Freedom, Capitalism and Human Behavior Chapter 2: Human Rights and the Meaning of Freedom

30 Pages Posted: 19 Oct 2005 Last revised: 18 May 2013

See all articles by Michael C. Jensen

Michael C. Jensen

Harvard Business School; SSRN; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

William H. Meckling

Simon School, University of Rochester (Deceased)

Date Written: June 30, 1999

Abstract

With the possible exception of love, probably no word in the English language generates a more sympathetic response than the word freedom. Everyone favors freedom. We prize it not only for ourselves, but also as a characteristic of our society. Most of us, however, have given little thought to what we mean by freedom. We use it to describe virtually everything we believe is good or right. Freedom is a hurrah word. Advocates of all persuasions characterize their programs as enhancing freedom. In the extreme, we find spokesmen for the most tyrannical states boldly claiming that theirs is true freedom because it provides freedom from want, a logic equivalent to arguing that prisoners are free as long as they are well fed and sheltered.

Any unambiguous conception of freedom should distinguish between choices such as 1) Give me $20 and I'll give you a sirloin steak, and 2) Give me your wallet or I'll shoot you with the gun I have pointed at your midsection. These transactions both give you a choice. One might be tempted to say that the second is inconsistent with freedom because the choice I'm giving you makes you worse off. But there are many transactions that seem perfectly consistent with, and even required by, freedom that have this characteristic. Consider the offer I make you on the expiration of your lease of my property: Give me a monthly rental of 10% more than our previous arrangement or move out.

Keywords: freedom, capitalism, human rights, definition of rights, nature, constraints, definition of freedom, contracts, power, rights

JEL Classification: A00, H00, K00

Suggested Citation

Jensen, Michael C. and Meckling, William H., Freedom, Capitalism and Human Behavior Chapter 2: Human Rights and the Meaning of Freedom (June 30, 1999). Harvard Business School NOM Unit Working Paper No. 1999. Available at SSRN: https://ssrn.com/abstract=638703 or http://dx.doi.org/10.2139/ssrn.638703

Michael C. Jensen (Contact Author)

Harvard Business School ( email )

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William H. Meckling

Simon School, University of Rochester (Deceased)

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