December 16, 2005Economy

Free markets, Transparency and Human Development

The correlations and their implications

This is an archived blog post from The Acorn.

Inexplicably, but fortunately, the Indian blogosphere is discussing free markets.

The debate on Mall Road and The Examined Life sparked off (tangentially) from a post on corrupt politicians. So it is timely to consider the linkages between free markets, transparency and human development.

Analyses on this blog demonstrate that both transparency and human development positively correlate to free markets. They show that the world’s most open economies are the least corrupt. They also show that the most open economies also have the highest rates of human development. Instead of debating whether a perfect free-market is possible, it is more useful to debate what these correlations imply. If they indicate causation — that is, if free markets cause lesser corruption and greater human development, as The Acorn believes they do — then there should be little reason to object to India embracing them. But even if causation cannot be proved, the case for embracing free markets is still strong: firstly, because India’s half-century love affair with socialism left most of its citizens in poverty and hopelessness; secondly, because where free markets and enterprise have got a chance, they have led to job and wealth creation; and thirdly, because there is China.

In the The Acorn’s view, the desirability of giving normal human beings complete economic freedom is not predicated on its ability to deliver economic growth or combat corruption:

Economic freedom is a fundamental right and must be seen as such. That it correlates with prosperity and development is an advantage.[The Acorn]

Related Link: DesiPundit’s coverage of this debate

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