Political and Economic Freedom, and the Social Orders
Abstract: The aim of this paper is to contribute to a theoretical underpinning of the economic freedom–political freedom relationship. In this endeavor we use the theory of social orders (North et al. 2009) to interpret the Hayek-Friedman Hypothesis (HFH), which leads us to propose a new interpretation. The core insight of this weak form of the hypothesis is that economic freedom is a necessary condition for maintaining political freedom in open access orders, that is, once achieved, political freedom needs economic freedom to be stable; but the HFH is not relevant for limited access orders. Our empirical investigations, based on cluster analysis, survival probabilities and probit regressions, by using a panel database for 130 countries for the period 1970-2005 provide support for the weak interpretation.
