Mises on the interconnection between economic and political freedom (1949)

Ludwig von Mises

The Austrian free market economist Ludwig von Mises (1881-1973) argues not only that political and economic liberty are inextricably linked but that economic liberty is the foundation stone for all political liberties:

Freedom, as people enjoyed it in the democratic countries of Western civilization in the years of the old liberalism’s triumph, was not a product of constitutions, bills of rights, laws, and statutes. Those documents aimed only at safeguarding liberty and freedom, firmly established by the operation of the market economy, against encroachments on the part of officeholders. No government and no civil law can guarantee and bring about freedom otherwise than by supporting and defending the fundamental institutions of the market economy. Government means always coercion and compulsion and is by necessity the opposite of liberty. Government is a guarantor of liberty and is compatible with liberty only if its range is adequately restricted to the preservation of what is called economic freedom. Where there is no market economy, the best-intentioned provisions of constitutions and laws remain a dead letter.

Milton Friedman argued for many years that economic and political liberty were interlinked and that to destroy one (such as economic liberty) would eventually harm the other (political liberty). He was aiming his argument at the “political liberals” (i.e. social democrats) who were happy to regulate and control the economy without thinking that they would thereby end up harming what they considered to be a higher value, namely political freedom. Mises goes much further than this is his chapter “On Freedom” in Human Action in which he argues that political freedom is dependent about flourishing free markets and that written constitutions merely protect already existing institutions created by market activities. If these free market institutions are weakened too much then the political edifice which is built upon them will come crashing down.