Tuesday, October 23, 2018

Economic Freedom, Part 1

In October 1986, with support from the Liberty Fund in Indianapolis, Indiana, the Fraser Institute convened the first of four conferences in Napa Valley, California.  The Fraser Institute published the proceedings in 1988, Economic Freedom, Democracy and Welfare.  Edited by Michael A. Walker, Director of The Fraser Institute, and co-chaired with Milton and Rose Friedman, the conference was organized as a counterpart to do for economic freedom what Freedom House did for political freedom:  to calculate the amount of economic freedom that exists in various nations of the world.

Its origins can be traced to a conversation in 1984 at the Mont Pelerin Meeting in Cambridge, England, between Michael Walker and Milton Friedman, whose book Capitalism and Freedom had been extant since 1962.  However, there had been no serious attempt to explore the relationship between economic and political freedom in a scholarly way.  That conversation led to the idea of broadening the analysis to also include civil freedoms, which can often be more important than political freedoms.

The conference consisted of several conceptual, historical, and statistical papers, most notably those Nobel Laureates in Economics Douglass C. North and Milton Friedman.  These were fleshed out with case studies on economic freedom in East Asia (Alvin Rabushka), Africa (Lord Peter Bauer), Latin America (Ramon Diaz), and Sweden (Ingemar Stahl).  Another paper dealt with property rights (Svetozar Pejovich).  Discussants included Armen Alchian, Walter Block, Herbert J. Grubel, Arnold Harberger, Brian Kantor, Assar Lindbeck, Michael Parkin, Gordon Tullock, and Sir Alan Walters.  It would be hard to find a more distinguished group of scholars concerned with economic freedom, or any other economic subject for that matter.

A second conference was convened in July 1988 in Vancouver, Canada.  Edited by Walter E. Block, the proceedings were published in 1991, Economic Freedom:  Toward a Theory of Measurement.  (The volume is available for free download on my website alvinrabushka.com.)  This conference was designed to set forth the philosophical foundations of economic freedom and its conceptual definition that would provide a basis for measurement.

Michael Walker set the background for the proceedings with a summary of the preceding conference held in Napa Valley.  Alvin Rabushka wrote the next three papers:  “Philosophical Aspects of Economic Freedom,” “Freedom House Survey of Economic Freedoms“ (for comparative purposes), and “Preliminary Definition of Economic Freedom.”  I will discuss the contents of these papers in subsequent posts.  The final paper was an initial attempt by Zane Spindler and Laurie Still to calculate “Economic Freedom Rankings” for 145 countries on a five-point scale based on Rabushka’s “Definition” paper.

Conference participants, in alphabetical order, also included James Ahiakpor, David Friedman, Milton Friedman, Rose Friedman, James Gwartney, William Hammett, Henri LePage, Henry Manne, Richard McKenzie, Antonio Martino, Charles Murray, Ellen Paul, Robert Poole, and Gerard Radnitsky.

The third and fourth conferences were held in Banff, Alberta, Canada in 1989, and Sea Ranch, California in 1990.  The two were melded into the third volume in The Fraser Institute Rating Economic Freedom Project.  Stephen T. Easton and Michael A. Walker edited the volume, Rating Global Economic Freedom, published in 1992.

Papers in this volume focused on more precise measures of economic freedom for countries around the world for which data were available.

Authors and participants included James C.W. Ahiakpor, Juan F. Bendfelt, Walter E. Block, Jack L. Carr, John F. Chant, Edward H. Crane, Arthur T. Denzau, Thomas J. DiLorenzo, Stephen T. Easton, Milton Friedman, John C. Goodman, James D. Gwartney, Edward Lee Hudgins, Ronald W. Jones, Robert A. Lawson, Richard McKenzie, Joanna F. Miyake, Charles Murray, Alvin Rabushka, Richard W. Rahn, Alan Reynolds, Laurie Rubner, Gerard W. Scully, Bernard H. Siegan, Zane A. Spindler, Alan C. Stockman, Richard L. Stroup, Melanie Tammen, and Michael A. Walker.

The first comprehensive report based on the four conferences and three conference volumes was Walter Block, James Gwartney, and Robert A. Lawson, Economic Freedom of the World, 1975-1995, published on January 1, 1996.  Thereafter subsequent annual reports were published for 1997, 1998-1999, and then annually through 2018 (published in conjunction with the Cato Institute since 2001).  Separate periodic reports for North America were published from 2002 and for the Arab World from 2005.  Altogether, about a dozen individuals have helped to edit the series of annual reports on Economic Freedom.

In 1995, The Heritage Foundation, in conjunction with the Wall Street Journal, created a rival Index of Economic Freedom.  The Heritage/WSJ index was conceptually and empirically simpler than the Fraser Index.

Subsequent posts in this series will discuss in greater detail the philosophy, concepts, and measures of Economic Freedom that make up the Fraser Institute Annual Report

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