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What economic freedom means to me

Submitted by
D N Ranawaka
University of Colombo Faculty of arts
Centuries worth of knowledge on economics has driven the world into new and diversified
thinking patterns and processes and these thinking processes in economics has influenced the
society and the behaviors of states and world order. These thinking patterns are majorly affected
by prevailing societal contexts. Similarly, the concept of economic freedom also has various
dimensions.
The evolution of the concept goes in parallel with the economic development and social
ideologies that were visible in different eras of time. Economic freedom was highly accepted in
classical economic theory, laissez faire and also among Physiocrats. These concepts were widely
known during Smiths time and economic freedom was ideally recognized as the main path to
economic growth and prosperity. According to Smith, economic freedom consisted of free
markets, protection of property rights, and a minimal government interference in the economy
which also led to economic prosperity and growth. Smithian concept was accepted until late 20th
century, where the role of government was given considered important. Economic growth and
political freedom were accepted as factors that are closely related with economic freedom. In this
era where economic growth was accepted as the major objective a society could achieve,
economic freedom was identified in the means of freedom of using ones resources. Even though
the emergence of the concept of political and economic freedom was widely accepted, criticisms
were made based on countries that developed with 65% of involvement by the government to the
economy. Austrian school of thought also confirmed that political and economic freedom are
mutually dependent. However, the measurement of economic freedom is widely accepted in the
present where different layers of economic freedom is critically viewed. The most common of
these indices are Economic freedom of the world (EFW) developed by the Fraser Institute and
the Index of economic freedom (IEF) developed by the Wall Street Journal and Heritage
foundation. Some of the dimensions introduced by these indices are business freedom, trade
freedom, monetary freedom, fiscal freedom, investment and financial freedom, freedom of
corruption and legal structure and security of property rights.
What is important to understand in evolution of the concept economic freedom is that it is
closely related to the views and perceptions of the role of economy perceived through different
ages of time. During the 18th and 19th century economic freedom was viewed merely as the
freedom to use the economic resources was closely related to the development and economic
growth that was focused during that time. Laissez-faire and libertarian views dominated during
this time. With Keyness views of the role of the government intervention was accepted,
economic freedom of labor and land was questioned. Later, by understanding the social inclusion
of economic growth these indices were widely accepted in economic thinking.
From my perspective what lacks in all these thought definitions of economic freedom is the role
of an individual. What economic freedom means to a person and how economic freedom is
obstructed from a persons perspective. It is arguably true that once economic freedom is
achieved in an aggregate level, a persons privileges are secured. What I think is economic
freedom is achieved in a macro scale when it is genuinely felt within a person. The hierarchy of
economic structure should also commence from the bottom; the individual. When an individuals
rights relating to economic activities are secured that will bring the freedom within the society
and further in a country.
Freedom is the ability to do a certain activity without rules, regulations and obligations. So
economic freedom is the ability to take economic decisions. The decisions you take in day-to-
day life are related to economics, as most of the resources including time is scarce. The perfect
market structure emerged in classical school of thought creates an efficient economy for the
society. They recognized the opportunity cost in decisions you make and how it makes an impact
on another individual. The moment you decide to buy a certain brand of an item provides wage
to another person. If everyone is efficient in the decisions they make, this will create a perfect
economy even though in reality such economies do not exist, it is one way to achieve what we
desire.
So the ability to take decisions that will impact the economy is economic freedom from my
perspective. As mentioned above these decisions have an impact on another persons life. So
when taking a decision asking the question of will it be good for me and other people in the
society is a must. This would further ensure the economic freedom of the whole society. Ideally,
even though this seems like a utopian concept, there are countries who have actually inculcated
these methods. Equality and equity are other dimensions of economic freedom that has not yet
been addressed even though corruption has been taken into account in freedom indices.
In the context of Sri Lanka, whether we are moving in the right path, whether everyones
economic freedom is ensured without obstructing another persons, whether we have the
freedom to do the right thing is a question we should ask ourselves.
As per my view, I see two major flaws obstructing our path to a freer economy which can also
lead to the growth of an economy. One of them is the culture and the other is our perception and
the way we see things. These two factors are hardly inseparable and one factor complements the
other.
As our parents are so close to us, it has made us depend on them for almost 25 years. Arguably a
person can say that this idea is too generalized though this is applicable to most of us. Our
parents take decisions for us invading the path we truly desire and their involvement in our life is
too dominated it has a negative impact on a childs future. If economic freedom were to be seen
a child should be able to be employed and earn for themselves and take the responsibility for
their own actions and life at the age of 16. This has a caused negative impact on the economy of
Sri Lanka. The next flaw is the perception and the way we see things. There are few career paths
that are recognized as respected and parents are too driven to make their child pursue one of
these careers. Instead, people should be able to follow their passion either it could be a cleaner,
an astronomer, a nurse, a musician etc. without being judged by the occupation and without
being given certain benefits and recognition just for the sake of ones career. Another aspect that
should be looked into is if economic freedom is ensured or obstructed when a person takes a
decision. In other word, an individual should be sensible enough to evaluate whether the decision
he or she takes creates negative externalities to other people. If it does, the person should be
ethical enough to minimize the negative externalities or not take the decision at all. This is an
issue relating to ethics of a society and also complements the above mentioned genuine
economic freedom felt by a person. So once these concepts are established, economic freedom
can be restored within a society as well as within a nation. Although it may seem to be a utopian
concept ability to restore freedom within oneself ensures the freedom of others as long as the
community respects and values the freedom of all. This would create a peaceful society ensured
with equal benefits and equity which leads to economic efficiency, growth and sustainability in a
macro level.
In conclusion, what I think is economic freedom should be felt within oneself, in a micro-level. It
could either be the law or the ethics that would help a society to achieve this concept, economic
freedom should be felt and appreciated in-order to reap the benefits of true economic freedom.