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A Lesson from Economic History

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Here’s the eminent economic historian Peter Mathias, from page four of the second edition of his The First Industrial Nation: The Economic History of Britain 1700-1914 [2] (1983):

Britain’s was the first industrialization of any national economy in the world. Even more remarkable, it occurred spontaneously, not being the result of conscious government policy sponsoring industrial progress. Although inevitably the results of state policy were significant in legal processes, taxation policies, tariffs, shipping regulations and the like, it derived virtually no momentum directly from public taxation, or public promotion, or state-guaranteed loans to raise capital for productive investment…. It is worth stressing from the outset that the state had its back turned to the economy, as far as directly promoting industrial growth or new industrial skills on any scale were concerned…. Britain saw an industrial revolution by consent. It owed nothing to planners and nothing to policemen.

When I read this passage I thought of the claim, made prominently today by Cass Sunstein [3], that ultimately the sovereign is the source of all good. Mathias’s history contradicts Sunstein’s theorizing.

See also my earlier posts, here [4], here [5], and here [6], as well as Tom Palmer’s critique [7] of Sunstein.