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 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)
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