Economic Freedom: Toward a Theory of Measurement

Barbara Lenes McLennan is a graduate economics student in Edmonton.

This book is a self-published compilation of papers and discussions from
a symposium held July 28-30, 1988, at Vancouver’s Fraser Institute. It
presents a surprisingly frank inside view of how the Institute and
related organizations in the United States manipulate media
presentations of economic issues by developing strategies to define and
control debate. In this case, the purpose of the symposium was to
develop a numerical “Index of Economic Freedom” (as a means of
comparing and rating the countries of the world) to counter the economic
implications of the “Index of Political Freedom” developed by the
U.S.-based Freedom House. The participants in Vancouver, mostly from the
United States, felt that the latter index enshrines human rights at the
expense of private property rights.

The premise of their view rests on the belief that liberty means
individual ownership of property, and that an increase in property
represents an increase in freedom. Economic freedom is fundamental and
precedent to political freedom. Democracy, or majority rule, is
subservient to capitalism, or unconstrained individualism (the
“miracle of the market”). The majority was condemned for its
restriction of the individual, while the topic of abusive uses of
private property was left undeveloped. Thus Hong Kong and Singapore were
held up as examples of economic freedom, while Sweden was viewed as a
threat.

Significantly, the only unquestioned agreement among the participants
when they tried to define economic freedom was negative and
individualistic: the absence of constraint on “how I spend my
money.” (Restraints were defined as taxation, social programs,
government in general, or anything collective.) The positive definition
of freedom then became “choice.” Because of such an anarchic
premise, the rest of the book haggled over how to define economic
freedom for the purposes of measurement. Infighting and arguments to
save face continually disrupted the flow of discussion.

Specific data attempting a measurement of economic freedom were
provided by a directed master’s thesis from Simon Fraser University.
When the data revealed the difficulty of comparing countries because of
a paucity of records or of similar statistics, the decision was made to
drop attempts to include Third World countries in the index. The focus
simplified to such common measurements as GNP and national income,
vaguely adjusted for government expenditures and regulation of business,
as the measure of economic freedom at which to aim. A further symposium,
to be sponsored again by the Liberty Fund, was scheduled to focus on the
measurement of these adjustments. Lest one be tempted not to read this
book when so little was accomplished, the book does offer insight into
this society of activists: the structure of their thoughts and
arguments, and the hierarchy of their personages.