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Social orders, and a weak form of the Hayek–Friedman Hypothesis

Judit Kapas () and Pál Czeglédi ()

International Review of Economics, 2018, vol. 65, issue 3, No 3, 328 pages

Abstract: Abstract This paper contributes to a theoretical underpinning of the economic freedom–political freedom relationship. We use the theory of social orders (North et al. in Violence and social orders: a conceptual framework for understanding recorded human history, Cambridge University Press, Cambridge, 2009) to look at the Hayek–Friedman Hypothesis (HFH), which leads us to propose a novel interpretation. The core insight of our weak interpretation of the hypothesis is that economic freedom is a necessary condition for maintaining political freedom in open access order countries (countries with high levels of both freedoms), i.e., once achieved, political freedom needs economic freedom to be stable; but the HFH is not relevant for limited access orders (rent-seeking-dominated orders). We find empirical support for the weak interpretation with canonical correlations and conditional logit regressions, using a panel database for 122 countries for the period 1980–2011.

Keywords: Economic freedom; Political freedom; Institutions; Social orders (search for similar items in EconPapers)
JEL-codes: H11 O10 O57 P50 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s12232-018-0298-7

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