Unlocking true prosperity

Adam Smith, in his 1776 masterpiece, ‘An Inquiry into the Nature and Causes of the Wealth of Nations’, observed that for a nation to prosper, little else is required than to provide individuals with economic freedom. If economic freedom is provided, the rest of the requisites will be brought upon by the natural course of things. On the other hand, for decades, democracy has also been accepted as the ultimate political system capable of bringing prosperity to a nation. Many have assumed that democratic governance leads to economic success because of its promise of free and fair elections, equal representation and civil and political liberties. However, democracy cannot guarantee economic progress in the absence of economic freedom, which is characterised by the ability of individuals to make their own economic decisions, own property and participate in the voluntary exchange of goods and services. This is not to say that we should not strive for a democratic political system, but when it comes to economic development and prosperity, economic freedom plays a far more critical role than democracy.