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Examining the Hayek-Friedman hypothesis on economic and political freedom


  • Lawson, Robert A.
  • Clark, J.R.


This paper examines empirically the hypothesis made famous by Nobel Laureates Friedrich A. Hayek and Milton Friedman that societies with high levels of political freedom must also have high levels of economic freedom. In our judgment, the Hayek-Friedman hypothesis holds up fairly well to historical scrutiny. Using data on economic and political freedom for a sample of up to 123 nations back as far as 1970, we find relatively few instances of societies combining relatively high political freedom without relatively high levels of economic freedom. In addition, we find that these cases are diminishing over time. Finally, we examine several cases of countries on different economic and political freedom journeys.

Suggested Citation

  • Lawson, Robert A. & Clark, J.R., 2010. "Examining the Hayek-Friedman hypothesis on economic and political freedom," Journal of Economic Behavior & Organization, Elsevier, vol. 74(3), pages 230-239, June.
  • Handle: RePEc:eee:jeborg:v:74:y:2010:i:3:p:230-239

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    References listed on IDEAS

    1. Farrant, Andrew & McPhail, Edward, 2009. "Hayek, Samuelson, and the logic of the mixed economy?," Journal of Economic Behavior & Organization, Elsevier, vol. 69(1), pages 5-16, January.
    2. Dawson, John W., 2003. "Causality in the freedom-growth relationship," European Journal of Political Economy, Elsevier, vol. 19(3), pages 479-495, September.
    3. Stroup, Michael D., 2008. "Separating the influence of capitalism and democracy on women's well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 67(3-4), pages 560-572, September.
    4. W. Kenn Farr & Richard A. Lord & J. Larry Wolfenbarger, 1998. "Economic Freedom, Political Freedom, and Economic Well-Being: A Causality Analysis," Cato Journal, Cato Journal, Cato Institute, vol. 18(2), pages 247-262, Fall.
    5. James D. Gwartney & Randall G. Holcombe & Robert A. Lawson, 2004. "Economic Freedom, Institutional Quality,and Cross-Country Differences in Income and Growth," Cato Journal, Cato Journal, Cato Institute, vol. 24(3), pages 205-233, Fall.
    6. Pitlik, Hans & Wirth, Steffen, 2003. "Do crises promote the extent of economic liberalization?: an empirical test," European Journal of Political Economy, Elsevier, vol. 19(3), pages 565-581, September.
    7. Wu, Wenbo & Davis, Otto A, 1999. "The Two Freedoms, Economic Growth and Development: An Empirical Study," Public Choice, Springer, vol. 100(1-2), pages 39-64, July.
    8. repec:cto:journl:v:24:y:2004:i:3:p: is not listed on IDEAS
    9. Manuel Vega-Gordillo & José L. à lvarez-Arce, 2003. "Economic Growth and Freedom: A Causality Study," Cato Journal, Cato Journal, Cato Institute, vol. 23(2), pages 199-215, Fall.
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    11. de Haan, Jakob & Sturm, Jan-Egbert, 2003. "Does more democracy lead to greater economic freedom? New evidence for developing countries," European Journal of Political Economy, Elsevier, vol. 19(3), pages 547-563, September.
    12. Dawson, John W, 1998. "Institutions, Investment, and Growth: New Cross-Country and Panel Data Evidence," Economic Inquiry, Western Economic Association International, vol. 36(4), pages 603-619, October.
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    Cited by:

    1. Makovi, Michael, 2016. "Labor Economics in a Planned Economy: F. A. Hayek and John Jewkes on the Impossibility of Democratic Socialism," MPRA Paper 70174, University Library of Munich, Germany.
    2. Rode, Martin & Gwartney, James D., 2012. "Does democratization facilitate economic liberalization?," European Journal of Political Economy, Elsevier, vol. 28(4), pages 607-619.
    3. Andreas Freytag & Sebastian Voll, 2013. "Institutions and savings in developing and emerging economies," Public Choice, Springer, vol. 157(3), pages 475-509, December.
    4. Niclas Berggren & Therese Nilsson, 2013. "Does Economic Freedom Foster Tolerance?," Kyklos, Wiley Blackwell, vol. 66(2), pages 177-207, May.
    5. Nejad, Maryam Naghsh & Young, Andrew T., 2016. "Want freedom, will travel: Emigrant self-selection according to institutional quality," European Journal of Political Economy, Elsevier, vol. 45(S), pages 71-84.
    6. Joshua Hall & Yang Zhou, 2017. "The Sinuous Dragon: Economic Freedom and Economic Growth in China," Working Papers 17-12, Department of Economics, West Virginia University.
    7. Robert Szarka, 2016. "The Effect of Economic Freedom on Civil Liberties in the Short Run: Physical Integrity Rights, 2000-2011," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 31(Fall 2016), pages 21-35.
    8. Joshua C. Hall, 2016. "Institutional convergence: exit or voice?," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 40(4), pages 829-840, October.
    9. M. Zakir Saadullah Khan, 2012. "Examining Friedman Hypothesis On Political,Civil And Economic Freedom For Saarc Countries: A Dynamic Panel Data Analysis," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 37(3), pages 107-127, September.
    10. Makovi, Michael, 2016. "The Impossibility of Democratic Socialism: Two Conceptions of Democracy," MPRA Paper 70172, University Library of Munich, Germany.
    11. repec:ejw:journl:v:12:y:2015:i:3:p:375-399 is not listed on IDEAS
    12. Kapás, Judit & Czeglédi, Pál, 2011. "Gazdasági szabadság, politikai szabadság és a társadalmi rendek
      [Economic freedom, political freedom, and social orders]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 485-510.
    13. Makovi, Michael, 2016. "The Freedom of the Prices: Hayek's Road to Serfdom Reassessed," MPRA Paper 72071, University Library of Munich, Germany.
    14. Webster, A.L., 2013. "Is There Feed-Back Between Economic Freedom and Economic Growth: A Comparative Granger-Causality Test Based On Quartiles," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 13(1), pages 11-24.
    15. Erik Grimmer-Solem, 2015. "The mature limited access order at the doorstep: Imperial Germany and contemporary China in transition," Constitutional Political Economy, Springer, vol. 26(1), pages 103-120, March.
    16. Leonid Krasnozhon, 2013. "Institutional stickiness of democracy in post-communist states: Can prevailing culture explain it?," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 26(2), pages 221-237, June.
    17. Christian Bjørnskov & Jacob Mchangama, 2013. "Do Social Rights Affect Social Outcomes?," Economics Working Papers 2013-18, Department of Economics and Business Economics, Aarhus University.
    18. Makovi, Michael, 2016. "Interest Groups and the Impossibility of Democratic Socialism: Hayek, Jewkes, and the Arrow Theorem," MPRA Paper 70173, University Library of Munich, Germany.
    19. repec:eee:jeborg:v:141:y:2017:i:c:p:83-95 is not listed on IDEAS
    20. Hugo J. Faria & Hugo M. Montesinos-Yufa & Daniel R. Morales, 2014. "Should the Modernization Hypothesis Survive Acemoglu, Johnson, Robinson, and Yared? Some More Evidence," Econ Journal Watch, Econ Journal Watch, vol. 11(1), pages 17-36, January.
    21. repec:kap:atlecj:v:45:y:2017:i:1:d:10.1007_s11293-016-9522-6 is not listed on IDEAS


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