June 26, 2014
TORONTO—Higher levels of economic freedom can help reduce the risk of violent conflict in countries around the world, finds a new study released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.The essay, Free Markets and Civil Peace, examines the relationship between economic freedom, which is measured by several factors (trade openness, level of government involvement in the economy, level of judicial independence), and civil unrest.“In economically free countries, there’s a greater respect for human rights, better relationships between distinct ethnic and religious groups, better public institutions, higher per-capita income and subsequently less potential for violent conflict or insurgency,” said Fred McMahon, the Fraser Institute’s Dr. Michael A. Walker Research Chair in Economic Freedom.The study finds that economic repression and economic mismanagement supply the means, motive and opportunity for groups to challenge state authority whereas economic freedom and free markets help eliminate grievances and pacify potential unrest.Moreover, economic repression can lead to the build-up of resources (cash, for example) that can be used for violent revolution. Why? Because economic distortions (say, the wide income gap between totalitarian governments and ordinary citizens in oil-rich Arab states) can spawn underground economies that finance insurgency.“If reforms in any country, no matter its history of violence, make peace more profitable to the citizenry than war, peace will usually win out. Because when individuals pursue self-interest, as noted by Adam Smith, they serve a higher social purpose,” said Indra de Soysa, essay co-author and professor of political science at the Norwegian University of Science and Technology.Finally, the essay points to Germany and Japan, two economic powers that remain committed to the principles of economic freedom imported after the Second World War, particularly in terms of economic growth and development, while enjoying decades of peace.“Free markets spur prosperity and peace arises from cooperation among people acting out of self-interest. While free markets may struggle to take root in some war-torn countries such as Iraq and Afghanistan, they remain vital to any reconstruction effort,” McMahon said.