The Cato Institute has published a new edition of its annual report on The Economic Freedom Of The World, endorsed by Milton Friedman and not to be confused with about a million other such reports produced by rival thinktanks (I seem to remember that Heritage were the first to get into this game, but their index is based on subjective scoring and is really bad, while Cato’s is based on publicly available economic and survey data and is only quite bad, from a scientific point of view.)
Lovers of liberty will be pleased to know that the forward march of human civilisation continues unabated and we are all precisely 0.15% freer than we were at the time of the 2002 Report; the Index of World Economic Freedom apparently increased from 6.34 to 6.35 in 2001. Is it me, by the way, or is it pretty pathetic that such a self-important document is only produced with a two year lag? Anyway, as usual the dominance of the rankings by a bunch of incredibly rich free-ports and tax havens at the top and a bunch of horribly poor kleptocracies at the bottom, means that they can publish their usual diatribe about how “economic freedom is closely correlated to wealth, equality, development, relief from aching piles etc”. But the interesting thing to me is the extraordinary level of philosophical incoherence of the whole exercise.
As Kieran said, we’re not necessarily all Isaiah Berlin fans on this site. But some of us are, including me, and I’d like to make use of one of his biggest contributions; the distinction between negative and positive liberty. Basically it’s pretty intuitive; negative liberties are the absence of forcible restrictions on you doing something, positive liberties are the provision of the means for you to actually do something. As one might imagine, the libertarian half of the internet, on which Cato can reliably be located, tends to slag off positive liberties and claim that only negative liberties can legitimately be described as “Freedom!“.
So let’s look at the categories under which countries are scored. There are five major headings.
- Size of Government: Expenditures, Taxes and Enterprises
- Legal Structure and Security of Property Rights
- Access to Sound Money
- Freedom to Exchange with Foreigners
- Regulation of Credit, Labor and Business
Of these, 4 and 5 are pretty straightforwardly negative liberties, 1 is a negative liberty under a charitable interpretation which allows the taxation of income to be considered a form of restriction on liberty, but 2 and 3 are quite clearly positive liberties. A sound and stable medium of exchange (including a stable financial system), and an honest and impartial judiciary and legal system are things that the government provides for you, so that you can make decent use of your economic freedom. Now one might possibly argue that in a perfect anarchocapitalist world these could be provided by someone other than the government, but even granted that incredibly arguable proposition, Cato have given away far too much. Including the two positive liberties in their index of economic freedom is equivalent to the admission that economic freedom is not really worth anything unless you have the ability to make use of it. Which opens the door for everyone else to point out that “access to sound money and security of property rights” are all that you need in the way of positive liberties if you happen to be rich, but that if you aren’t then you also need education, basic healthcare and social security.
This is, if I remember, what Isaiah Berlin ended up concluding; that once you let in any sort of positive liberty, it is powerfully difficult to avoid ending up with a concept of liberty that includes all and any of the compenents of what people need to live a good life. Which is not necessarily a bad thing, but it does mean that the philosophical usefulness of the concept of “Liberty!” as a motivating force for theories of political morality, is rather more limited that the rhetorical attractiveness of the word would suggest. As it stands, Cato have constructed an index of what rich people need in order to enjoy their money. Which is exactly what they’re paid to do, but it doesn’t really have all that much to do with economic freedom in anyone’s sense of the word.