Session Summary
The concept of freedom is being reexamined amid rising polarisation, challenging the traditional market views of influential neoliberal economists like Milton Friedman and Friedrich Hayek.
Liberty encompasses more than personal freedom; it’s about the set of opportunities available to individuals. Liberty is not just the freedom to act independently but also involves the range of choices available to each person. A reduction in these available choices due to social or economic constraints leads to a loss of freedom, making liberty broader than just individual autonomy.
Economists often misuse the terms ‘free market’ and ‘free enterprise’ to justify unequal wealth distributions. Hayek and Friedman championed free markets as the ultimate path to economic prosperity and freedom. However, this perspective overlooks the inequalities and societal impacts that unregulated markets can create, often limiting freedom for marginalized groups.
In our interconnected society, freedom for one group often means constraints for another. Libertarians see taxation as coercion, even with representation. Conflicts arise when liberties, like carrying a gun or refusing vaccination, infringe on others’ rights to safety and life. Balancing these freedoms requires careful societal judgments.
Freedom should involve some form of coercion as it works to enhance freedom for all. This can be sustained with preservation of democratic media.
Minor forms of coercion, like traffic lights, enhance freedom by ensuring order and expanding everyone’s freedom to move. Public goods, such as infrastructure and health, need funding through taxation to prevent free-riding and expand opportunities. Coercion for public goods such as education can increase everyone’s freedom to act, providing societal benefits.
Redistributive tax and expenditure policies encourage inclusive growth by expanding opportunities for the poor. Providing health and education expands individuals’ capabilities more than it contracts the opportunity set of those taxed. For instance, COVID-19 vaccines were developed with funds for centuries of scientific research. Without tax and expenditure policies, inequalities lead to externalities that undermine economic performance.
The group that controls the press can shape societal narratives, resulting in a loss of “effective freedom” (choices) for others. Stiglitz questions what kind of regulations should be imposed on media, including social media, to reduce social harms. This raises the question of whether media control should be based on wealth, as it allows the wealthy to advance their interests in economics and politics, further constraining the choices of others.
Progressive capitalism, a type of revitalized social democracy can be alternative to decline in neoliberalism economics.
Unfettered markets are neither efficient nor stable, prompting the need for an alternative framework that balances market forces, addresses market failures, and harnesses collective action. Institutions like cooperatives, not-for-profits, and public institutions empower unions, civil society, and collective movements, fostering empathy and reducing negative externalities. This leads to enhanced freedom, efficiency, and equity.
By investing in public goods, enhancing capabilities, and managing externalities, progressive capitalism can unlock greater, long-term value. Advancing activities with positive externalities, bolstering social insurance, and strengthening social cohesion will not only drive sustainable growth but also foster a freer and more equitable society—one that outperforms the laissez-faire models advocated by Hayek and Friedman.
Malaysia, along with other global markets, could implement progressive capitalism to foster a ‘good society’. However, the Malaysian society needs to take collective action to decide which types of trade-offs are worthwhile for the freedom of their people.