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freedom and the state

In The Power of Freedom: Uniting Human Rights and Development, Jean-Pierre Chauffour is very critical of state-centric human rights and development policies, but he also explains his vision for the state in expanding freedom:

Since Adam Smith (1776), it is  common to consider the core functions of the state as being to protect  individuals against violence, theft, and fraud, and providing a limited   set of goods and services that markets may find it difficult to  provide for a variety of reasons. In particular, the state should  establish the legal system and institutions to provide for the enforcement   of contracts, the mutually agreeable settlement of disputes,  and the guarantee of and respect for the rule of law. Except in  cases where freedom of exchange is exceedingly costly or practically  impossible, such as in the situation of monopoly or similar market  imperfections or in the presence of externalities, the state should give way to the market to determine, arbitrate, and enforce the rules  of the game.

Nobel laureate  economist Milton Friedman (1962) noted that market solutions  (i.e., voluntary cooperation among responsible individuals) permitted   “unanimity without conformity” (i.e., a system of effective  proportional representation), whereas political solutions (even in proportional   representation) typically tended to produce the opposite,  that is, “conformity without unanimity.”

Although economic freedom sets limits on the functions and goals  assumed by governments, it also requires states to be effective in  delivering those core activities of government responsibility. Far  from requiring a weak state, securing economic freedom and civil  and political rights necessitates a strong state with effective institutional   capacities and instruments to maintain the rule of law and  other core functions, such as the protection of people, contracts, and  properties, or the provision of basic public goods. Ineffective states  tend to take on an ambitious range of activities that they cannot  perform well. At the extreme, weak and failing states commit human  rights abuses, provoke humanitarian disasters, drive massive waves  of immigration, and attack their neighbors (Fukuyama 2004).

In particular, freedom principles influence a country’s  macroeconomic institutions in four key dimensions: they delineate  the relationship between individuals and the state (i.e., the rule of  law); they determine the relationship between individuals and the  objects that they see as being their own (i.e., the property regime);  they define the relationship among individuals in reaching agreement   on collective matters (i.e., the participatory process); and they  determine the relationship between individuals and their representatives   in the use of public resources (i.e., governance). All four  relationships capture the extent to which a country’s institutional  framework is consistent with a free society.’

The failure of a country’s legal system to provide for  the security of people and property rights, enforcement of contracts, and the mutually agreeable settlement of disputes undermines a  free society and the operation of a market-exchange system. It  encourages violence in conflict resolution and threatens social peace.
….
The power of legal and judicial reform to spur economic development   is supported by a growing body of research showing that  economic development is strongly affected by the quality of a  nation’s legal institutions, including the system of checks and balances   (e.g., Knack and Keefer 1995). Actually, the capacity of national  legal institutions to protect property rights, reduce transaction costs,  and prevent coercion may be decisive in determining whether economic   development takes place.

Judicial reforms in developing countries should be part of a larger  effort to make legal systems more market-friendly. The core of such  judicial reforms would typically consist of measures to strengthen  the judicial branch of government and make it independent, facilitate  access to dispute resolution mechanisms, speed the processing of  cases, and professionalize the bench and bar (Messik 1999).$ It would  also encompass everything from writing, or revising, commercial  codes, bankruptcy statutes, and company laws through overhauling  regulatory agencies and teaching justice ministry officials how to  draft legislation to foster private investment. However, in contrast  to the “law and development model” developed in the 1970s, the  state should not be expected to be the direct protagonist of social  change.’ Instead, the state should simply enforce the rule of law to  prevent the actions of different individuals from interfering with  each other, including the drawing of boundaries. This would entail  first and foremost the enforcement of private property rights.

In a free society, it is liberty in all its dimensions-and first and  foremost the freedom to participate in the marketplace-that is primary,   with democratic rule but a byproduct. Participation cannot  be limited to the notion that everyone has a right to take part in  public decisionmaking and then the obligation to accept the rule of  the majority. As has long been argued by early liberals, such a  concept of participation carries the risk of despotism. As Machan  (2003) put it, “Whereas the original classical liberal idea is that we  are free in all realms and democracy concerns mainly who will  administer a system of laws that are required to protect our liberty,  the corrupt version of this idea is that democracy addresses everything   in our lives and the only liberty we have left is to take part  in the decision-making about whatever is taken to be a so called  ‘public matter.”

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Filed under: General Welfare,

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