Liberty Capital Accumulation and Economic Growth

Qixin Zhan and Heng-Fu Zou ()

No 619, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: This paper delves into the theoretical underpinnings of how freedom, grounded in the rule of law and property rights, shapes wealth accumulation and economic growth. By integrating liberty into the neoclassical growth model, we introduce the innovative concepts of "liberty consumption" and "liberty capital" and define utility and production functions on them. Through theoretical analysis and simulations, we ascertain that a robust preference for liberty nurtures sustained prosperity and heightened productivity. However, in scenarios where the costs associated with liberty consumption are substantial and liberty capital depreciates rapidly -- indicating an environment inhospitable or constraining to liberty -- it adversely affects economic output and overall well-being. These insights underscore the significance of examining liberty dynamics in economic growth and development. Without the presence of liberty, property rights, and the rule of law within utility and production functions, society faces the peril of descending into either a Hobbesian state of "war of all against all" or a totalitarian state ruled by a singular authority. In either case, life becomes solitary, poor, nasty, brutish, and potentially short.

Pages: 54 pages
Date: 2024-02-12
New Economics Papers: this item is included in nep-cmp, nep-cna, nep-gro and nep-upt
References: View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Annals of Economics and Finance, 2024, vol. 25, no. 1, pp. 63-116.

Downloads: (external link)
https://down.aefweb.net/WorkingPapers/w619.pdf (application/pdf)

Related works:
Journal Article: Liberty Capital Accumulation and Economic Growth (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:619

Access Statistics for this paper

More papers in CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Qiang Gao ().