Milton Friedman's spending matrix revisited: 'Spending efficiency' and 'preference compatibility' across different economic systems
General Economics
2025-12-24 v1 Economics
Abstract
This article expands Milton Friedman's spending matrix to analyse 'spending efficiency' and 'preference compatibility' across different economic systems against five key outcome criteria. By generalising Friedman's typology, it compares efficiency and freedom as systems shift from laissez-faire capitalism to communism, illustrating a gradual deterioration in their key outcomes. While government intervention is sometimes necessary to address market failures, its role should always be carefully limited to avoid inefficiency and misalignment with individual preferences. The insights may provide guidance for policymakers in designing economic systems and policies that promote both economic prosperity and personal liberty.
Cite
@article{arxiv.2512.19984,
title = {Milton Friedman's spending matrix revisited: 'Spending efficiency' and 'preference compatibility' across different economic systems},
author = {Ali Zeytoon-Nejad},
journal= {arXiv preprint arXiv:2512.19984},
year = {2025}
}