You have nothing to lose but your chains?

Is capitalism a necessary condition for political freedom? Friedrich Hayek and Milton Friedman argued that capitalism is necessary for political freedom in what is now known as the Hayek–Friedman hypothesis. While previous empirical work relying on economic freedom as a proxy for capitalism has confirmed the hypothesis overall, those results are sensitive to the definitions of capitalism and political freedom. We argue that while Milton Friedman claimed that political freedom could not exist without economic freedom, Hayek argued that political freedom could not exist without private ownership and control of the means of production, a distinction that could affect the results. We test the Hayek hypothesis using V-Dem’s measurement of state ownership and its political civil liberties index, which summarizes annual data going back to 1789. Our primary results identify only one robust example of a country wherein political freedom was maintained temporarily in the context of heavy to complete state economic control: Belarus amidst the fall of the Soviet Union in 1991, a brief transitional phase that does not violate the Hayek hypothesis. We argue that explaining the connection between private property and democratic freedoms requires a humanomics appreciation of those consensus-based institutions. The emergence and exercise of private property rights fosters the individual responsibility, sociality, and tolerance required to preserve democracy.