March 6, 2005
Economic and Political Freedom: Does One Lead to the Other? BECKER
President Bush’s January inaugural speech stressed the importance of improving political freedoms worldwide: “So it is the policy of the United States to seek and support the growth of democratic movements and institutions in every nation and culture, with the ultimate goal of ending tyranny in the world”. The right to vote freely and other political freedoms are valued everywhere, clearly demonstrated by the happy faces of many Iraqis when they went to vote for the first time in free elections. Pressure to liberalize politically may be spreading throughout the Middle East, as shown by recent small steps toward greater democracy in Egypt, Lebanon, and Saudi Arabia.
Men and women “in every nation and culture” also place high value on economic freedoms. These include the ability to own property and have it protected by law and contracts, the opportunity to change jobs, including moving off farms and to different cities and regions, the right to become self-employed, and the freedom to choose among hundreds of varieties of goods and services at competing establishments.
The Chinese are so happy with the economic freedoms granted them during the past 25 years that for the moment they have accepted sharp limits on their political freedoms, including a one party system, a controlled press, and attempts to limit access to many websites. Similarly, Indians were content enough with their extensive political freedoms acquired after independence from Great Britain in 1947, so they did not press for economic freedoms until four decades later.
Since both economic and political freedoms are highly valued, it is essential to understand how they interact as nations evolve. The history of different countries during the past century strongly indicates that economic freedoms over time typically push societies toward political freedoms. To take a few examples, South Korea, Taiwan, and Chile all started their economic development under military regimes. Korea and Taiwan both began freeing their economies around 1960 after centralized direction of their economies failed to produce economic growth. Chile began opening its economy under General Pinochet in 1981, also after his centralized approach to the Chilean economy failed. Within two decades, all three nations had achieved, or were moving rapidly toward, political democracies, with vibrant competition for elections among competing parties, and a mainly free press.
The path from political to economic freedom, by contrast, is slower and more uncertain. It took India over four decades to begin to loosen its extensive controls over private companies, labor markets, start-ups, imports from abroad, and numerous other activities. It still has a long way to go. Mexico has had a free press and considerable political freedom for a century or so, but economic freedoms did not begin to evolve until the latter part of the 1980’s. Israel has fierce competition among political parties, but continues to have an overly controlled economy.
To be sure, a few case studies are not conclusive, partly because one may pick and choose to come up with favorable examples. So examples have to gain support from analyses of as many nations as possible. International comparisons of these questions were started by the sociologist, Seymour Martin Lipset, and continued by many others, especially more recently by the economist Robert Barro. The consensus among these studies is that countries are likely to become democratic if economic growth succeeds in raising their average incomes to high enough levels. And countries with greater economic freedom, that is with freer markets and more secure private property, produce faster growth and greater prosperity than countries that sharply limit economic freedoms. Moreover, this strong positive relation between economic freedom and growth is largely independent of the degree of political freedom.
These studies also find that the effect of political freedom on subsequent economic growth is weak. There is probably greater variability in economic performance under dictators, but on the average, totalitarian regimes and democracies do not differ greatly in their rates of economic progress. I believe that democracies are not especially successful at generating economic prosperity because powerful interest groups develop under democracies (and other political systems too). These groups compete for economic favors that often are at the expense of economic efficiency. For example, democratic nations have difficulty shifting away from policies that say restrict foreign and domestic private investments, as India did for so long, because both government and private enterprises that benefit from these restrictions lobby to continue them.
By contrast, when economic freedoms lead to greater prosperity, that encourages a widespread desire for more political freedom. With freer markets,entreprenuers and management travel abroad more often to meet customers and suppliers, and incidentally learn about the freedoms elsewhere. A growing middle class takes trips to other countries, and they send their children abroad to study at top schools. University students read the great works that show the advantages of political freedoms. More families become highly literate as education progresses, and families learn about the world from cable and satellite television, and from the internet.
As a result of these activities, a steadily increasing fraction of the population become aware of the political freedoms enjoyed by the leading nations, the great satisfaction from having the right to speak openly, to read conflicting opinions on different issues, and to vote for candidates with competing agendas. They begin to agitate for greater political freedoms, and eventually they become too powerful a force to be ignored.
This analysis implies, in particular, that if China continues to grow rapidly, the Chinese people will become increasingly dissatisfied with censorship and their limited political freedom. Already they have much greater freedom than under Mao to voice different opinions, and to criticize the government -if not done too stridently and openly. These forces will gather steam, and I believe they will lead before long to a much more open political process.
To be absolutely clear, I am not claiming that people value economic freedoms more than political freedoms. Rather, the argument is that economic freedoms tend to lead before long to political freedoms, while the reverse causation is slower and less certain. Put differently, private property and open markets help economies grow, which gives the political process a strong shove toward democracy. For this reason, the President’s inaugural speech should have paid more attention to economic freedoms, along with his stirring and convincing case for democracy.
Posted by becker at 9:31 PM | Comments (45) | TrackBack (18)
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Comments
Professor Becker:
Right On! Economic liberaliazation and subsequent political liberalization have strong correlations.
One question: what about in African countries where private property is not protected--if not even existing more many--and acquring the legal documents takes years (per de Soto's research). It would seem that some sort of political reform would be needed for economic liberalization?
Posted by spiritofcapital at March 7, 2005 1:30 AM | direct link
“To be absolutely clear, I am not claiming that people value economic freedoms more than political freedoms”
You may not be---but I am definitely doing so. A certain degree of affluence usually precedes any genuine interest in democracy. The vast majority of people value a comfortable lifestyle far more than political freedom. The latter is something of an acquired taste that many perceive as an added responsibility and headache. Instinctively, it is deemed preferable to let others worry about such extraneous stuff.
