You Cannot Have Political Freedom without Economic Freedom

If you read degrowth advocates, many of the policies they advocate for will say something along the lines of “democratizing” various institutions. Furthermore, if you listen to the rhetoric from many progressives (whether they are directly de-growthers or not), they stress the importance of basic human rights. This is something where I think many of us can find some common ground. I, along with basically everyone I interact with, agree that political freedom and civil liberties are important. Whether one views it as important on a moral basis, sees it as an avenue for economic prosperity, or whatever other reason, there are really few who directly espouse purely authoritarian beliefs. (Even political actors who act as authoritarians usually justify it under some guise about “the good of the people”— heck, even North Korea is called “The Democratic People’s Republic of Korea”).

A Look at Political Freedom and Civil Liberties

To measure political freedom and civil liberties, one can look to Freedom House.

Under political freedom, they score countries based on three categories: electoral process; political pluralism and participation; and functioning of government. For the electoral process, they include questions like if the executive and legislative branches were elected via free and fair elections; political pluralism and participation gauges whether or not different political parties have avenues to compete in elections, the freedom to vote and support policies that you wish without outside political influences, and if various often marginalized groups have opportunities to participate in elections (voting or running). The final category largely has to do with government transparency and safeguards against corruption.

Under civil liberties, they score countries based on four pillars: freedom of expression and belief; association and organizational rights; rule of law; and personal autonomy and individual rights. These pillars include questions like the freedom of the press, the right to practice a particular religion, freedom of speech and assembly, due process and independent judiciaries, equal treatment of various segments of the population, and social freedom (e.g., marriage equality).

Again, the vast majority of these groups are aspects that most people subscribe to, making this mostly uncontroversial.

The Issue for De-growthers

De-growthers typically have views that are economically socialist and socially free/liberal. Take someone like Bernie Sanders, for example, who is not a card-carrying de-growther but would still fall under this same tent of pro-political/human freedom but anti-economic freedom. The obvious next question is how realistic is this ideal?

This is where I think there needs to be a reckoning for de-growth advocates. It is virtually impossible to have political rights and civil liberties without having a mostly capitalist system.

This realization is not new—it is commonly referred to as the Hayek-Friedman hypothesis. While overall similar, Friedman’s claim was a bit stronger. Friedman stated in his widely read book Capitalism and Freedom:

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.

Hayek on the other hand focuses on one major piece of economic freedom/capitalism: private property. He posits in Road to Serfdom that:

If “capitalism” means here a competitive system based on free disposal over private property, it is far more important to realize that only within this system is democracy possible. When it becomes dominated by a collectivist creed, democracy will inevitably destroy itself.

To violate their hypotheses or be more in line with policies advocated for by many de-growthers, a country would have to be not economically free but politically free. This is outlined in Lawson and Clark (2010), which will be discussed soon.

Source: Lawson & Clark (2010).

As you can see, it is plausible for a country to be not politically free and economically free (Venezuela, Russia, North Korea) and of course economically and politically free (Nordic countries, the United States, Canada). But it’s also possible, at least according to the Hayek-Friedman hypothesis, for a country to be economically free but have little political freedom (Singapore). This is much more rare than the other two cases, but nevertheless is possible.

For example, if you look at the most recent data on economic freedom and human rights, you will note that it is much more common to have both economic and political freedom, or neither. The top ten countries as of 2021 in the Economic Freedom of the World Index are (in order): Singapore, Hong Kong, Switzerland, New Zealand, United States, Ireland, Denmark, Australia, United Kingdom, and Canada. Eight of the ten most economically free countries are considered “Free” by the Freedom House data. Singapore and Hong Kong are considered “partly free.” The bottom 10 countries in economic freedom are: Venezuela, Zimbabwe, Syria, Sudan, Yemen, Iran, Libya, Argentina, Algeria, and the Republic of Congo. These are not exactly beacons of democracy and human rights. Nine of these countries are considered “not free” and only one (Argentina) is considered “free” according to Freedom House. Using this case, only Argentina could potentially violate the Hayek-Friedman hypothesis. However, I imagine this is not a country that many de-growthers would aspire to, given the recent election of Javier Milei. His policies that promote free market fundamentalism means we can expect to see its economic freedom scores rise in the coming years.

The Hayek-Friedman hypotheses have been examined in two excellent papers, one by Robert Lawson and J.R. Clark in the Journal of Economic Behavior and Organization in 2010, and a recent working paper by Gabriel Benzecry, Nicholas Reinarts, and Daniel Smith. The Lawson and Clark paper assesses most closely the Friedman quote, while the latter work examines the Hayek hypothesis.

Lawson and Clark use data from the Economic Freedom of the World Project and measures of political freedom and civil liberties from Freedom House. They find very few cases that violate this hypothesis. The gray shaded areas in the below figures would be strict violators of the hypothesis, where there are high amounts of political freedom provided in a country but very low levels of economic freedom. In the extreme versions, there are no such cases. There are some potential minor violators, but as they point out in their paper, each case is either followed by market liberalization or kept their more socialist policies and destroyed their political freedoms along the way (Venezuela). They suggest that violators of this hypothesis are an unstable equilibrium, where countries can temporarily have low levels of economic freedom but high political freedom, but they soon transition out of this state. Comparing violators in 1990 to their policies by 2005, they state:

Ten countries found themselves in violation of the Hayek–Friedman hypothesis in 1990: Barbados, Belize, Botswana, Cyprus, Greece, Malta, Portugal, Spain, Trinidad and Tobago, and Uruguay. And again, by 2005 only Barbados remained on the list. Of the remaining nine, all nine moved toward freer markets, thus bringing their economic systems more in sync with their political systems. (pg. 233).

Source: Lawson & Clark (2010).

Israel was one notable example of this inevitable transition. In the 1970s through 1980s, they had a relatively liberal democracy, but its economic policies were quite the opposite. However, as you can see from the below figure, over time its economy became much freer and was more in line with its political freedoms.

Source: Lawson & Clark (2010).

Benzecry, Reinart, and Smith provide both an update to this above paper and approach it somewhat differently to be more in line with the Hayek side of the hypothesis. They also use different data, including variables from Varieties of Democracy on “state ownership of the economy” and “political civil liberties.”

They find that there is a very strong relationship between less state control of the economy and greater civil liberties. (Note here that higher scores on these measures suggest less ownership of the economy and higher civil liberties).

Source: Benzecry, Reinart, and Smith (2024)

In their entire sample of over 26,000 country-year observations, they find two notable violators of the hypothesis: Belarus in 1991 and Ukraine in 1992. However, both countries were in transition from being part of the Soviet Union. Belarus kept its state ownership of the economy policies and eventually saw its political freedoms die with it. On the other hand, Ukraine had free elections before and then quickly privatized its economy. Given the drastic shifts during these transition stages, it is not implausible for a country to adopt certain policies before others, leading to short-run violations. However, these two countries suggest that eventually, the two match up with one another.

Where this matters for de-growth advocates is that they are calling for long-term, systematic changes to the economic system while retaining or even expanding human rights. But all of the real-world, empirical data suggests that this is not a realistic outcome. The findings from these two papers suggest that de-growthers may have to face reality in this situation. You cannot have political freedom without economic freedom. They should drop the “democratizing institutions” aspect of their argument and face the reality that if they truly want their preferred economic system, they must accept that civil liberties and human rights will be violated along the way. Alternatively, they could also just change their minds and realize that political, human, and economic freedoms can go hand-in-hand!