In his masterpiece “An Inquiry into the Nature and Causes of the Wealth of Nations,” written in 1776, Adam Smith made the observation that providing individuals with economic freedom is all that is needed for a nation to prosper. The remainder of the requirements will be fulfilled naturally if economic freedom is provided.
On the other hand, democracy has long been recognized as the best political system for boosting a nation’s prosperity. Because democratic governance promises free and fair elections, equal representation, and civil and political liberties, many people have assumed that democratic governance leads to economic success.
Economic freedom, on the other hand, is the capacity of individuals to own property, make their own economic decisions, and participate in the voluntary exchange of goods and services. Without economic freedom, democracy cannot guarantee economic progress. This is not to say that we shouldn’t strive for a democratic political system; however, economic freedom is far more important to economic growth and prosperity than democracy.
What then is economic liberty? It refers to the capacity of individuals and businesses to engage in economic activities without the government’s much-needed attention. The fundamental principles of economic freedom are the rule of law, the protection of property rights, the quality and efficacy of regulations, the freedom to trade, and fiscal responsibility. The private sector is thriving, contracts are upheld, and property rights are safeguarded by a robust legal framework in countries that guarantee economic freedom.