Posted by David Thomson at March 7, 2005 4:45 AM | direct link
Second Mr. Thomson above that economic freedom, specifically, improvement in personal wealth are more valuable than political freedom. One need look no further than East/Southeast Asian developing countries for multiple case studies on tension/competition between political and economic freedom.
It would be good to be more specific about what data are used to demonstrate varying degrees of economic freedom. I have a feeling that the studies would run into difficulties. For example, the incidences of property rights and enforcement/legal structures must be tempered with different attitudes towards government, elites, and wealth in a given society.
That said, the general correlation between economic and political freedom might also be distinguished from the general correlation between, say, per capita wealth and political freedom.
All in all though, such thoughts are good starting point for further analysis, but as a basis for a particular domestic policy, such comparisons of aggregate macroeconomic data have limited utility. The simple example is comparison of GDP figures across vastly different economies, without looking at how GDP is distributed within a population and across sectors of the economy.
It has been an ongoing disservice for elite western governments to prescribe specific policies to "less developed" economies. Fortunately, national technocrats and publics around the world are getting wiser and correctly viewing such advice through a domestic lens and, among other things, (a) considering the decision frameworks of individuals and of particular populations in their given society, and (b) avoiding backing into familiar policies and frameworks that have yielded desired outcomes in the west.
Unfortunately, there are still armfuls of irresponsible governments/leaders/officials who appear to have little interest in genuinely addressing the welfare of their country's populations. But that's another topic.
Posted by my labor makes you free at March 7, 2005 9:57 AM | direct link
Economic freedom can be easier for governments to grant that political freedom.
Economic freedom resides mostly in governments laying down rules for what may not be done. Other things being equal, fewer rules equal more freedom; a command economy is not only an inefficient vehichle for creating wealth, but a tremendous amount of work to run.
Political freedom is more difficult. It demands of the public engagement, and of public institutions mechanisms to mediate conflicts between interests. A highly sophisticated structure for ensuring political freedom, like the American Constitution, is beyond the capacity of many less developed cultures to implement.
Posted by Zathras at March 7, 2005 10:45 AM | direct link
...economic freedoms. These include the ability to own property and have it protected by law and contracts,...
So what about the freedom to walk along a beach without encountering "Private Property - No Tresspassing signs"? Or the freedom to modify a computer program to suit one's needs (that is, violate the derivative works clause of the program's copyright)? Or the freedom to walk into a grocery store and take an item off the shelf and walk out (without paying)?
Property law is fundamentally about the government taking freedom away from its citizens (or at least providing a mechanism by which some citizens can restrict the freedom of other citizens). Now, it can be argued that by "freedom" we only mean those freedoms that people should have (or that freedom is the ability to take away other people's freedom) - but then every country in the world can claim that it's citizens have complete freedom because its citizens are granted exactly the freedoms that (the country in question has concluded that) they should have.
Along those lines, Bush keeps going on about spreading democracy in the Middle East but, in fact, everyone wants democracy - they just want it on their own terms. Specifically, Bush wants a democracy in Iraq in which the USA has permanent military bases there from which it can launch attacks on neighboring countries and in which American companies are pumping Iraq's oil and selling it to people in the USA at low prices. The various insurgent groups all want different things (some would want a democracy in which Saddam Hussein was back in power and some would not) but the one thing they have in common is that they want a democracy in which the USA is completed excluded from any dealings with Iraq. So the battle is really over whether a democracy is shaped in Iraq that includes or excludes the USA.
Similarly, both the Israelis and the Palestinians want peace. It's just that a number of Israelis want a peace in which Palestine doesn't exist and a number of Palestinian's want a peace in which Israel doesn't exist. So both sides then claim "Oh, the other side doesn't want peace: they just want to destroy us!"
So, yeah, everyone wants freedom, democracy, and peace - they just want them on their own terms and it is the terms that are in dispute around the world. The real question, then, is whether having the economic freedom on the terms the the USA wants will lead to political freedom on the terms that the USA wants (and vice versa).
Posted by Wes at March 7, 2005 11:18 AM | direct link
Bush is on record stating that if the Iraqi government asks the US military to leave, it will do so. Also, they are bending over backwards to get an Iraqi assembly to set up its own style of representative government. There's not much more we can do.
Thug regimes like Hussein start out promising economic growth as a trade-off for political freedoms. They end, as have many of the east Asian ones, in total collapse as the totalitarian state and the one-party rule slowly expand and create corruption and graft of enormous proportions at all levels of government.
The "trade-off" of economic and political liberties is, in my assessment, a chimera in the long run. I did an econometrics project on this in a seminar once; the best data and methodology I could put together showed that in the short run, dictatorships grow faster than democracies... but in the long run, democracies grow faster (this is the 10-year and greater horizon). I think that is absolutely right. In the short run, the dictator can suppress the Marxists and strong-arm the economy into action. However, the corruption and inefficient style of growth eventually create macroeconomic pressures on either the currency or the banking system or the businesses that are under the policies, and growth will slow or even reverse.
Corruption is just too much fun. In the long run, it's inevitable without political freedoms to air out the dirty laundry.
Posted by RWS at March 7, 2005 4:00 PM | direct link
I'd be curious in hearing some response to Wes' obvious confusion between anarchy and freedom. The fur on the back of my neck is standing as I read this illogical retort.
Posted by Jay Cline at March 7, 2005 7:42 PM | direct link
I think Becker makes an important point here, suggesting that advancing economic status may correlate with an increased demand for political freedom.
