Capitalism and Freedom, Part V

The ShadowLands is proud to present Part V of John Butler of the John Butler Trio's meditation on capitalism and freedom.

Historical evidence speaks with a single voice on the relation between political freedom and a free market. I know of no example in time or place of a society that has been marked by a large measure of political freedom that has not also used something comparable to a free market to organize the bulk of economic activity. Capitalism is not a sufficient condition for human or political freedom, though it is a necessary condition.

Hong Kong has had an extraordinary degree of economic freedom: no tariffs and no import or export quotas, except as we in our wisdom have forced such quotas on Hong Kong in order to protect our industries from its efficiency. There are few regulations on business, no price controls, no wage controls.

Hong Kong's completely free economy has achieved marvels. Here is a place with no resources except a magnificent harbour, a small piece of land that has grown to a population close to six million and at the same time, the standard of living has multiplied many times. It has been one of the most rapidly growing countries in the world, a remarkable example of what free markets can do if left unrestricted.

However, in one respect Hong Kong has no freedom whatsoever. It has no political freedom. At the very time officials of the British Colonial Office were imposing economic freedom on Hong Kong, at home in Britain a socialist government was imposing socialism on Britain. Perhaps they sent the backward people out to Hong Kong to get rid of them. It suggests that while economic freedom facilitates political freedom, political freedom, once established, has a tendency to destroy economic freedom.

The situation is even more extreme if you consider that Hong Kong got zero foreign aid during its growth. Foreign aid has done far more harm to the countries we have given it to than it has done good. Why? Because in every case, foreign aid has strengthened governments that were already too powerful. Mozambique, Tanzania, and many other African countries...