Tonight, in Chicago, Cato is hosting the formal presentation of the third biennial Milton Friedman Prize for Advancing Liberty. This year’s winner is Mart Laar, the former prime minister of Estonia responsible for guiding his country’s successful transition from communism to a democratic market economy.

We are now in the fifteenth year since the collapse of the Soviet Union, and unfortunately many of the former Soviet republics have made little progress in either economic or political reform. Estonia, however, is a glittering exception. According to the Economic Freedom of the World report, the country now ranks 12th out of 127 countries in economic freedom. Freedom House gives Estonia its highest rankings for both political rights and civil liberties. And the World Economic Forum rates Estonia 20th out of 117 in its Growth Competitiveness Index.

For Laar to win the Friedman Prize is especially fitting, since Laar’s bold free-market reforms were inspired by Friedman himself. Before entering politics, Laar was a historian. “I had read only one book on economics — Milton Friedman’s Free to Choose. I was so ignorant at the time that I thought that what Friedman wrote about the benefits of privatization, the flat tax and the abolition of all customs rights, was the result of economic reforms that had been put into practice in the West. It seemed common sense to me and, as I thought it had already been done everywhere, I simply introduced it in Estonia, despite warnings from Estonian economists that it could not be done. They said it was as impossible as walking on water. We did it: we just walked on the water because we did not know that it was impossible.”

Here is Laar’s 1992 book, War in the Woods, on Estonian resistance to Soviet occupation during and after World War II. And here is a paper presented by Laar at a 2004 Cato conference in Russia on Estonia’s reform experience.