I think it is related to a pointthat Fukuyama made well in The End of History. His suggestion being that as a technocratic class in China rises, they begin being educated in places that have adopted the free market system (places with better schools). They come back to their country as the sons and daughters of the wealthy (read: party members) class of that society, and find that while rich and enjoying a good economic position, are dissatisfied with their status. I think the argument certainly carries some weight.
Milton Friedman also puts forth an interesting suggestion: "Freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself ... Economic freedom is also an indispensable means toward the achievement of political freedom." (In my understanding) after noting instances in South America, he retracted his longstanding statement that economic freedom directly lead to political freedom, realizing instead that there was a mere correlation.
I think this weakening of this point went too far, and that Professor Becker's argument is well made. It is difficult for either economic freedom to progress without the political, or vice versa.
However, I would put forth the additional suggestion that countries that restrict economic freedom rarely respect the political. Thoughts?
Posted by SS at March 7, 2005 8:19 PM | direct link
...obvious confusion between anarchy and freedom.
Presumably the discussion is about freedom from government control so, in that sense, anarchy is complete freedom. Where's the confusion?
In particular, no one wants complete freedom and so the disagreement arises from what limits to place on freedom. For example, capitalists would like to limit collective ownership while socialists would like to limit individual ownership.
In this particular discussion, there seems to be a sort of convolution of economic freedom with economic success. If economic freedom is defined to be equivalent to economic success then when the US national debt (from the Bush administration's massive military spending and tax cuts) becomes
unsustainable and the US economy goes through the floor then it can be said that the USA did not have economic freedom under the Bush administration.
It is an interesting question of whether economic success correlates with a desire for political freedom. If economic success is defined as minimizing the fraction of the population that is uneducated and desperately poor then there should be a strong correlation because people who are too poor and uneducated to have an understanding of the political choices available to them are unlikely to make good choices.
Posted by Wes at March 7, 2005 10:51 PM | direct link
A bit off topic here but it relates to the definition of freedom.
Bush is on record stating that if the Iraqi government asks the US military to leave, it will do so.
Bush is also on record saying that Iraq had weapons of mass destruction (at the time of invasion) so he doesn't exactly have a lot of credability.
Also, they are bending over backwards to get an Iraqi assembly to set up its own style of representative government.
Actually, they are bending over backwards to get the Iraqi's to set up a style of government acceptable to the USA. I doubt very much that anyone in the Bush administration cares whether it's a style that the Iraqi's want except to the extent that the Bush administration wants a government that won't face immediately face a popular revolt.
There's not much more we can do.
I agree that there's not much more that we will do. As far as what we could do - we could withdraw all our troops immediately and pass a law that no US company may be involved in any aspect of Iraq's oil production. The most relevant question is what we should do. If Bush were truly enlightened he would go before congress with a bill barring US companies from any involvement in Iraq's oil production and reconstruction (to make it perfectly clear that there is no conflict of interest) and requiring all US troops to be withdrawn within two years unless either 1.) in a vote certified by the United Nations 90% of all Iraqi's vote for the USA to stay or 2.) the United Nations certifies that Iraq is not stable enough for such a vote to take place.
More to the question at hand. Saddam Hussein decided that the right amount of freedom for Iraq involved brutal suppression of rebellions involving the Shia and the Kurds and now the Bush administration has decided that the right amount of freedom for Iraq involves a brutal military occupation suppressing a rebellion involving the Sunnis, among others.
Of course, the Bush administration claims that it is making progress toward democracy and that at some time in the future the Iraqis will be able to vote for for their constitution - but, like, how much choice is that? I mean what are they going to do? Vote to not have a constitution? That's like back when they could either vote for Saddam Hussein or not. Wow! What a choice.
Real political freedom isn't about whether people are allowed to vote or whether people are allowed to express their opinions. Real political freedom is about people being able to determine the political decisions that their country makes. When half the USA didn't want to go to war with Iraq and the Bush administration completely ignored them the Bush administration was stomping all over the essence of what political freedom really is.
Posted by Wes at March 7, 2005 11:26 PM | direct link
"When half the USA didn't want to go to war with Iraq and the Bush administration completely ignored them the Bush administration was stomping all over the essence of what political freedom really is."
Huh? The last time I checked the Republican administration did not pull off a coup. President Bush has been chosen by the voters to lead this country. The majority of our elected representatives also back the president in Iraq.
There is nothing stopping you from advocating your (I think) most peculiar views. It appears, however, that you bewilderingly think that democracy does not exist in the United States if most of us disagree with you!
Posted by David Thomson at March 8, 2005 4:58 AM | direct link
This fight was hashed out 2-3 years ago, and it's really not relevant to the topic. Can we just agree that reasonable minds can differ on the war?
Posted by Daniel Chapman at March 8, 2005 10:40 AM | direct link
What makes this blog valuable, apart from the unusual intellectual firepower of its proprietors, is the number of thoughtful posters who stay on topic and do not encumber threads with lengthy polemics. There are plenty of options elsewhere on the Internet for repeating talking points about the Iraq war or whatever Bush administration policy was in the newspaper this morning.
Posted by Zathras at March 8, 2005 1:02 PM | direct link
President Bush has been chosen by the voters to lead this country.
The fundamental idea that the USA was founded on is that, for each decision that is made, a person should have a say in the decision to the extent that they are affected by the decision. For example, under ordinary circumstances, the decision of what a person should eat for lunch should be made by the person eating the lunch.
The essence of political freedom, as it was intended in the founding of the USA, is that people should have a say in the decisions of a government to the extent that they are affected by those decisions. Now, things like fair elections, separation of power between different branches of government, separation of power between the federal and state levels of government and the bill of rights are all mechanisms designed to achieve political freedom but they are the means rather than the end.
