Economic freedom is very important for all across countries. Indeed, economic freedom leads to the ability to make various choices and take economic actions. Moreover, it is related to other sorts of freedom including social freedom, political freedom and cultural freedom that are important for everyone’s life. Even if there is economic freedom, which is needed to work, consume, produce, control one’s property and invest in the way one prefers, across countries around the world, it is not up to the mark. In many countries, there are inadequacies in economic freedom that is regarded as a prerequisite for economic development. Consequently, many cannot exercise their economic freedom as desired.
It is pertinent to say that economic freedom indicates the freedom of economic actions. One has economic freedom when one can freely make choices, sell and buy goods and services, choose an occupation, start a business or hire employees, compete, own property and make profits without any coercion or state regulation. But whether the institutions and policies of a country are consistent with everyone’s economic freedom depends on several conditions. Notably, there are several indexes including the indexes of the Fraser Institute and the Heritage Foundation that measure economic freedom with different components, though there are criticisms against them. Some notable components of economic freedom are property rights, government integrity, judicial effectiveness, business freedom, trade freedom, monetary freedom, investment freedom and financial freedom. In countries where there are high levels of economic freedom in terms of its components, people can freely make economic choices and actions and there is low poverty.
Of course, economic freedom varies across countries. Many have more economic freedom in different countries around the world, while many have less economic freedom. People in developed and many developing countries have more economic freedom. They can take more economic choices and actions. This is mainly because developed and many developing countries have more consistent policies and institutions that provide conditions facilitative to the economic freedom of people. As a consequence, the per capita income of those counties is more than other countries. But it is undeniable that a considerable number of people in the world do not have economic freedom at the desired level. This is especially the case in less developed countries, where there are considerable inadequacies in the consistent policies and institutions supportive of economic freedom.
It is notable that economic freedom has many economic, social and other positive effects, although there are some negative impacts. Some notable impacts are increased per capita income, more investment, reduced poverty, increased purchasing power and reduced corruption. Indeed, per capita income is higher and poverty is lower in those countries that provide more economic freedom. Moreover, economic freedom leads to some other positive impacts including improved living standards, improved health, higher literacy, increased life expectancy, and self-worth and facilitates the realization of different goals in life. These are mainly because people with more economic freedom are more capable of spending on health, and buying various goods and services needed for an improved life.
But there are debates on economic freedom, which is compatible with reasonable governmental regulations designed to address poverty, prevent human rights abuses and create conducive conditions for development. Advocates including Adam Smith, John Stuart Mill and Murray Rothbard argue for economic freedom that is based on property rights and free-market system. Advocates of economic freedom mainly claim that economic freedom leads to economic growth and many other positive consequences. But opponents of the ‘free market economy’ including Karl Marx, John Kenneth Galbraith and Robert Heilbroner argue for an economic system that is characterized by centralized economic planning and state control of the means of production. In the strict sense, the latter type of economic system is also called to be ”command economy”. Opponents mainly claim that free markets lead to monopolies, chronic economic crises, economic exploitation and some other negative effects and that centralized political control of people’s economic lives avoids these problems of the marketplace.
No doubt, there are some negative impacts of economic freedom. Indeed, economic freedom sometimes leads to monopoly of giant corporations, income inequality, increasing degradation of the poor, poor quality of goods and services, fluctuations in income and prices and limited focus on collective interests. Increased economic freedom leads to other impacts including increased corruption. But it is now proven that economic freedom has more positive outcomes than negative ones in different countries around the world. Indeed, many countries that supported a command economic system now resorted to a free economic system, despite the fact that in many economies, there are more regulations of government. Thus, economic freedom is needed for everyone across countries, though some regulations are important for making sure that the negative effects of economic freedom are well addressed.
Of course, there is a range of social, economic, institutional, political, policy-based and other barriers to economic freedom in different countries around the world. A lack of economic freedom oriented policy, a lack of positive attitude of the government toward free trade, inefficiency in the implementation of economic plans and ethnic conflicts are some policy based and political barriers to economic freedom in different countries. Policy related and political barriers mostly exist in those countries where the political system is inadequately developed or there is inadequacy in political freedom. Besides, high illiteracy rate, poor infrastructure, poor communication network, inadequacies in human capital, a higher presence of corruption and inadequate health services are some other barriers to economic freedom.
To secure economic freedom for all across countries, the deserving improvement across components of economic freedom including business freedom, property rights and investment freedom is important. Of course, policy and structural barriers need to be well addressed for providing facilitative conditions. But governments need to refrain from actions that unfairly interfere with personal choice, freedom of occupation, property rights, voluntary exchange and freedom to enter into markets, even if different sorts socialist policies are needed for the benefit of economic development for all. Also, emphasis needs to be given to the development of human capital and the development of infrastructure and communication networks, which are vital for increasing economic freedom. Of course, corruption needs to be minimized in different countries. For this, transparency and accountability in different government departments are important.
Of course, it is the responsibility of each state to improve conditions that are needed for economic freedom. The important aspect here is that governments need to ensure economic freedom for all. As free trade, a key component of economic freedom, can hamper the business of different small firms on some occasions or can bring detrimental effects on the economy of nations on some occasions, some sort of restrictions that do not unfairly restrict economic freedom may be reasonable to a certain extent. Since developed countries are more consistent with economic freedom, less developed and developing countries need to do more compared to developed countries. But international cooperation is also important in less developed and newly developing countries for improving different conditions needed for economic freedom.
DISCLAIMER: The views expressed are those of the authors and do not necessarily reflect the official policy or position of the Magazine, its employees or any other authors. Views published are the sole responsibility of the author(s).
