It is not difficult to hijack the meaning of a word or expression and this has happened to ‘economic freedom’ but the writer of a letter to the Business Day has again put the record straight.
In the past year or so various posts have been added dealing with this topic:
- Core principles of economic freedom
- Crisis caused by government failure
- Left and Right and ‘economic freedom’
- Economic freedom & ANCYL
These are extracts from Martin Hack’s letter The politics of economic freedom first published in Business Day yesterday.
TO unburden the poor and alleviate poverty, the expedient “economic freedom” is now in vogue. What exactly does economic freedom mean?
A number of eminent economists have written about the concept. The best articles are by Milton Friedman and Friedrich Hayek, whose theories, especially on “economic freedom” were previously discredited but have now gained widespread acceptance by economists, notably Jeffrey Sachs.
The dictum was that central planning could never work because it lacked that totality of information necessary for the efficient allocation of assets, which only free markets can provide.
The dismal economic performance of the Leonid Brezhnev years and the inevitable insolvency of Russia and the Soviet bloc corroborate this. China is not an example of communist success, it is a story of Chinese niftiness and ingenuity in maintaining a totalitarian political system while pursuing market-orientated economics.
“Economic control is not merely control of a sector of human life which can be separated from the rest,” Hayek wrote, “it is the control of the means for all our ends.”
In his book Capitalism and Freedom, while Friedman agrees that economic freedom is a necessary ingredient for political freedom, he argues that central control of any economy nearly always leads to authoritarianism or totalitarianism.
According to him, it is vital to separate economic power from political power.
A properly operating and competitive free market provides as many safeguards as any constitution, because it allows the citizen to make his own choices and to profit from the possibilities that type of market provides. This is what he terms “economic freedom”.
The Marxist maxims of the African National Congress, such as “the national democratic revolution” or “economic freedom” or “equal social inclusion” mean nothing more than the dead hand of nationalisation.
It is in effect a national socialist charter because, as under Josef Stalin, an economic enemy has been identified to be dispossessed and “re-educated”.
The agenda is, paradoxically, purely political and has nothing to do with economics.