In her preface to the Department of State's recently published
Country Reports on Human Rights Practices for 2007,
Secretary of State Condoleezza Rice wrote: "These values [liberty,
dignity, and rights] are the basic endowments of all human beings,
and the surest way to protect and preserve them is through
effective, lawful, democratic governance." There is no distinct formula
through which to guarantee this process, but an unequivocal linkage
to ensuring this progression lies in economic freedom. As a
fundamental element of enhancing human rights, economic freedom is
an indispensable means toward promoting effective, lawful, and
A Valuable End in Itself
Economic freedom is a part of human liberty that is concerned
with the material autonomy of the individual in relation to the
government and other organized groups. As Friedrich Hayek once
observed, "To be controlled in our economic pursuits means to be
controlled in everything." Hayek's observation on economic freedom is
based on the truth that each person is a free and responsible being
with an inalienable dignity and fundamental human rights that
should come first in any political system.
It is not surprising to see that seven of the 10 countries
identified as "the most systematic human rights violators" (North
Korea, Burma, Iran, Syria, Zimbabwe, Cuba, and Belarus) by the
State Department's human rights report are "repressed" economies
according to the Index of Economic Freedom, an annual
publication by The Heritage Foundation and The Wall Street
Journal that measures economic freedom around the world.
Government leaders in these countries put their own tyrannical
political systems ahead of the people's economic freedoms. The
concentration of power and wealth in the hands of unaccountable and
autocratic political elites results in erosion and nullification of
basic social and economic rights such as the rights to health,
food, water, and education.
As the Index defines it, "the highest form of economic
freedom provides an absolute absence of coercion or constraint of
economic liberty beyond the extent necessary for citizens to
protect and maintain liberty itself." In other words, economic
freedom is about individuals' basic economic rights to work,
produce, save, and consume without the state's intimidation and
infringement. It encompasses the freedom to engage in
entrepreneurial activities, having choices in education and health
care, fair taxation, and just treatment by the courts under the
rule of law.
Greater economic freedom generates opportunities for people and
creates sustainable wealth and respect for human rights. By
reducing barriers to economic activities, economic freedom helps to
create a framework in which people fulfill their dreams of success.
This is well-documented in the Index,which identifies strong
synergies among the 10 key ingredients of economic freedom, among
which are openness to the world, transparency, and the rule of
Empirical findingsconfirm that greater economic freedom empowers
people and improves their quality of life by unleashing
opportunities and innovative ideas. As Chart 1 demonstrates, there
is a strong positive relationship between economic freedom and
prosperity. People in countries with greater economic freedom enjoy
higher standards of living than people in countries with less
More important, there is another noticeable dimension to the
relationship between economic freedom and prosperity; one that
involves the evolution of economic freedom and standard of living
over time. Table 1 shows that, measured by 10-year compound
averages, countries' improvements in their Index scores and
their growth rates of per capita GDP are positively related to each
other with the simple correlation of 0.44. In other words,
countries moving toward greater economic freedom tend to achieve
higher growth rates of per capita GDP over time.
Promoting and preserving human rights cannot be seen in
isolation from economic freedom. When living standards are low and
poverty persists, violence often replaces peace, and basic human
rights are easily violated. Sustainable economic development backed
by economic freedom thereby plays a vital role in supporting the
expansion and protection of human rights.
A Vital Means to Democratic
Greater economic freedom can also provide more fertile ground
for effective and democratic governance. It empowers people to
exercise greater control over their daily decision-making
processes. In doing so, economic freedom ultimately nurtures
political reform as well. Economic freedom makes it possible for
independent sources of wealth to counterbalance political power and
encourages the cultivation of a pluralistic society.
Debate over the direction of causality between economic freedom
and democracy has been somewhat controversial due to the complex
interplay between the two freedoms. However, the positive
relationship is undeniable. Chart 2 shows the relationship between
economic freedom and democratic governance measured by the
Economist Intelligence Unit's democracy index. They are clearly
interrelated and together form a coherent whole.
It is undeniable that freedom has reached every area of the
world over the past century. Economic freedom is a powerful
building block for advancing effective and democratic governance.
Yet the world needs to be mobilized behind that cause more
effectively, and it needs to confront those who advocate ideologies
of repression and extremism.
In his recent book, Liberty's Best Hope: American Leadership
for the 21st Century, Heritage Foundation Vice President Kim
Holmes highlights the need to build coalitions of freedom-loving
countries around the world. He suggests inviting countries to join
a common alliance of liberty through a "Global Economic Freedom
Forum" and a "Liberty Forum for Human Rights" that would enshrine
the powerful interplay of economic freedom, human rights, and
As President George W. Bush once noted, "Freedom can be
resisted, and freedom can be delayed, but freedom cannot be
denied." This is why the United States should
continue to stress freedom as a liberating moral force and the
foundation of America's leadership for the future. It is the
compelling force of economic freedom that empowers people,
unleashes powerful forces of choice and opportunity, and nourishes
other liberties. As the 21st century progresses, freedom's
champions must join to advance their common cause of freedom,
peace, and prosperity.
Anthony B. Kim is a Policy
Analyst in the Center for International Trade and Economics at The
Friedrich Hayek, The Road to Serfdom
(Chicago, Ill.: The University of Chicago Press, 1944).
Jonathan Farrar, Acting Assistant Secretary,
Bureau of Democracy, Human Rights, and Labor, "Remarks on the State
Department's 2007 Country Reports on Human Rights Practices," March
11, 2008, at www.state.gov/g/drl/rls/rm/2008/102116.htm.
R. Holmes, Edwin J. Feulner, and Mary Anastasia O'Grady, 2008
Index of Economic Freedom (Washington, D.C.: The Heritage
Foundation and Dow Jones & Company, Inc., 2008), at www.heritage.org/index.
Countries are grouped by their Index
score changes based on 10-year compound average growth rate. As
shown in the number of countries in each group in the table, the
countries are divided under a normal distribution curve.
Covering 192 countries, the EIU Democracy Index
is based on five categories: electoral process and pluralism; civil
liberties; the functioning of government; political participation;
and political culture. The Index classifies: full democracy: scores
of 8 to 10; flawed democracy: scores of 6 to 7.9; hybrid regimes:
scores of 4 to 5.9; authoritarian regimes: scores below 4. For more
information, see www.economist.com/media/pdf/DEMOCRACY_INDEX_2007_v3.pdf.