Economic freedom

Economic freedom or economic liberty is the ability of members of a society to undertake economic actions. This is a term used in economic and policy debates as well as in the philosophy of economics. One approach to economic freedom comes from classical liberal and libertarian traditions emphasizing free markets, free trade, and private property under free enterprise. Another approach to economic freedom extends the welfare economics study of individual choice, with greater economic freedom coming from a "larger" (in some technical sense) set of possible choices. Other conceptions of economic freedom include freedom from want and the freedom to engage in collective bargaining.

The 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 or theft. 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. There are several indices of economic freedom that attempt to measure free market economic freedom. Empirical studies based on these rankings have found higher living standards, economic growth, income equality, less corruption and less political violence to be correlated with higher scores on the country rankings. It has been argued that the economic freedom indices conflate together unrelated policies and policy outcomes to conceal negative correlations between economic growth and economic freedom in some subcomponents.

According to the free market view, a secure system of private property rights is an essential part of economic freedom. Such systems include two main rights: the right to control and benefit from property and the right to transfer property by voluntary means. These rights offer people the possibility of autonomy and self-determination according to their personal values and goals. Economist Milton Friedman sees property rights as "the most basic of human rights and an essential foundation for other human rights." With property rights protected, people are free to choose the use of their property, earn on it, and transfer it to anyone else, as long as they do it on a voluntary basis and do not resort to force, fraud or theft. In such conditions most people can achieve much greater personal freedom and development than under a regime of government coercion. A secure system of property rights also reduces uncertainty and encourages investments, creating favorable conditions for an economy to be successful.Empirical evidence suggests that countries with strong property rights systems have economic growth rates almost twice as high as those of countries with weak property rights systems, and that a market system with significant private property rights is an essential condition for democracy. According to Hernando de Soto, much of the poverty in the Third World countries is caused by the lack of Western systems of laws and well-defined and universally recognized property rights. De Soto argues that because of the legal barriers poor people in those countries can not utilize their assets to produce more wealth. One thinker to question private property was Pierre-Joseph Proudhon, a socialist and anarchist, who argued that property is both theft and freedom.

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