Economic freedom
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]
Freedom from want[edit]
Franklin D. Roosevelt included freedom from want in his Four Freedoms speech. Roosevelt stated that freedom from want "translated into world terms, means economic understandings which will secure to every nation a healthy peacetime life for its inhabitants – everywhere in the world". In terms of US policy, Roosevelt's New Deal included economic freedoms such as freedom of trade union organisation, as well as a wide range of policies of government intervention and redistributive taxation aimed at promoting freedom from want. Internationally, Roosevelt favored the policies associated with the Bretton Woods Agreement which fixed exchange rates and established international economic institutions such as the World Bank and International Monetary Fund.
Herbert Hoover saw economic freedom as a fifth freedom, which secures survival of Roosevelt's Four freedoms. He described economic freedom as freedom "for men to choose their own calling, to accumulate property in protection of their children and old age, [and] freedom of enterprise that does not injure others."[44]
Freedom of association and unions[edit]
The Philadelphia Declaration (enshrined in the constitution of the International Labour Organization[45]) states that "all human beings, irrespective of race, creed or sex, have the right to pursue both their material well-being and their spiritual development in conditions of freedom and dignity, of economic security and equal opportunity." The ILO further states that "The right of workers and employers to form and join organizations of their own choosing is an integral part of a free and open society."[46]
Socialist views[edit]
The socialist view of economic freedom conceives of freedom as a concrete situation as opposed to an abstract or moral concept. This view of freedom is closely related to the socialist view of human creativity and the importance ascribed to creative freedom. Socialists view creativity as an essential aspect of human nature, thus defining freedom as a situation or state of being where individuals are able to express their creativity unhindered by constraints of both material scarcity and coercive social institutions.[47] Marxists stress the importance of freeing the individual from what they view as coercive, exploitative and alienating social relationships of production they are compelled to partake in, as well as the importance of economic development as providing the material basis for the existence of a state of society where there are enough resources to allow for each individual to pursue his or her genuine creative interests.[48]
Socioeconomic impact of economic freedom[edit]
One of the ways to measure economic competitiveness is by comparing an extent of economic freedom that countries have, which as surveys show can also largely explain differences in economic well-being across the world. Generally, countries with higher economic freedom have higher gross domestic product per capita and its growth rates, as well as better health care, education quality, environment protection, income equality, and happiness results. These trends of increasing prosperity are confirmed even when we compare these indicators within territories of countries. Nevertheless, despite these benefits societies have to be aware that with increasing economic freedom they will have to face going through a phase of increasing inequality, which basically is a result of decreased redistribution, as well as other negative effects from economic liberalization, i.e., running of local enterprises out of business, takeover of competitive firms, enforcing of interests of foreign companies, dependence on foreign capital, deteriorating work rights, harmful manufacturing for the environment, introducing of commercial practices that are not favorable for consumers, as well as endangerment for survival of national cultures. However, these negative effects from economic freedom tend to be felt in a shorter term, and if countries use the opportunities of economic freedom in our increasingly globalized economy in a right way, as research shows their socioeconomic conditions will be significantly better than in a case of less economic freedom.[49]