Economic freedom means the opportunity to make personal economic decisions without any pressure. When people engage in voluntary transactions, both sides must benefit—otherwise, the losing side will simply walk away from such an exchange. When there are myriad such relationships, they ensure the well-being of the contemporary individual and the advantages of a market economy over other ways of organizing the economic activity of a society1. In short, economic freedom is the most important foundation for wealth and rapid economic growth, and numerous studies have only confirmed this.
The opposite of freedom is coercion, force, and deception. This forces people to make decisions that are negative and prevent individuals from entering into mutually beneficial relations that would increase wealth, and so ultimately diminish or even destroy wealth—through actual prohibitions or, for instance, fear of being tricked. Thus, societies, where crooks and con artists thrive, remain poor. A state monopoly on legitimate coercion can fix this, but only as long as this is being done in order to promote or maintain economic freedom, that is, free access for all citizens to any kind of beneficial economic activity, coupled with real protection for the inalienable right of any person to freely manage their labor and property.
On the other hand, the state has its price: it collects taxes and establishes certain limitations and responsibilities. Its monopoly on legitimate use of coercion can also be used in the private interests of individuals in power and unscrupulous business owners who take advantage of the government’s pressure to force people to make decisions that are not economically beneficial for them—but very beneficial to those entrepreneurs. As a result, in a clear majority of countries today, the state is the guiltiest party among all those who violate economic freedom.
This report looks at economic freedom as tightly tied to natural human rights and freedoms. To a very large extent, indeed, it is foundation of all other freedoms: examples of countries where there is a high level of economic freedom but limited political freedoms are plentiful whereas their opposite, countries that are politically free and democratic