Economic freedom is not as precious as political freedom to public opinion and intellectuals. It is frequently looked upon as the freedom to plunder and exploit other people.

Dr. Mousa Ghaninejad, Senior Economist

Leftist scholars maintain that the government should regulate economic relations in the society to make sure that economic liberty will not lead to exploitation and tyranny. As politicians use every excuse to boost their power, they will naturally use that call as a tool to expand their power. Differentiating between political and economic freedoms is an ideological invention by leftist groups and has led to many misunderstandings about the concept of economic freedom and ways of realizing it.

In reality, however, freedom cannot be broken down into different and opposing components but is a unified whole, which is manifested differently in different fields of human life. Political, economic, social, and cultural aspects of human life are based on the ownership rights and personal choice of people.

Every human being is in possession of his/her life and property. The right to avail of that property, or the right of choice in political, economic, social and other activities, is called freedom. Of course, personal ownership is a social institution and needs overarching laws to be established.

The economic freedom, which has been criticized by leftist elements, is freedom to sign cooperation contracts among free people. They argue that if employer, who owns capital and labor tools, and worker, who only possesses his/her own working force, freely enter into such contracts, the employer will dominate over the worker and unequal relationship is a certain outcome of that situation.

Employers are few in number and can unite together, but workers whose number is numerous are not united and cannot defend their rights against that unholy alliance.

Therefore, a third and impartial force like government should interfere between employees and workers and defend the weak against the strong. Therefore, the government will have to breach freedom of signing contract between the two sides and, at its own discretion, replace its own will for individual demands of citizens. Leftist groups’ emphasis on ignoring that freedom in order to establish social justice and one may claim that that approach enjoys widespread popularity.

The leftists also object to setting price of goods and services in a free market which is affected by supply and demand. They argue that prices set at a free market are often harmful to most consumers and are determined by a minority of producers.

To establish justice, it is necessary for the government to gear into action and determine a just ceiling for prices. Here, the governments will supplant determination of both sides of the economic equation and freedom of choice is ignored in favor of justice. State pricing system will always and inevitably lead to imbalances in markets. Determining a price, which is lower that that determined through balance between supply and demand will create excessive demand and the government will have to use subsidies to offset that extra demand. Subsides are, in fact, practical cost of governmental price setting, which are paid through the taxpayers’ money.

Negation of economic freedom through any reasoning is a form of blatant breach of fundamental principles of human rights. The important points it that the governments encourage the above ideas; that is, the institution which is supposed to be the main protector of freedoms turns into the main body violating them. The reason perhaps lies in the existing misunderstanding in modern thoughts and its impact on the establishment of modern civil institutions. The founders of the modern political thought believed that the government, as the sole representative of people should work as a judge or arbitrator; that is, the only power that is delegated to government by people is arbitration.

Such thinkers as John Locke maintained that the necessity for the existence of government resulted from the fact that in case of differences among citizens about their personal rights single person cannot play the role of the plaintiff and defendant as well as the judge. Therefore, people should elect representatives to arbitrate in case of such differences.

From his viewpoint, citizens delegate their power of arbitration to the government as an impartial party to see into disputes and settle them. The important point is that delegation of power, by no means, include right of ownership and, the government is basically established to protect that right. However, some modern philosophers have come up with a different definition for delegation of citizenship rights and the powers of democratic governments. John Jacques Rousseau, for example, maintains that by electing a democratic government, the citizens delegate not only the right to arbitration, but other powers and rights to the government and, the state symbolizes the national will.

When such a government has been established, citizens have no rights of their own and collective rights take place of individual rights and freedoms. This is, however, a contradictory and incorrect definition of government, which paves the way for ignoring personal rights on the pretext of protecting collective rights.

Infringement by the government on private ownership rights and, finally, establishment of socialistic (government-run) economy would be natural outcome of such an approach to governance. If the main goal behind establishment of government is to protect the liberties of citizens, delegating all powers to the government will practically contravene that premise. It is only through giving priority to society over individual (which is the linchpin of socialism) that such a relationship between people and the government could be defined. However, socialism in this sense is, in fact, a new form of slavery in which people have no liberties or rights of ownership and all decisions are taken collectively by the government.

Despite basic contradictions between liberal and socialistic approaches to government’s role, both have affected establishment of modern institutions in western and other societies. But since individual, human rights, and liberalistic traditions have been more powerful in the European societies than other parts of the world, the socialist approach has not been able to dominate European societies, except for short periods of time.

It is true that governments interfere, more or less, in economic activities in all modern societies, their economic systems, however, are based on freedom and personal ownership rights, which is the main distinction between liberal and socialist economic systems.

