… is from page 57 of Robert Higgs’s brilliant 1971 book, The Transformation of the American Economy: 1865-1914 (footnote deleted; links added):
“Institutions,” Arthur Lewis has written, “promote or restrict growth according to the protection they accord to effort, according to the opportunities they provide for specialization, and according to the freedom of manoeuvere they permit.” In all these respects American institutions were basic to the initiation of economic growth and to its sustainment.
DBx: I add only – as I believe Bob Higgs would agree – that also at work in the U.S. was bourgeois dignity.
Lewis is correct. And note that his message is counsel against industrial policy. After all, industrial policy stymies some effort with special penalties in order to stimulate other effort with special privileges; it restricts opportunities for specialization only to those tasks that government officials and their think-tank muses somehow divine are acceptable; and it has as its essence restrictions on the freedom of economic actors to choose their own maneuvers.
Pictured above is the late Nobel-laureate economist W. Arthur Lewis.