Political freedom is a matter of degree and it is measured by the extent to which the government's decisions reflect the preferences of those affected by those decisions. In particular, it is not measured by whether a country holds elections or allows public criticism of government policies (although such things usually promote political freedom). Interestly, with this fundamental definition of political freedom, the USA actually has less political freedom than many other countries.
Now, Gary Becker (incorrectly, in my opinion) defines political freedom as holding elections and he defines economic freedom (again, incorrectly, in my opinion) as private ownership. The question at hand is whether economic freedom results in political freedom so, using his definitions, a concrete question would be whether selling off a national park to a luxury condominium developer would result in more frequent elections.
The more interesting question, would be whether economic success (defined as minimizing the fraction of the population that is poor and uneducated) leads to political freedom (defined as goverment decisions reflecting the preferences of those who are affected by the decisions).
This is an interesting question because the problem with letting people make decisions for themselves is that it results in people no longer being able to control other people. For example, does a decent income and education correlate with willingness to let gay couples decide for themselves whether or not to get married? Or, for that matter, most people in the USA have had reasonable levels of education and income for most of the history of the USA but it took a civil war to decide that slavery was a bad idea.
Posted by Wes at March 8, 2005 1:12 PM | direct link
“Economic freedom can be easier for governments to grant that political freedom.”
An authoritarian government may not be thrilled about economic freedom, but it does enjoy the resulting added wealth. The entrepreneurs can be permitted a great deal of leeway---as long as they don’t try to wrestle power away from the political bosses. Please note what happened to jailed Yukos CEO Mikhail Khodorkovsky. Everything was apparently fine before he dared defy Putin. Will increased economic freedom inevitably lead to political freedom? Yes, I think this is most likely. Unfortunately, it may not occur anytime in the near future.
Posted by David Thomson at March 8, 2005 7:26 PM | direct link
First, thanks for the excellent post and discussion. I am not an economist. I'm a student of history and of the moral requirements for freedom (there are such). From that perspective, allow me a couple of observations.
Political freedom as we understand it entails some level of individual prosperity. This isn't a Marxist or a materialist notion, it's Jeffersonian. The point is that an economically dependent person can't behave as an independent citizen. It is unrealistic to expect the servant to look his master in the eye and claim equality of any sort.
Historically, the political aspect of equality was among the last to emerge. In England, then in the US and Western Europe, classes that matched the elites in social and economic achievement eventually broke through to political equality because they had the power and the wherewithal to do so.
The reverse is also true: politically democratic countries that are economically backward, like India, are in fact "command cultures," in which the poor have no choice but attach themselves to some headman in the hope of material benefits. Anyone who has lived in such countries knows that political parties become milk cows for the rich and employment agencies for the poor. Anything as abstract as "opening up the economy" simply never intrudes on the agenda.
The interesting question is how that cyle is ever broken - as it has been, again and again. That is the question that the President's people should be asking, if they wish his "freedom policy" to succeed. The Arab world, diverse at it is, remains largely a culture of command. What are the commanding heights that must be stormed - not only in the economy and in politics, but in the moral sphere, in a way of life - that result in the transformation of a society from obedience to economic risk-taking, from tribal chieftain to Bill Gates? Welcome anyone's thoughts on the matter.
Forgive the plug, but I have a post in my blog - at http://vulgarmorality.com - on the the prospects for the President's policy: Freedom Policy, Command Cultures.
Posted by Vulgar Moralist at March 8, 2005 8:48 PM | direct link
Define "economic liberty." What does this mean? Does it mean absolute freedom of contract? Does it mean limited liability for corporate shareholders? (Limited liability would seem to me to be a manifestation of economic non-freedom, insofar as it impairs the freedom of non-shareholders to undertake their economic affairs without overpowering interference from limited liability entities.)
Could it be that some kinds of economic freedom -- such as weak intellectual property laws or enforcement (cf. China) and unsrestricted flow of both capital AND labor (cf. the merchantile era in Europe, and contrast to our current free-moving capital, but restricted-by-immigration-laws-moving labor system) are helpful to political freedom, while other kinds of economic freedom (freedom to hold slaves, limited shareholder liability) do not necessarily do so?
Moreover, if political freedom leads to economic non-freedom, or at least has the potential to do so (because of the interest groups you mention making inefficient distributions), and economic freedom leads to political freedom, does this mean that there's a perfectly ordinary and natural progression? Economic freedom leads to political freedom, and then the political freedom constrains economic freedom through the political process? Gee, that almost sounds like historical materialism! Why, Dr. Becker, you're a Marxist! Good to have you on board. :-)
Posted by Paul Gowder at March 9, 2005 9:11 AM | direct link
Finally, does "economic liberty" mean strong protection for private property interests or strong protection for free trade?
The two are often in conflict. Cf. again the intellectual propery issue, and also limitations on tort liability, both of which have the liberalization of trade on one side (free copying! no tort liability!) and strong property protections (compensation for copied works! compensation for damaged property!) on the other.
Which one is "economic liberty?"
Are nusiance laws, which restrain my neighbor's land use to protect the uses of my land, a form of economic liberty or not? How about nusiance laws on a broader scale, i.e. environmental protection laws?
Or is "economic liberty" incapable of making that decision, and thus a completely content-free concept?
Posted by Paul Gowder at March 9, 2005 9:16 AM | direct link
I have no quarrel with anything that Mr. Becker has said on the subject. But I think that it's important to see that his arguments do not scale down to the development of economic and political liberty in circumstances of extreme poverty. I'm pretty sure he would agree that are still some basic political liberties (such as the freedom from the threat of violence in civil war) that are preconditions to economic liberty. In this (admittedly more particular) sense, political liberties are very much a precondition to economic liberties.
