Democratic Freedom And Market Freedom

This paper critically analyses the relationship between democratic freedom and market freedom. To develop my position, I first analysed the two opposing views of Friedman and Lindblom. Friedman argues that market freedom and democratic freedom are compatible, while Lindblom argues that the two are not compatible. The paper further analyses Elizabeth Anderson`s paper on employee freedom. The argument in this paper is that democratic freedom and economic freedom are compatible.


Milton Friedman argues that democracy and the lack of freedom in an economic perspective are incompatible. For those individuals who do not believe that decentralised organisations of economies are able to satisfy the needs of people, but who favour processes for decision making that are democratic, the combination of an economy controlled by the state and political freedom is always attractive. Friedman however argues that in the long run, such a combination is not stable. The Friedman hypothesis states that society`s whose members enjoy levels of political freedom that are high are also required to provide high levels of freedom economically.

In a world where resources are rather limited, a mechanism that determines the goods used and the purposes they are used for is definitely important. If resource utilisation is not organised de-centrally through markets, in democracies, voters have to agree with the centralised resource allocation principles which are decided upon by political decision makers. However, such political representatives have the tendency of securing their voters seeming consent through propaganda and political control (Friedman, 2009). Their control over resources of an economic nature empowers them. Political freedom is largely undermined by the lack of economic freedom through the concentration of economic and political power in the hands of few select politicians.

Lindblom on the other hand argues that market freedom and economic freedom are incompatible. According to Lindblom, in reality, market systems are power systems that are aimed at controlling behaviours, within which are found elites and leaders. Additionally, the system embraces a number of interpersonal controls, for example coercion which to a big extent is not democratic. Lindblom clearly points out the way it is a must to induce business corporations, gratify, reward and further indulge them with an aim of offering them incentives to perform necessary tasks of coordination and organisation (Lindblom, 1982). Lindblom stresses out that there are dangers of giving corporations democratic rights that would see them treated as people on the relationship between market freedom and democracy, Lindblom posits that there exists no convincing evidence, except in the mind, that the market system is necessary for democracy.

Elizabeth Anderson posits that to be totally free, members of a society have to function more as humans who need shelter, food and medical care so that they can fully participate in production, to fully execute their roles as citizens and to move through civil societies (Anderson, 2004). In most workplaces, however, worker`s clothing, speech, diet, manners and other aspects that employees would like to govern are regulated by their employers. Workers could easily lose their jobs due to their participation in certain recreational activities, and political activities. A striking contradiction is explored by Anderson that on the one hand, while we are societies obsessed with freedom and that are wary of intrusion from the government into our private lives, we frequently allow our bosses to tyrannise us.

However, such a stark comparison between democracy and capitalism as that provided by Lindblom is unwarranted. It is quite clear that market freedom and democracy are pillars that are quite ideological that have the potential of bringing freedom and prosperity to the world that is not precedent.

Democracy and market freedom are compatible and also happen to strengthen one another. Both mechanisms aid in limiting power. They reduce direct competitors influence. A concentration of political power is counteracted by the competition between parties and politicians. On the other hand, the economic power of individual participants in markets is limited by the decentralised decision making on the use of resources held by companies who compete one another and households and the private ownership of the different factors of production (Cohen, 2017). Also, the different representatives in the political and economic spheres also tend to limit one another. The abuse of different factors of production is limited by the private control over such factors by politicians while politics sets economic activities’ legal framework.

In most of the countries across the globe, citizens enjoy extensive economic freedom but are not politically free. A good example of such a country is Singapore. Such a case however, in no way contradicts the Friedman theory. In addition to Friedman regarding the lack of freedom economically as being incompatible with political freedom, he made an assumption that while economic freedom was a necessary condition for political freedom, it was not sufficient. According to Friedman, in the long run, a combination of a lack of economic freedom and political freedom would be possible. According to Friedman however, societies that are both economically and politically free are more desirable. Friedman`s main argument is that systems that are politically free cannot survive without economic freedom (Lawson and Clark, 2010).

The interrelation between democratic freedom and economic freedom is best illustrated by Venezuela. In the 19770`s, to a large extent, Venezuela was considered as a properly functional democracy whose market economy was relatively well developed. With time however, a dictator governed the country and the country economy has to a large extent dwindled. Following the bad economic downturn, the state of Venezuela intervened. The means for creating a socialist paradise were inflation, increased government expenditures, systematic violation of property rights and high taxes (Buxton, 2018). However, political repressions followed economic repressions. That did not come as a surprise, there exists no country in the world where democracy persisted without being accompanied by a market economy that was relatively free.

While democracy is a model of success and a political success, its survival on the long run depends on the openness of market economies. When societies that are democratic put in place measures aimed at weakening their markets, their democracy is endangered with consequences that are unintended and an outcome that is not certain (Lundström, 2005).

From this paper, it is evident that democratic freedom and economic freedom are compatible. Systems that are politically free could not possibly survive without economic freedom.

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  • Anderson, E., 2004. Ethical assumptions in economic theory: some lessons from the history of credit and bankruptcy. Ethical theory and moral practice, 7(4), pp.347-360.
  • Buxton, J., 2018. The failure of political reform in Venezuela. Routledge.
  • Cohen, G.A., 2017. Capitalism, freedom, and the proletariat. In Liberty Reader (pp. 163-182). Routledge.
  • Friedman, M., 2009. Capitalism and freedom. University of Chicago press.
  • Lawson, R.A. and Clark, J.R., 2010. Examining the Hayek–Friedman hypothesis on economic and political freedom. Journal of Economic Behavior & Organization, 74(3), pp.230-239.
  • Lindblom, C.E., 1982. The market as prison. The Journal of Politics, 44(2), pp.324-336.
  • Lundström, S., 2005. The effect of democracy on different categories of economic freedom. European Journal of Political Economy, 21(4), pp.967-980.

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