Economic freedom

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Economic freedom, or economic liberty, refers to the agency of people to make economic decisions. This is a term used in economic and policy debates as well as in the philosophy of economics.[1][2] One approach to economic freedom comes from the liberal tradition emphasizing free markets, free trade, and private property. Another approach to economic freedom extends the welfare economics study of individual choice, with greater economic freedom coming from a larger set of possible choices.[3] Other conceptions of economic freedom include freedom from want[1][4] and the freedom to engage in collective bargaining.[5]

The liberal free-market viewpoint defines economic liberty as the freedom to produce, trade and consume any goods and services acquired without the use of force, fraud, theft or government regulation. This is embodied in the rule of law, property rights and freedom of contract, and characterized by external and internal openness of the markets, the protection of property rights and freedom of economic initiative.[3][6][7] There are several indices of economic freedom that attempt to measure free market economic freedom. Based on these rankings, correlative studies have found higher economic growth to be correlated with higher scores on the country rankings.[8][9] Critics of this approach, such as Fredrik Carlsson and Susanna Lundström, have argued that the economic freedom indices conflate unrelated policies and policy outcomes, for example counting lower corruption as an indicator of economic freedom, to conceal negative correlations between economic growth and free-market policies.[10]

  1. ^ a b Bronfenbrenner, Martin (1955). "Two Concepts of Economic Freedom". Ethics. 65 (3): 157–170. doi:10.1086/290998. JSTOR 2378928. S2CID 144625406.
  2. ^ Sen, Amartya. "Rationality and Freedom". Harvard University Press: 9.
  3. ^ a b "Economic Freedom and its Measurement". The Encyclopedia of Public Choice. Vol. 2. Springer. 2004. pp. 161–171. ISBN 978-0-7923-8607-0.
  4. ^ "Franklin Roosevelt's Annual Address to Congress – The 'Four Freedoms'". January 6, 1941. Archived from the original on May 29, 2008. Retrieved November 10, 2008.
  5. ^ Jacoby, Daniel (1998). Laboring for Freedom: A New Look at the History of Labor in America (eBook). Armonk, New York: ME Sharpe. pp. 8–9, 148, 166–167. ISBN 978-0-585-19030-3.
  6. ^ Bhalla, Surjit S. (1997). "Freedom and economic growth: a virtuous cycle?". Democracy's Victory and Crisis. Cambridge, England: Cambridge University Press. p. 205. ISBN 0-521-57583-4.
  7. ^ Harper, David A. (1999). Foundations of Entrepreneurship and Economic Development. London, England: Routledge. pp. 57, 64. ISBN 0-415-15342-5.
  8. ^ Lawson, Robert; Murphy, Ryan; Powell, Benjamin (2020). "Determinants of Economic Freedom: A Survey". Contemporary Economic Policy. 38 (4). Wiley: 622–642. doi:10.1111/coep.12471. S2CID 216347809.
  9. ^ Ayal, Eliezer B.; Karras, Georgios (Spring 1998). "Components of economic freedom and growth: an empirical study". Journal of Developing Areas. 32 (3). Macomb, Illinois: Western Illinois University: 327–338.
  10. ^ Carlsson, Fredrik; Lundström, Susanna. "Economic Freedom and Growth: Decomposing the Effects" (PDF). Public Choice. Archived (PDF) from the original on 2017-08-11. Retrieved 2016-05-26.