Eustace Davie is a director of the Free Market Foundation and author of Unchain the child.
The concept of economic freedom is as simple as it is powerful. It is the cornerstone of every successful, wealthy and happy society on earth. But what is it and how is it defined?
Economic freedom is the fundamental right of every individual to control their own property and labour. At its core, economic freedom is about the freedom of individuals to make economic decisions. This includes the right to choose a profession, start a business, and decide what to charge for your labour.
It is the liberty to do with the fruits of your labour, property and investments whatever you may wish. It is the freedom to buy a desired product or service and to sell your own goods and services in the market of your choice.
True economic freedom is therefore the antithesis of the extreme Marxism espoused by the so-called “Economic Freedom” Fighters.
The Fraser Institute, through its annual publication Economic Freedom of the World — published in SA by the Free Market Foundation — provides a comprehensive analysis of the state of economic freedom across the globe.
The research shows that economic freedom is linked to various positive outcomes, including economic growth, poverty reduction and improvements in health and education.
One of the key components of economic freedom is personal choice. That means individuals have the autonomy to decide for themselves how to lead their lives and manage their economic affairs, without state coercion or undue restraint. When people are free to choose they can pursue their interests and talents, leading to more free, fulfilling and productive lives.
Voluntary exchange is another pillar of economic freedom. It allows people to trade their goods and services with others on terms they find mutually beneficial. This exchange is the basis of market transactions, which have been shown to lead to efficient outcomes and wealth creation.
The freedom to compete in markets is also essential. It ensures that no single entity, including government, has the power to control the market or limit entry to it. Competition drives innovation, quality improvements and lower prices, benefiting consumers and the economy as a whole.
Security of property rights is a crucial aspect of economic freedom. When individuals have confidence that their property is safe from seizure or unjust laws they are more likely to invest more and engage in economic activities.
The rule of law supports economic freedom by providing a stable legal framework in which contracts are enforced and individuals are protected from crime and arbitrary government actions.
Access to sound money is crucial for economic transactions. When people have confidence in a stable currency they can save and plan for the future without being afraid that their money will lose value.
Freedom to trade internationally opens markets and provides consumers with access to a greater variety of goods and services. It allows businesses to specialise and take advantage of global opportunities, leading to increased economic growth and development.
The regulation of credit, labour and business should be conducive to increased economic activity, not less. Excessive regulation that stifles innovation can reduce economic activity and harm business, instead of promoting it, while a balanced approach can promote fairness and competition without unnecessary interference.
In conclusion, economic freedom is about creating an environment where individuals have the right to work, produce, consume and invest in their own way. It is a proven path to prosperity, offering individuals the dignity of self-determination and the benefits of a thriving economy.
The data from the Economic Freedom of the World report consistently proves that where real economic freedom is allowed to flourish, opportunities increase and the quality of life of citizens improves.