But when I admit that it is a more limited sense, I mean more limited theoretically. Practically speaking, about 1/6 of the world population still has to deal with obstacles to the preconditions for economic liberties to exist at all.
Posted by Michael Martin at March 9, 2005 10:30 AM | direct link
Actually, I should add that I think the Bush administration has taken an approach that Mr. Becker might favor in addressing the (lack of) "political liberties" that I mention -- by encouraging private interests in the United States to get involved, for example, by tax breaks for Tsumani aid.
Posted by Michael Martin at March 9, 2005 10:34 AM | direct link
While I mostly agree with the post, the following claim is wrong:
"Mexico has had a free press and considerable political freedom for a century or so, but economic freedoms did not begin to evolve until the latter part of the 1980’s."
Mexico is an example of a long-lasting authoritarian regime that evolved from a closed to an open economy shortly before major political liberalisation occured. So, Mexico is a good example of the main argument, but for different reasons. Mexico's case follows Posner's logic pretty good, though.
Posted by Javier Aparicio at March 9, 2005 12:13 PM | direct link
Per VM's comment, American history abounds with examples of people whose political rights, or at least political opportunities, could be said to have been abridged, but who prospered mightily in most other respects. Even at the height of Jim Crow some blacks could acquire both education and wealth. Anti-immigrant sentiment in the early decades of the last century did not prevent multitudes of immigrants from acquiring a measure of wealth, and some succeeded in amassing vast fortunes. In later years both groups saw legal and other barriers to their political expression and opportunities removed.
What changed? Did changes in economic status lead to changes in political status? This is not an easy question to answer. It is unlikely that the greater relative wealth of blacks in 1964 compared to 1884 made no difference in the civil rights movement's great victories. It is even less likely that the children of impoverished immigrants would not face fewer obstacles to political expression and advancment, being not impoverished themselves. Having said that, it is I think clear that economic freedom and opportunity alone were not the only factors at work with respect to either group. It may be doubted that they were of themselves sufficient cause to produce an increase in political freedom and opportunity for either group, and especially for the descendants of slaves.
Only with caution should we assign the lessons of the American experience to other countries. It may be the case that the American political tradition accomodates itself to the expansion of political freedom better than others. What I'm suggesting is that economic freedom and opportunity may lead to political freedom and opportunity, but shouldn't be expected to do this without help.
Posted by Zathras at March 9, 2005 1:41 PM | direct link
Interesting points by Zathras. I wonder what kind of help would be most useful - whether the precedents of occupied Germany and Japan, countries which became democratic and prosperous, have any lessons for the Administration today.
In any case, I agree that material prosperity is not enough to lead, directly and inevitably, to democracy. Other factors, such as education and independence of spirit are needed as well - and some luck, I suspect.
Posted by Vulgar Moralist at March 9, 2005 9:51 PM | direct link
While reading Milton Friedman's "Capitalism and Freedom", I encountered a similar, although much worse formulation of the relationship between economic freedom and political freedom. Freidman made the absurd statement that there can be no political freedoms without economic freedoms (patently untrue).
Although Becker is clearly a proponent of free-markets, he makes his analysis of the relation between economic liberalization and political freedoms in a more balanced way - clearly aknowledging cases where economic and political 'freedom' have not at all coincided.
Nonetheless, one gets the feeling that political freedom (democracy) and capitalism (euphemistically called economic freedom - which sounds better?) are not opposition logics.
Lets examine the logics...
Democracy, in the most fundamental sense, implies free elections and the assignment of equal political value to each participating citizen - one person, one vote; and the majority rules. That's the essential principle of most democracies.
Capitalism, or "economic freedom" implies, as Becker surmises, protection of private property, the right to change jobs, etc, a commodity market in labour power, opportunities for startup companies etc.
But what is the fundamental principle of capitalism?
This has been vigorously debated, but some of the fundamental principles is that it entails a market in labour power (labour power is commodified) and the existence of privately held capital which is distributed according to the self-interested will of investors/capitalists. It is held that this flow of capital (investment) provides jobs, benefits, etc, to society.
Nevertheless, a momentary analysis of investors in the US reveals that there is a tremendous stratification of financial holdings; Wealth is not at all held equally. The top 5% of investors in America own more capital than the bottom 50% of all Americans. Fine. Its the workings of the free market.
But what about democracy.
Does the already realized potentiality for free markets to result in enormous wealth/investment power disparities affect the quality of the democracy in such 'economically free' societies?
In other words, do the wealthy enjoy more political power than do other citizens?
Can they use their economic assets, (media holdings particularly) to promote particular agendas, pressure political elites, influence key demographics etc?
Few would dispute this possibility (or argue that it doesn't currently occur on a massive scale).
Thus, the democratic principle of equal political value per person is clearly violated.
The tendency for free markets to create vast wealth stratifications results in a similarly disfigured stratification of political power.
In this light, capitalism can be viewed as antagonistic to democracy, rather than a prerequisite.
I'm not arguing that some kind of free market is not a good idea; far from it - I only wish to examine some inherent tendencies of the logic of capitalism/democracy and recognize that they do not at all corrospond.
Posted by Peter Konefal at March 10, 2005 12:43 AM | direct link
"Freidman made the absurd statement that there can be no political freedoms without economic freedoms (patently untrue)."
Is it really? Every democracy on this planet has a capitalist economy--but every capitalist economy isn't a democracy. This suggests it is a necessary, though insufficient, precondition for the formation of democracy. If by "political freedom" you mean democracy, then it is your statement which is patently untrue.
