptitious ways that industries gain political influence, allowing corporations free speech in political matters only influences the “rules of the game” if they can persuade individuals to vote differently.It seems to me that allowing corporations’ influence to be determined by the persuasiveness of their arguments seems infinitely more benign than doing so through the political clout they wield behind closed doors.

Even more, I think it is just as likely that allowing corporations free speech will serve as a check on the political influence of corporations by lowering the barriers to entry to influence, and dispersing rather than concentrating that power and influence. Corporations may have a singular motive in profit, but as a group their end legislative and regulatory desires are as diverse and contradictory as individuals’ beliefs and values.

H.T. Felix Salmon

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