Freedom and the market economy

    The seeds of a new generation lie embedded in the present one. The political and social devastation that the economic policies of socialism has left behind are still traceable today with people depending on intricate and wasteful social welfare systems, with an air of contestation and confrontation in industrial relations by left wing unions, with the false ideas that nationalisation and protectionism being the solution to unemployment and equality in income distribution. We are having new advocates of these policies that have historically impeded a large proportion of the population to unleash its potential and contribute directly to social and economic development and an improvement in the quality of life.

    I read the book “Capitalism and Freedom” by Milton Friedman in 1973 when Malta, Europe and other parts of the “Less developed world” where going through a frantic phase of nationalisation, protectionism, worker participation in management,  state control and intervention. Friedman’s main thrust in his thinking was that you cannot separate economic freedom from political freedom. The more the state intervenes in the economy, the more the citizens of that society find it difficult to express their own opinions and ideas and the less the possibility of dissent. Milton Friedman was strongly influenced by the three pioneers of liberal economics and of a more human form of capitalism – the Viennese Karl Popper, Friedrich von Hayek and Ludwig von Mises.  The method is not that of “laissez faire”, the neo- classical economic principle of capitalism at any cost, but a market economy that unleashes the great potential of the human being where the state guarantees law and order.

    Nineteen seventy nine was a watershed year – Margaret Thatcher became prime minister in the United Kingdom, and Deng Xiaoping began liberalising the gigantic sleeping giant of China. These two persons had a tremendous influence on the turn the global economy and society had to take from the nineteen eighties onwards. The break from the repressiveness of socialism liberated vast amounts of people not only in their entrepreneurial drive and their direct participation in the economy, but also in expressing their views and opinions and creating the necessary tension that moves society forward.

    Capitalism has again been criticised following the financial crisis of 2008 with its spilling over to the real economy, and the ensuing increase in poverty in what we had referred to as the “western world”. The influence of socialist thinking was never brushed away from our back and today even centrist and centre right politicians shy away from arguing that there is no alternative to the market economy, albeit with gentle and practical regulation. There is no single text that encompasses a “theory” of market economics the way that socialists have in the “Communist Manifesto” by Karl Marx. The strength of the market economy lies in its flexibility and adaptability, and in its belief in the strength of human judgement but also in its weaknesses and its vulnerability to make mistakes and fail.  Freedom creates space for the entrepreneurial drive for a restart and a rebound. The state, even with the best intentions of politicians, should stay out of areas where it does not need to be.

    Joseph FX Zahra