Posted by Palooka at March 10, 2005 2:37 AM | direct link
In fairness, Sweden is an example of a quasi-socialist country that is a democracy.
Sweden, though, is a good example of part of what Professor Becker is getting at. Entitlement programs, whether they are good, bad, or perverse, are extraordinarily difficult to adjust or dislodge in any significant way once in place. If a country concentrates on political freedoms without working on economic freedoms, then the democratic process can further entrench social programs, especially when those programs build up constituencies that will obstruct change that may be beneficial in the long-term. That is a big problem in Sweden. Capital and skilled labor is fleeing that country, even more rapidly with the ascendancy of the EU, because of the high taxes and regulations. In the long run, the young, especially those that are motivated and develop skills, are hurt at the expense of the elderly who benefit from the entitlements. I recently talked with a soon-to-graduate Ph.D. in chemical engineering, and he said there are literally no jobs in that field in his country, because any engineering firm worth it salt would move across the border, anywhere but Sweden!, to escape the drag on growth and business development.
Posted by RWS at March 10, 2005 7:37 AM | direct link
Peter -- excellent points, all (although I still think economic freedom is an indeterminate and useless concept).
I suspect that the people who look at economically free countries and determine that they are politically free do so because they fail to account for their own biases toward examination of the political ability of those most similar to them. So someone studying the U.S. will see that the educated middle to upper-middle class is relatively politically free because they themselves are part of the educated middle to upper-middle class. They won't see that the poor have little interest or involvement in politics because they're too busy trying to put food on the table and they haven't had the benefit of a decent education to permit them to participate.
The Roman Republic is often cited as a society that was politically free -- despite the slaves and the aristocratic senate.
Palooka (hello again!) -- (a) correlation does not imply causation, and (b) there are only a handful of non-capitalist economies on the planet -- cuba, china and north korea are an insufficient sample size, even with the former soviet union thrown in. I do note, however, that many countries in Europe have been run by socialist party governments without immediately collapsing into tryanny.
I also note that Lech Walsea came out of communist Poland.
Posted by Paul Gowder at March 10, 2005 7:43 AM | direct link
The Roman Republic is not often cited as a free society. I have never seen it cited as anything but an imperfect democracy largely run in oligarchical fashion and approving of slavery.
The US is not perfectly free, but we can only find perfect human liberation, freedom and opportunity in the great Heaven Above. Education is already subsidized in this country incredibly by (1) excellent public libraries, (2) public schools, (3) public universities, (4) an enormous system of private endowments that the government allows to incorporate and exist tax-free, (5) religious educational institutions, (6) the internet, and (7) private schools and colleges exempt from taxation.
If anything, there is a luxurious excess of educational possibilities about society and politics. Those that do not partake of it do so chiefly for reasons of personal preference.
Posted by RWS at March 10, 2005 11:13 AM | direct link
RWS:
To blithely shove illiteracy, lack of critical thinking skills, and otherwise complete lack of educational attainment sufficient to be a participant in a representative democracy into the "personal preference" box is to ignore two very crucial points:
#1. If it really is "personal preference," then it's personal preference at the expense of the public in general. Society has a clear interest in those citizens who have the voting franchise being able to exercise it intelligently.
#2. It's not a matter of "personal preference." Have you ever been into an inner-city school? There is a significant stratification of educational opportunity along class lines, largely because public education is funded on a local property tax basis in most of the country. The rich get dramatically smaller classes sizes, better facilities, better paid (and thus better attracted) teachers, more books, etc. etc. PLUS poverty has many other attendant factors to it which make it highly difficult to pursue an education, such as community violence and an early entrance into the workforce.
How can you call lousy public schools with lousy teachers, crumbling buildings, insufficient books, and students who are scared and exhausted from violence and their evening job a "luxurious excess of educational possibilities???"
Posted by Paul Gowder at March 10, 2005 1:03 PM | direct link
One more thing. If the failure to take advantage of this purported ""luxurious excess of educational possibilities" is a matter of "personal preference," at least at the pre-adult level, it's not one we should respect, and it doesn't relieve us of our responsibility to jam education down the throats of kids.
We recognize that children don't have the right or capacity to make significant personal choices every day. They can't enter into contracts. They can't work full-time. They can't marry. They can't consent to sex.
Children don't have the right or the capacity to make the decision to ignore their education. We need to do it for them.
Posted by Paul Gowder at March 10, 2005 1:09 PM | direct link
Paul, I understand your point fully. I don't entirely disagree with it at all. It's not fair that some people have more opportunity than others, and education is linked to opportunity. Fair enough.
But I think you are missing two points. First, you misapprehend my definition of personal preference. If a human exhibits a behavior or psychological aversion to excelling in school, that is a personal preference, even if we consider humans to be completely animals and have no autonomy or metaphysical self at all. That is sort of the definition of personal preference.
Second, let's step back from that assume that people have some measure of autonomy apart from biological necessity. The next question we must ask is how much people aside from their parents and immediate family/friend/religious institution network can do about it. Some, but not a whole lot. No matter how much money we throw at a school, a lot of kids just are predisposed not to care. I actually went to a school that was probably 90% or more low income for my elementary school years, so I think I know what I am talking about. I took advantage of all sorts of wonderful programs at that school, because I was raised to do so. Few others did.
I think there is a plausible case that the more we spend on entitlements, the lower incentive we place on citizens to value and strengthen family and marriage: encouraging people to wait until marriage to have children instead of out-of-wedlock problems that are so endemic in inner cities. Without strengthening families, all the social welfare money in the world is often ineffective or even a little counterproductive.
