Why Economic Freedom Is the Foundation of All Freedom Part 1

Friedman argues that even when few people openly protest against state regulations, the impact of such restrictions on individual freedom remains profound and worth examining. Competitive capitalism, he says, not only enables economic efficiency but also promotes political freedom by separating economic power from political power. However, this relationship is not absolute, countries like Fascist Spain, Fascist Italy, and Tsarist Russia all allowed private enterprise yet lacked political freedom. Thus, capitalism alone cannot guarantee liberty, but it is a vital precondition for it.

Economic arrangements, Friedman insists, have a direct and powerful effect on political freedom. Societies that promise material security under totalitarian systems, such as Soviet Russia, illustrate this link clearly. In such regimes, citizens depend on government approval to work, earn, or even live freely. When the state controls economic life, personal independence vanishes.

In the 19th century, thinkers such as Jeremy Bentham and the Philosophical Radicals argued that political liberty and laissez-faire economics were inseparable. Restricting economic choices meant restricting human freedom. As democracy expanded, public support for economic liberalization grew as well. However, during the 20th century, especially after the two World Wars, many democratic nations moved toward centralised economic planning and extensive welfare policies. Critics like A.V. Dicey, Ludwig von Mises, Friedrich Hayek, and Henry Simons warned that these developments threatened freedom itself. Hayek’s The Road to Serfdom famously cautioned that excessive state control over economic life would inevitably lead to political oppression.

Friedman observes that the trend toward planning and control often arose not from its success but from its failure, from governments trying to fix the very problems their interventions created. Public dissatisfaction with the inefficiency of planned economies frequently led to even greater interference, deepening the cycle of control. He argues that the connection between economic and political freedom is not accidental. History shows that whenever freedom expanded, it did so hand in hand with the rise of capitalism and market institutions.