In his 1968 book The Great Terror, the late historian Robert Conquest documented a number of Joseph Stalin’s atrocities and brutalities in the 1930s Soviet Union. Criticized for decades, Conquest was largely vindicated following the collapse of the Soviet Union and the opening of its archives. A story often circulated is that Conquest’s publisher suggested a revised edition of The Great Terror and asked for a new title. Conquest reportedly recommended I Told You So, You F**king Fools (though he later denied this, much to my disappointment). The new edition was titled The Great Terror: A Reassessment—it lacks punch after hearing the other one.
Heavily centralized governments like that of the former Soviet Union are known for violating the physical integrity rights of their citizens. The late Rudolph Rummel estimated the death toll as a direct result of government violence against citizens (what he terms “democide”) in the twentieth century to be 262,000,000 people. “Just to give perspective on this incredible murder by government,” wrote Rummel, “if all these bodies were laid head to toe, with the average height being 5′, then they would circle the earth ten times. Also, this democide murdered 6 times more people than died in combat in all the foreign and internal wars of the century.” The centralization of the economy is, to borrow from economist Don Lavoie, the militarization of the economy. And militarized central planners wage war on their own citizens.
But the millions of dead bodies left in the wake of command economies do not prevent critics from claiming that it is capitalism (an awful term) that is built on violence; a kind of structural violence constantly inflicted on the have-nots in the name of private property. The claim is virtually a mirror image of the scene from Monty Python and the Holy Grail where the peasant screams, “Come and see the violence inherent in the system! Help! Help! I’m being repressed!” So despite the seemingly hyperbolic absurdity of the claim, it raises the question: do economic liberalization and secure private property rights perpetuate violence?
Reducing Political Violence
A 2014 review of the literature determined that “one of the key discoveries of the past few decades” is that international trade, FDI, and market economies are “correlated with better protections for human rights.” Another 2015 review of the literature similarly concluded that economic globalization has played an important role in improving human rights. Global markets can also help foster a virtuous cycle: countries with a track record of human rights abuse are less likely to engage in liberal economic exchange and less likely to attract foreign capital.
The evidence connecting greater economic freedom with improved respect for human rights has become overwhelming. Indra de Soysa of the Norwegian University of Science and Technology in particular has done extensive research on the effects of economic freedom on government-on-citizen violence. In one study, de Soysa found that more economic freedom (based on the Economic Freedom of the World Index) leads to less political repression, even after controlling for per capita income or other relevant factors. In another study, de Soysa and Silja Eriksen relied on the CIRI Human Rights Data Project, which reports on extrajudicial killings, disappearances, torture, political imprisonment, freedom of speech and government censorship, freedom of religion, freedom of movement and migration, freedom of assembly and association, free and fair elections, workers’ rights, and women’s rights. Their analysis of 104 developing countries between 1981 and 2003 discovered that economic freedom increases physical integrity rights. In an analysis of 118 countries between 1981 and 2005, de Soysa and Krishna Chaitanya Vadlamannati found economic globalization (based on the KOF Index) to be linked to fewer governmental violations of human rights. A later study of 150 countries between 1970 and 2008 supported these findings, demonstrating that increased exposure to global markets reduces state violence toward its people. Finally, a 2013 analysis of 117 countries between 1981 and 2006 by de Soysa and Vadlamannati found “positive effects of market-economic policy reforms on government respect for human rights.” If you care about human rights, you should also care about economic rights.
Several other studies bolster those by de Soysa and colleagues. An analysis of 106 countries between 1981 and 2004 found that increases in both economic globalization (KOF Index) and economic freedom (EFW Index) increase respect for physical integrity rights (CIRI). Trade was “advantageous to guaranteeing human rights,” while FDI was also “favorable for human rights” through its impact on economic development and its tendency to “reduce the political power of traditional monopoly or oligopoly businesses” and “the potential of corruption.” A 2003 study examined incidences of genocide between 1955 and 1997, finding that one of the factors that decrease the risk of political mass murder is economic interdependence. Another comparable study established a negative relationship between economic liberalization and human rights violations. By testing the latter’s impact on the former, the authors concluded that human rights abuses slow the pace of liberalization. Illiberalism in human rights correlates with illiberalism in the economy.
In short, a mass of empirical work indicates that state violence toward citizens is greatly tempered by economic freedom. It appears that Rummel was correct when he wrote, “The more power a government has, the more it can act arbitrarily according to the whims and desires of the elite, the more it will make war on others and murder its foreign and domestic subjects. The more constrained the power of governments, the more it is diffused, checked and balanced, the less it will aggress on others and commit democide.”
Reducing Personal Violence
The violence associated with a lack of freedom is not limited merely to the government. When markets are overregulated and private property is insecure, the potential for violent crime increases. Regulation and prohibition tend to push markets underground, developing into black markets. In these illegal markets, there is no third-party mechanism for securing property rights or contract enforcement. Consequently, property is secured and contracts are enforced within black markets through private means, which translates into citizen-on-citizen violence. The deeper underground the market is pushed, the greater the need for personal enforcement.