Posted by RWS at March 10, 2005 2:02 PM | direct link
RWS: I don't disagree with anything you say up until the very last paragraph. As for the social welfare money question: I've never yet seen any proof from anyone that the pittances that we spend on "entitlements" actually affect the childbearing decisions of the recipients of those entitlements. The very idea is absurd, because it costs a lot more to raise a kid even badly than the expected value of that kid in the most generous government programs. Really.
Honestly, I think the predisposition not to care is largely attributable to parenting. The problem is, we're in a nasty vicious cycle. Illiterate parents who work at McDonalds aren't nearly as likely to be raising kids who care about education. We may or may not be able to intervene at the patental level. If that's what you mean by "strengthening families," then I agree completely.
So I think we're agreed that strengthening childbearing is a precondition to broader public education, which is a precondition to meaningful political participation. So... How do we strengthen families? More "economic freedoms" won't do it (I don't think anyone suggested they would). Attempts to legislate morals won't do it. Raw cash won't do it. Propaganda won't do it. What will?
Maybe just incremental change? bend the resources of the state toward making the life of the child a little bit better than the parent's, and on and on??
Posted by Paul Gowder at March 10, 2005 11:48 PM | direct link
Difficult question, Paul. I used to assess the economic incentives structure as you do, in terms of whether people depend on programs like welfare, public health care, or public ed. I absolutely think there are good points to the viewpoint, and to me it is largely a question of evidence and fact, not say the inherent good or evil of government. The more I view humanity, though (I’m 28 now), the more I think that people unconsciously respond to incentives a lot more than they think they do or is immediately apparent. For example, I work as a law clerk, and we routinely sentence men who have many children by different mothers, none of whom they ever bothered to marry. Now, the man made a morally indefensible choice somewhere along the way; either he should offer marriage to one or more of the women or at least live with them and support the family economically, so the kid does not end up in the same problem. The woman made an indefensible choice in deciding to risk pregnancy without birth control... or even worse, that she consciously wanted a child out of wedlock. Regardless, the woman as well as the man can depend on the incredibly generous public education entitlement and the ability to work at a low skill level without paying taxes and squeeze by. Don’t you think there would be a lot fewer kids born as such if there were no public education? Wouldn’t that fact affect culture and childrearing and our cultural approach to sexuality? I think it would. People would say to avoid at all costs a kid out of wedlock, because then you'd be stuck with her/him 24/7 without a means to depend on what is often daycare (public schools) to them.
I’m not saying to yank public education. What I am saying is that feel-good programs can often make things worse in ways that people never really foresee; especially, they can change cultural attitudes. Until people start making responsible choices, your ideal of a democracy where everyone has an economics degree before entering the voting booth is a chimera.
As a last point on this question, one of the geniuses of democracy is that a lot of ignorant and semi-ignorant people acting in concert tend to come to a correct decision in a political process, often moreso than a small group of highly educated people. It is a weird phenomenon which is why democracy works, as well as why highly talented mutual fund managers rarely beat the market index. Same thing. So, just because there are a lot of chronically ignorant folks out there does not mean we have a faulty or dysfunctional democratic process.
Posted by RWS at March 11, 2005 7:46 AM | direct link
“If anything, there is a luxurious excess of educational possibilities about society and politics. Those that do not partake of it do so chiefly for reasons of personal preference.”
I completely agree with you. An individual may face insurmountable obstacles in seeking a formal education. The informal opportunities, however, are numerous. This very blog is a great example. Used books cost next to nothing. Basic Internet access is available to virtually everyone. Most people, sadly, are not particularly interested in these matters. They have opted to do other things.
“As a last point on this question, one of the geniuses of democracy is that a lot of ignorant and semi-ignorant people acting in concert tend to come to a correct decision in a political process, often moreso than a small group of highly educated people.”
You are only half right. Ignorant people should not be allowed to vote. A literacy test is necessary to determine if the citizen can at least read and write at a minimal level. A functional illiterate should not be allowed access to the voting booth. Racists in the Old South misused the literacy test to exclude people based on their pigmentation. Their immoral behavior does not in any way invalidate the principle itself.
Posted by David Thomson at March 11, 2005 8:21 AM | direct link
David's last analysis would support the idea that economic freedoms are much more important than political freedoms at the outset; start with economic growth and let that bleed into greater political freedoms, as the economy expands enough to support greater literacy and more human capital.
Not to turn to this Iraq thing again, but it almost looks like the Arab world seems to turn on its head the generally accepted premise among development economists/theorists that an illiterate and non-Western population is fully capable of participating in democracy. A persistent minority of Arab persons in Iraq have shown a complete inability to act like decent and mature human beings in the midst of the downfall of a dictator.
Kind of incredible, because just about everywhere else in the world, from South America to India to Africa to east Asia, people have shown a remarkable willingness and ability to support basic democratic processes and solving problems through deliberation and not suicide bombings.
Whether a flipped-out and tiny minority of people can torpedo a sane majority's attempt to get on with people-oriented government remains to be seen.
Posted by RWS at March 11, 2005 9:15 AM | direct link
I should add that a nation should determine voting eligibility according to the educational norm. What is the level of literacy rate of the majority of its adult citizens? After all, Afghanistan may have a current 90% illiteracy rate.
“Whether a flipped-out and tiny minority of people can torpedo a sane majority's attempt to get on with people-oriented government remains to be seen.”
Do the math. The terrorists are simply not murdering that many people in Iraq. Have I lost my sanity? Nope, they are not even killing 200 people per week. Iraq has roughly 24 million citizens. The terrorists are slowing down the inevitable evolution of Iraqi society---but they are not even coming close to shutting it down. And most of these murders take place in the Sunni Triangle. Much of the rest of Iraq is relatively peaceful.
