The Relation Between Economic Freedom and Political FreedomFreedom

It is widely believed that:

• politics and economics are unconnected
• individual freedom is a political problem
• material welfare is an economic problem
• any kind of political arrangements can be combined with any kind of economic arrangements

This is advocated by “democratic socialism”.

Its advocates:

• condemn the restrictions on individual freedom imposed by “totalitarian socialism” in Russia
• are persuaded that a country can adopt the essential features of Russian economic arrangements and yet ensure individual freedom through politics

I think that:

• this is a delusion
• there is an intimate connection between economics and politics
• only certain combinations of political and economic arrangements are possible
• a socialist society cannot be democratic in the sense of guaranteeing individual freedom

Economic arrangements play a dual role in the promotion of a free society.

1. Freedom in economic arrangements is a component of freedom

Economic freedom is an end in itself. This needs special emphasis because intellectuals have a strong bias against regarding this freedom as important.

They:

• hate the material aspects of life
• regard their pursuit of higher values as more important and deserving special attention.

For most citizens, however, the direct importance of economic freedom is comparable in significance to the indirect importance of economic freedom as a means to political freedom.

2. Economic freedom is also an indispensable means toward the achievement of political freedom.

The British after World War 2 who were not permitted to travel to the US because of exchange controls were deprived of freedom just as the Americans who were denied to travel to Russia because of their political views.

The one was an economic limitation on freedom.

The other was a political limitation. Yet there is no essential difference between the two.

The citizen of the United States who is compelled by law to devote something like 10 per cent of his income to the purchase of a particular kind of retirement contract, administered by the government, is being deprived of a corresponding part of his personal freedom.

How strongly this deprivation may be felt and its closeness to the deprivation of religious freedom, which all would regard as “civil” or “political” rather than “economic,” were dramatized by an episode involving a group of farmers of the Amish sect.

On rounds of principle, this group regarded compulsory federal old age programs as an infringement of their personal individual freedom and refused to pay taxes or accept benefits.

As a result, some of their livestock were sold by auction in order to satisfy claims for social security levies. True, the number of citizens who regard compulsory old age insurance as a deprivation of freedom may be few, but the believer in freedom has never counted noses.

A citizen in the United States who under the laws of various states is not free to follow the occupation of his own choosing unless he can get a license for it, is likewise being deprived of an essential part of his freedom.

So is the man who would like to exchange some of his goods with, say, a Swiss for a watch but is prevented from doing so by a quota. So also is the Californian who was thrown into jail for selling Alka Seltzer at a price below that set by the manufacturer under so-called “fair trade” laws. So also is the farmer who cannot grow the amount of wheat he wants. And so on.

Clearly, economic freedom, in and of itself, is an extremely important part of total freedom. Viewed as a means to the end of political freedom, economic arrangements are important because of their effect on the concentration or dispersion of power.

The kind of economic organization that provides economic freedom directly, namely, competitive capitalism, also promotes political freedom because it separates economic power from political power and in this way enables the one to offset the other.

Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom, and that has not also used something comparable to a free market to organize the bulk of economic activity.

Because we live in a largely free society, we tend to forget how limited is the span of time and the part of the globe for which there has ever been anything like political freedom: the typical state of mankind is tyranny, servitude, and misery. The nineteenth century and early twentieth century in the Western world stand out as striking exceptions to the general trend of historical development. Political freedom in this instance clearly came along with the free market and the development of capitalist institutions.

So also did political freedom in the golden age of Greece and in the early days of the Roman era. History suggests only that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.

Fascist Italy and Fascist Spain, Germany at various times in the last seventy years, Japan before World Wars I and II, czarist Russia in the decades before World War I—are all societies that cannot conceivably be described as politically free. Yet, in each, private enterprise was the dominant form of economic organization. It is therefore clearly possible to have economic arrangements that are fundamentally capitalist and political arrangements that are not free.

Even in those societies, the citizenry had a good deal more freedom than citizens of a modern totalitarian state like Russia or Nazi Germany, in which economic totalitarianism is combined with political totalitarianism. Even in Russia under the Tzars, it was possible for some citizens, under some circumstances, to change their jobs without getting permission from political authority because capitalism and the existence of private property provided some check to the centralized power of the state.