The Cultural Conditions of Prosperity

Alejandro A. Chafuen

How are economic freedom, culture, and the basic social institutions of a free society connected? Family and private property are the two pillars of the free society. The institutions of private property emerged not only to improve economic results, but also to protect the intergenerational family: Passing down homes and lands generation by generation was seen as essential to preserving a family. As the family is a social institution and occupies a space between the individual and the state, socialists have attacked the institution almost as much as they attack private property.

Private property is a condition sine qua non of economic freedom. I usually define this freedom as the right of adults to try to use what they own as they please. This definition echoes the one used by The Heritage Foundation in describing its 2016 Index of Economic Freedom:

Economic freedom is the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please. In economically free societies, governments allow labor, capital, and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself. [1]

Heritage Foundation’s Index of Economic Freedom has been measuring America’s economic freedom since 1995. Scores for freedom from corruption have suffered the worst decline since then: They are down by 16 points. During this past decade, the ratings on respect for private property in the U.S. have fallen over 10 points while the overall score of U.S. economic freedom has fallen by almost six points. In fact, eight out of the 10 aspects of America’s economic freedom measured in the Index show declines. While respect for private property has declined considerably, other critical areas have recorded score deteriorations during this decade as well: Financial freedom, for instance, declined by 20 points, and government spending has deteriorated by over 6 points (although it has shown improvement during the past couple of years).

Human freedom encompasses more than just economic freedom. We know that economic freedom leads to prosperity. A person can use his economic freedom to buy alcohol or drugs yet remain a slave to his addictions. We have also learned that the economic problems that come with low rates of economic growth (such as reduced opportunity and low wage growth) can cause families to endure stress and ultimately to break up.

The family, as Michael Novak has taught us, is the original and best department of health, education, and welfare; therefore, lower levels of economic freedom negatively affect several cultural indicators, albeit indirectly. Within a strong and supportive family environment, one absorbs such key values as abstinence, fidelity, and work ethic and practices like religious observance and volunteer work. Reliance on the state tends to reduce a sense of personal responsibility and commitment to sustaining and protecting the rule of law.

In the latest Index of Economic Freedom, the United States ranks a dismal 154th in fiscal freedom and freedom from regulation and 131st in government spending. The growth of the state and overregulation also has a negative impact on a culture of respect for laws.

I saw the impact of this in my native country, Argentina. After decades of government growth and regulation, Jorge Luís Borges (1899–1986), the country’s most famous writer, remarked that “the Argentine tends to lack a moral, not an intellectual culture; he is less concerned to be seen as immoral rather than as a fool. Dishonesty, as we know, enjoys the veneration of all, it is called creole wise-guy (viveza criolla).”[2] The term describes an attitude whereby most of the population ignores the rules; they find and use loopholes, and the sense of responsibility and consideration for others is weakened.[3]

The weakening of the rule of law is one of the main reasons for the gradual decline in economic freedom in the United States, which is now down to 11th place in the world. Reversing this downward trend is essential in order to nurture a culture of respect, liberty, and responsibility and increase widespread opportunities for prosperity.

Alejandro A. Chafuen is President of the Atlas Network.


Endnotes

  1. “What Is Economic Freedom?” in “Frequently Asked Questions,” 2016 Index of Economic Freedom website, The Heritage Foundation, http://www.heritage.org/index/about (accessed June 4, 2016).
  2. Jorge Lanata, 2004, ADN: Mapa Genético de los Defectos Argentinos (Buenos Aires: Editorial Planeta, 2004), p. 104. Quotation translated from Spanish by the author.
  3. Leonard P. Liggio and Alejandro A. Chafuen, “Cultural and Religious Foundations of Private Property,” Chapter 1 in The Elgar Companion to the Economics of Property Rights, ed. Enrico Colombatto (Cheltenham, UK: Edward Elgar, 2004).


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