Posted by David Thomson at March 11, 2005 10:11 AM | direct link
I think Paul's analysis would tend to support that, as well: if a country does not have enough wealth to support welfare programs to educate the poor sufficient to have a "sufficient" democracy, it should concentrate on economic growth, which leads to greater resources to devote to education, greater employment opportunities that make education more valuable and therefore more advantageous to pursue, and so on. Then, political freedom once you get to that point? Something to think about there, too.
Experience shows that the poor often vote themselves an economically destructive amount of welfare, especially in latin America. The countervailing force is often creditors such as private banks and the IMF reminding people of fiscal reality. When the leftists get too strong, the military sometimes steps in. The same is apparently going on in Bolivia right now with their impending election and the military's frustration with the leftists.
Posted by RWS at March 11, 2005 10:22 AM | direct link
(The above analysis discussing the idea that economic freedoms precede political freedoms because of the costs of running an effective democracy.)
I think Iraq is more likely than not going to do just fine, and I generally supported the war, though it would have been nice had the administration handled the pre-war and post-war issues a lot better. But, it's not a foregone conclusion yet. The insurgents are assassinating journalists and judges and police and politicians, so their killings are of important people to the process. If they succeeded in destabilizing the region to the point of civil war, that would be a problem.
I think that will not happen, but it will be a slow, untidy, expensive process to beat them. Once a religious culture of persecution sets in (see the KKK and the Nazi Party), throw out rationality and other such norms of adult behavior. Winning the war against irrational, juvenile terrorist mindsets is worth it, though, because it allows a free speech society, which is the main building block of education's goals.
Posted by RWS at March 11, 2005 10:32 AM | direct link
“The insurgents are assassinating journalists and judges...”
Speaking of judges being murdered. The following occurred in Atlanta just a few hours ago:
“Lt. Gov. Mark Taylor confirmed that Superior Court Judge Rowland Barnes and his court reporter were killed. He gave no other details in announcing the deaths in the state Senate. A deputy died later at a hospital, while a second deputy had minor wounds, police said.”
http://apnews.myway.com/article/20050311/D88OT3J00.html
Iraq admittedly has a much higher murder rate of its top legal professions. Nonetheless, they still probably do not total even a 1/2 of 1% of the total. Baghdad’s population is estimated to be around 4 million people. Once again, please do the math. Even if 50 people are murdered in a single day---that is a mere fraction of the overall population. In the rest of the country, we can take for granted that far more people are killed by ordinary automobile accidents
Posted by David Thomson at March 11, 2005 11:41 AM | direct link
David, I support the president. I don't think there's need to be impertinent.
Assassinations of key figures are a major problem in Iraq, because (1) they are often successful at targeting decision-makers, (2) they intimidate others in key offices, and (3) they constitute a significant deterrent to signing up to be a police officer or a judge or public official. Plus, infiltration of police is a major problem. They would be set up like Afghanistan right now and we'd have rapidly declining troop levels if there were not an effective insurgency. That's just how it is.
Posted by RWS at March 11, 2005 12:39 PM | direct link
"they constitute a significant deterrent to signing up to be a police officer.."
This is not even slightly accurate. The police have little problem finding recruits. The terrorists are "effective" enough to slow down things---but it's obvious that they are losing. Everything is not wonderful to be sure. Nevertheless, I say this without any hesitation: Iraq is already a success story!
Posted by David Thomson at March 11, 2005 1:09 PM | direct link
Interesting discussion and generally well informed until touching on Iraq as the working example. It's far too early for anyone on any side to be claiming anything about Iraq, unless the goal is simply to make a point or establish one's political allegiance. That being said, what counts in Iraq is not so much reported "reality" but perceptions: in Iraq, in the region, in the West, and in the United States.
One important dimension missing from much of the American popular perception of Iraq is just how dangerous a place it has become for ordinary Iraqis not because of terrorism but because of corruption and lawlessness. The crime wave is feeding general distrust and skepticism of state authority. One effect is that people are turning to reliable institutions for support. That means tribe/clan and religion. That also means a more difficult nation-building challenge, regardless of who is doing the building.
But this thread discussion is not about Iraq.
Posted by YH at March 11, 2005 5:28 PM | direct link
I have a hard time swallowing some of Beckner's rather blase statments such as "The Chinese are so happy with the economic freedoms granted them during the past 25 years." Does that refer to the freedom to NOT be able to move between rural and urban areas, the inability to establish property rights for a vast majority of people? While the Chinese government may choose to mimic what it sees as economic freedom, do not be fooled! Most of China's current economic issues (inefficient banking and stock market) are the result of the LACK of economi freedom.
What should also be mentioned is that perhaps the most critical pillar for true economic freedom is the rule of law. Without political freedom, one cannot truly establish rule of law - where the poorest peasant has the same rights to speak, buy land, etc. as the leader of the country , without rule of law, the only economic freedom that can exist is tenuous as subject to those that are above the law. Therefore, I think it is very naive to say that economic freedom can exist without political freedom.
What China has is simply a pseudo-market that might push the country to some sort of political reform, but not because the Chinese are "so happy", but because they are so upset that a small minority has been able to use their political powers for economic gain.
Posted by Henry at March 11, 2005 6:32 PM | direct link
This blog phenomena is so cool. I wonder if Jurgen Habermas would consider this a virtual re-birth of the public sphere.
This site seems to bring some of the best debaters and arguers from many different political persuasions - and best of all - the argument is mostly positive, cumulative and repectful!
Good job all...
Posted by Peter Konefal at March 14, 2005 11:50 PM | direct link
Posted by Anonymous at June 27, 2009 7:22 PM | direct link
