What's economic freedom?
BILAL AHMED (April 24, 2011)
Basically, the word freedom defines its own ideology (free to practice its own conception of good) the same logic applies within the economic paradigm that, an individual or set of individuals, institution or set of institutions, nation or set of nations etc can practice their own conception of economic good.
That means free to invest or withdraw wealth or capital (there is difference between wealth and capital) into market or in conventional bazaar (there is difference between market and bazaar). Ultimately movement of capital is free plus all participants possess choice and the decision-making authority.
To explain the difference between market and bazaar, wealth and capital is beyond the scope of this article. For a quick understanding of market and bazaar, we shall assume it market and for wealth and capital we shall assume it as capital. The current era with enlightenment constructed its framework around freedom and supposes it free if the participants are economically free, or economic freedom. This is an ideal situation. However, I would like to share some elementary arguments associated with economic freedom.
The term economic freedom authorises us to practice our own conception of economic freedom or economic good, it's not finished here, although it starts from here. I argue that economic good for each participant finishes within the limits of profit and if I am not wrong that profit is the ultimate dominant economic good in the current phase if what you read is true.
Unprofitable economics practices wouldn't prevail in general. Those having profits are defiantly much freer than those, who are profitless, one more thing the ability to absorb the greater profit from market is quite small for all participants. Economic freedom shrinks and everyone can't attract profit from market. The same ability shall be restored by some individuals for whom we can say they are really free.
If economic freedom allows us to perform whatever we want with our capital then unequal distribution of income never allows us above phenomenon. Because in general, the profit-making ability falls within one group and the rest shall out of the scope of this who represent the majority, ruled by minority profit absorbers. What do you think this is an ideal scenario? The rule of the minority over the majority: No doubt dangerous for the political system (democracy).
One argument arises is of an individual default who cannot make the profits it is not the system, which means the system is appropriate, while the other side of picture is that the system is much elastic for corruption and supportive to maximise profits through legal methodology (monopolisation, cartelization, interest group league).
Movement of capital depends on profits. It's a fact that investment to its profits (returns) will be in the profitable sector. However, the remaining sectors remain unresponsive, when the margin of profit evaporates by any real or artificial causes. The investment shall also disappear that is the natural psyche of individuals in a free market economy.
The problem is of unequal distribution of income, the market is hijacked by some big bosses. The entrance to the market is open for all but real ability of investment remains out of scope for the general public because of hefty difference in income. In this way unequal distribution of income commands economic freedom.
An important point to define here, in a contemporary free market economy, the freedom for an individual is directly associated with capital. As the magnitude of capital increases, your degree of freedom increases. By the tool of capital, an individual can express his freedom. An individual without money is much more free. In the current system this can be easily understand without needful explanation.
In the above I have discussed the choices and decisions of an individual(s), No doubt an individual(s) serves the right for same but tight unequal capital distribution once again bind the individual(s) to act. In general the market rules the individual(s) not vise-versa (this is single direction function so called one way). This occurrence once again take-over the liberty of economic freedom.
Being a very small part of the market an individual(s) without capital cannot act on his fundamental right to practice economic freedom. The individual has only one choice to only serve the market as an obedient professional worker. An individual has the right of economic freedom but he cannot practice it through circumstances and the market fails to maintain the rights of an individual(s). This rational behaviour explains what may be a contradiction in economic freedom or the massive inaccuracy happening in system or both simultaneously.
In view of the above, the capital is centralised by profit and an individual(s) is blind as well as the deaf servant of market and market is bound with the contract of profits the ultimate interest for association. If the profit is dropped, the contract with market would be off. To remain part of the market an individual(s) must fall within profit line otherwise he is out of the market.
One serious problem arises right from here that, usually market participants adopt destructive activities for increasing their profit share for market survival. In the end, society bears the massive cost of their profits. The author, admits that there are a series of regulations on the market, but the market has soft avenues for the defaulter of regulations.
If the money is involved in any matter, there is a great probability for default, as capital (money) is the fuel of the market. According to an economic fundamental principle of maximisation of utility, individual(s) is free to maximise his utility, profit (that code is not challengeable if the economy is a free market) and unequal distribution of capital may support big bosses to justify their unwarranted acts. Economic freedom in the current times, even in advanced economies, is hard to maintain and to combat the same. Unequal distribution of capital must evaporate. Which is in principle is against economic freedom.