A different situation prevails in other countries, including our country. Due to reasons that will be discussed later, the socialist approach has had the greatest influence over economic and political institutions. Governments in those societies often consider themselves as representing "public will" which possesses powers over al freedoms and rights of citizens. They consider themselves authorized to infringe upon the most private matters of their citizens, including decisions involving their livelihoods and economic status. Of course, such infringement, which entails ignorance of individual rights, takes place under the aegis of such general and ambiguous ideas as the public expediencies and social justice.

The most evident examples for breach of economic freedom, which was mentioned at the beginning of this paper, pertain to concluding free contracts among citizens as well as setting price of goods and services. In the first case, the government prevents free contracts to b signed between employers and workers on the pretext of protecting the weak and, in fact, imposes its own conditions on them.

From a liberalistic viewpoint, this is a blatant breach of human rights because when governments enter such fields for which they are not qualified (including personal freedoms) they deprive human beings of the right to determine their fates (self-determination). The government, which represents the public will in socialistic approach, claims that it can recognize the expediencies of citizens better than them and, in practice, plays the role of a guardian considering people as minors.

The main outcome of ignoring personal freedoms, as proved in all human societies, is suffering of the public, especially the weak. If workers and other citizens are let free to establish syndicates, they will be able to defend their interests under better conditions than when their rights have been overruled by the government. of course, by syndicate, we do not mean state-run syndicates that are customary in Third World countries, but voluntary and truly popular institutions whose examples can been seen in advanced industrial states.

The main harm resulting from government’s intervention in labor contracts, which we are witnessing in our own country, is a long line of jobless people who have lost their occupations because employers are not willing to make new investment and employ new labor force. It is evident that the longer that line becomes, there would b more pressure on the labor market to reduce real wages and, therefore, even employed workers will ultimately come to harm through the government’s intervention. The interests of majority of workers can be met only in one case, which is promotion of economic prosperity and increasing demand for more manpower. Such conditions cannot be created unless through liberating the labor market and lack of government’s intervention in the conclusion of voluntary contracts.

Controlling prices is another common method for breaching economic freedoms by governments. Here, the main pretext is again, to support low-income social classes and establishment of social justice. Prices in competitive markets are in fact, reflection of the free will of citizens and their decision as how to use the limited economic resources. If the relative price of a commodity goes up, it should mean that consumers, through their free choice, are willing for more of that commodity to be produced and encourage producers through paying a higher price to produce that commodity.

Under those conditions, what would happen, if the government interfered to curb the price rise? Firstly, information about true demand of consumers will be damaged and producers will receive wrong signals for their products. As a result, the natural balance between supply and demand will be disturbed and there would be surplus demand compared to supply.

Secondly, when the government interferes to solve the problem, it would be forced to interfere more and more. That is, it should take up for the shortage either through production or imports and, therefore, pay subsidies. Anyway, the result is that the government will have to pay the price of fixing prices through public coffers; that is, it should pay subsidies out of taxpayers’ money but those subsidies are only used by a small fraction of the society. The main point, which is not explained by proponents of such policies, is the policies that are adopted to control prices, how those policies are funded, and their real results.

In reality, no government has financial resources of its own and all resources belong to people. Therefore, any payment that is made by the government is actually done at people’s cost. It is a common misunderstanding that the government is able to fix price of one or more commodities because what government does through such policies is, in fact, to make public pay the price difference and disburse it to consumers that demand that special commodity. That is, the people should pay the bill and that bill will be much costlier than when no price control is in force because the cost of state bureaucracy is also added.

Of course, in some instances, the government may have to enforce quotas to implement its price regulatory policies and avoid of paying anything on the surplus demand that exists in the market. In that case, two official and unofficial markets will come to being with their own costs for the society. In addition, such price regulation policies are, in practice, offset by price hike and expansion of the unofficial market.

The satirical aspect of government’s intervention in economic affairs is that all those futile measures are taken in the name of justice. Violation of freedoms and economic rights including restriction of voluntary contracts, will imbalance the results of free choice of consumes and produces, transfer money from some citizens to others, impose unnecessary costs, lead to widespread waste of economic resources, and amount to evident breach of human rights and injustice. Fixing price of oil products in our country means nothing but to transfer public wealth from low-income social classes to affluent social strata which consume the lion’s share of those products.

By reducing profit rate of banks and widening the gap between official and unofficial money markets, the government is only helping those who take great loans from banks. Most of them are inefficient state-run plants that only make losses or small- and medium-sized economic entities that rarely access financial resources and have to meet there needs through the unofficial market.

Does paying the bill for inefficiency and mismanagement of state-run companies at the cost of depositors who have taken their money to banks to protect its value, conform to standards of justice and fairness? Is filling the purse of rent-seekers to the loss of producers and consumers through fixing price of such commodities as cement and steel, is in line with promotion of social justice?