Two concepts of liberty: the relevance to economics

I was reminded recently of the thinking of liberal philosopher Isaiah Berlin on liberty, first propounded in his famous lecture of 1958. Specifically he described two concepts of liberty, positive and negative freedom. The first represents freedom to achieve self-mastery, which could be promoted through the influence of collective action. The second kind of freedom represents freedom ‘from’ interference by others.

The two concepts are clearly different and come into conflict with one another in any society. Berlin thought they would need to be traded off against each other. In addition, the balance between the achievement of some measure of both concepts could vary between individuals, depending on their place in society and the actions of a variety of determinants including other individuals and institutions.

With regards to economics, arguments on the political right can often emphasise the importance of the free market and getting out of the way of business through deregulation and privatisation as the route to prosperity and freedom. These sorts of ideas represent the promotion of a form of negative freedom. However they tend to ignore the more complex idea that increasing the negative liberty of some citizens can decrease that of others whom they influence or otherwise come into contact with. Depending on the effect of this kind of economic policy on growth, employment or productivity, positive liberty could be undermined if some individuals are empowered to the detriment of others, who might lose jobs, experience a cut to wages or working conditions or whose skills fall out of favour in an evolving economy. State interventions to counteract or manage such forces can by contrast increase positive liberty for some, but reduce negative liberty for others if for example higher taxes are imposed to fund the interventions.

Central planning under the formerly socialist economies was intended to promote something like positive liberty through collective action, but arguably ended up undermining both this and negative liberty through a failure to achieve the material progress and relative freedom of both kinds found in capitalist economies.

Thus the reality in political economy and a consideration of freedom can be seen as more complex than the simple prognostications of those in thrall to the free market or the reality of attempted socialisms. Different kinds of freedoms under capitalism do need to be traded off against one another if the members of such societies are to achieve their ends. The latter has historically required many forms of state intervention both to empower individuals to achieve positive liberty and also to achieve its counterpart, negative liberty. Different societies at different stages of development will necessarily achieve different trade-offs between the two, and this may depend on the importance of material progress in the form of economic growth, relative to the negative liberty with which it can sometimes conflict in the process of social transformation which accompanies such development.

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