Free economy will lead to political and social freedom, say economists

(The Malaysian Insider) – Without a free economy a country is less likely to achieve political and social freedom, contrary to the impression most activists have in Malaysia, economists said here today.

Dr Tom Palmer from the Atlas Economic Research Foundation emphasised that political liberalisation is very important for maintaining economical liberalisation.

“One must understand the freedom of competition as a process, not as a stake of the market,” he said during the Economic Freedom Network Asia Conference 2011 today.

He suggested that it is important to build a regional free trade agreement and promote free trade on a unilateral basis like in Singapore.

The emphasis on a free economy was also pointed out by Wan Saiful Wan Jan, chief executive of Institute for Democracy and Economic Affairs (IDEAS), one of the conference organisers.

“Maybe it is time to suggest that we have a free and prosperous economy before achieving political and social freedom in Malaysia. This is because when the people are comfortable with the quality of life, they will also fight for political and social reform in the country.

“To change, we need a bigger middle class, and this will only exist if our economy is free,” according to Wan Saiful in the foreword of the Economic Freedom of The World 2011 annual report by the Fraser Institute.

Prime Minister Datuk Seri Najib Razak has liberalised foreign investment in 17 sub-sectors, which critics said had for years forced foreigners to partner Bumiputeras before being allowed to set up businesses in the country.

Critics, however, said the reform measure will not have much impact because few of the workers hired in those sectors were Malays, who form the majority population and were the target of affirmative-action policies.

The report also pointed out that a lot of activism in the country focuses too much on the political and social angles, while neglecting the importance of fighting for economic freedom.

“If the people live in conditions that force them to constantly think of how to cope with the cost of living, there would be a high possibility that they do not have enough time to work on political transformation, or get involved in the civil society arena.

“So if we want to shape a country which is politically and socially free, we have to ensure that our economical system is also free. The concerns about political and social freedom, and effective activism in all angles only exist and flourish once the economy needs are fulfilled,” Wan Saiful said.