Policy

The relationship between economic freedom and political freedom made by Milton Friedman

The argument of the relationship between economic freedom and political freedom made by Milton Friedman is bolstered in six pillars that vary from historical evidence, theoretical thoughts and even general assumptions. However, the underlying logic involved in the argument is that economic freedom basically is a mean for achieving political freedom and it is articulated as follows: economic freedom fosters political freedom as long as the former requires Individual co-operation without any coercion; economic freedom promotes check and counter political balance and; economic freedom prevents power concentration. The following two paragraphs briefly address those three aspects of Friedman’s arguments on capitalism and freedom. This short essay also makes an empirical observation on the current trends on economic freedom and political freedom to confirm or reject Friedman’s propositions.

According to Friedman, “Political freedom means the absence of coercion of a man by his fellows men” (Friedman, Pag 15). Furthermore, that state of the world only can be achieved by the guarantee of voluntary co-operation in economic relations among fellow men. The author identifies that the instrument used to assure voluntary co-operation is the utility derived from economic transactions, which allegedly, benefits all parties involved in. Benefits bring voluntary co-operation which at the same time diminishes the possibility of political coercion.
Thus, Friedman’s most cogent idea, regarding political and economic relationship, stems from the proposition that “economic power can be widely dispersed” (Friedman, Pag 16); which means that free markets are not a zero sum game in which growth (economic power) does not need to be at expenses of existing centers of power.

The bottom line of this proposition is that, within a free market, individual economic growth leads to a fair competition for what could be “leading political ideas”. This phenomenon, supposedly, happens through a laconic assumption about funds of political campaigns. According to Friedman, there are enough billionaires willing to support different political ideas which mean political freedom and the possibility of discerning. That is the reason “… if economic power is kept separated from political power, it can serve as a check and a counterbalance to political power” (Friedman, Pag. 16).

Simple Empirical Test:

Friedman’s proposition assumes that there is a correlation between two phenomena: economic freedom and political freedom. The proposition goes further by suggesting that economic freedom is what fosters political freedom and not vice versa. Therefore, as long as we see more economic freedom, we should expect more political freedom. Let us make a simple test by integrating two separate indexes: 2011 Index of Economic Freedom taken from the Heritage Foundation; and Polity IV Index taken Political Instability Task Force (PITF)
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Conclusion:

Considering 154 countries taken from the indexes mentioned above we could point out that the trend shows a weak correlation which perhaps is not significant.

What is significant beyond the trend are the specific cases such as Bahrain, Qatar, United Arabs Emirates and Singapore among others that represent a huge exception to the argument. Those cases further few questions about the accuracy of Friedman’s theory: Is really economic freedom a sufficient condition for political freedom? Can economic power capture political institutions? Does economic freedom find political culture hostile for economic growth? More research and comparisons must be developed in order to conclude positively Friedman’s ideas.

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