Harvard economist Jeffrey Miron has argued that this outcome is particularly manifest in drug and alcohol markets. Miron’s research demonstrated that greater federal expenditure for enforcement of drug and alcohol prohibition is associated with higher homicide rates in the United States, even after controlling for factors such as incarceration rates, unemployment rates, support for marijuana legalization, per capita income, use of the death penalty gun ownership, and age composition of the population. Comparable results are found in other countries such as Afghanistan. A lack of property rights and overregulation is how you get Al Capone.
When people don’t live under the constant threat of expropriation, they save, invest, take risks, and care of their property.
In a similar vein, economist Kislaya Prasad examined the effects of India’s market reforms on violent crime. Hypothesizing that economic restrictions create violent black markets, Prasad examined the relationship between violent crime, differential gold prices (a measure of the incentive to smuggle gold), and manufacturing output (a measure of industrial delicensing and reduced import restrictions). The results showed that increases/decreases in gold prices are correlated with increases/decreases in the murder rate. Furthermore, states with high levels of manufacturing activity (and therefore fewer regulations) experienced a greater decline in the crime rate compared to states with lower levels of manufacturing. Extending the analysis to other countries, Prasad discovered a negative relationship between trade openness and the murder rate: as trade in a country increased, its murder rate decreased. As customs revenues via taxation decreased, so did the country’s murder rate. “These results … provide broader support for the existence of an equilibrium relationship between the incidence of violent crime and government control of economic transactions.”
More recent research suggests that black market organizations are ultimately collecting monopolistic rents through distorted, overregulated markets, which fund these organizations’ violent brand of private justice. This is, at least in part, why greater economic freedom drives the homicide rate down far more than political freedoms or redistributive governance (the latter has no statistically significant effect on the homicide rate). Economic freedom intensifies competition, provides legal means of contracting, secures property rights, and makes peaceful cooperation beneficial to economic actors. It also increases access to opportunities—particularly education, health, and justice—rather than concentrating it in the hands of a privileged few. It should therefore come as no surprise that research shows greater economic freedom reduces black market activity and is correlated with lower levels of terrorism, organized crime, and homicide.
In a 2010 cross-country analysis, Stringham and Levendis tested the effects of the Index of Economic Freedom and Economic Freedom of the World Index on homicide rates. “In both regressions,” they explained, “economic freedom is significantly correlated with homicide rates where increases in economic freedom are associated with decreases in the homicide rate.” A 2016 study by de Soysa found that economic freedom has negative effects on both the perception of crime as well as actual homicide rates and violent crime. A later study by de Soysa further demonstrated that economic freedom has a large, significant negative impact on homicide rates, even after controlling for legal systems, state services, political rights, access to political/economic resources, per capita income, government dependence on oil, and population size.
Globalization has also been shown to lower the homicide rate. Defining globalization as the sum of export and import values divided by GDP, researchers controlled for GDP, economic stress, low labor share income, income inequality, human capital, ethnic fractionalization, youth population, urbanization, and lagged homicide. The results indicated that greater globalization decreases the homicide rate, with the largest benefits occurring in low GDP per capita, high-inequality countries.
Similar to human rights abuses hindering economic liberalization, an analysis of plant-level data in Columbia has shown that violent crime reduces average firm production and increases market exit: a 1 percent increase in violence leads to a 0.39 percent decrease in aggregate production. In the case of Columbia, people don’t want to set up shop where bullets are constantly flying. This should give us pause: where shots are being fired, business is not being conducted. The contrasting nature of commerce and violence could not be made any clearer.
However, a wealth of US data over 30 years found no significant relation between homicide and economic liberalization. Nonetheless, it did find that violent crime might increase slightly with the reduction of government spending but decrease with the easing of labor market regulations. There was no indication that tax reforms had any impact on the violent crime rates. Yet, government spending cuts, tax reform, and labor market deregulation were associated with decreases in non-violent crime. All-in-all, the empirical research seems to demonstrate that greater economic freedom keeps both government and citizen violence at bay.
Producing Peace
Private ownership of the means of production—private property—is the core tenet of the market system. It’s a defining characteristic. And the overwhelming empirical research finds that secure private property rights and an open market are essential to the economic development and prosperity of a society. It’s not hard to see why. When people don’t live under the constant threat of expropriation, they save, invest, take risks, and care of their property. “Property rights,” the late UCLA economist Armen Alchian reminded us, “are human rights.”
But a private-property-based market system does not just produce prosperity. It also produces peace. Ironically, despite the private ownership of a resource, the most valuable use of that resource is still determined by the public. Ultimately, as Alchian noted, “private decisions are based on public, or social, evaluation.” Private property rights have the potential to incentivize individuals to be more attuned to the needs and desires of others; to serve their fellow man. Or, as Alchian put it, “Well-defined and well-protected property rights replace competition by violence with competition by peaceful means.”
