Return Of The Whig Economy

shallow focus photography of U.S. dollar banknotes

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The Industrial Revolution was a Tory Story! It began with the scientific exuberance of the Tory-dominated Restoration period, then slowed as the Whigs diverted the country into war and financial excess from 1689 to 1720. Even though the key inventions of the steam engine and coke-fired ironworks came during that period, they were not developed further. Forty years of Whig financial capitalism and social repression followed, before a Patriot King and a series of Tory governments unleashed the greatest boost in living standards the world has ever seen. Alas, since 1991 we have returned to Whiggery and worse.

One of the most important questions in world history is why Britain got the Industrial Revolution and other European countries did not. (Other civilizations – Chinese, Japanese, Mughal, and Ottoman – could theoretically have led to industrialization also, but their failure is a more complicated story.) In 1600, Britain had little to distinguish it from other European polities. Spain was much richer, France was richer, larger, and in 1600 better run by the estimable Henri IV, the Holy Roman Empire was vast and full of good hard-working German artificers, while the Netherlands was moving towards modern capitalism in a way that Britain, in 1600, was not. The first half of the 17th Century saw little progress by Civil War-wracked Britain and a lot by the Netherlands, although admittedly France, Spain, and the Holy Roman Empire all, for different reasons, fell further behind.

Then came the British Interregnum, followed by the Restoration. The Interregnum was helpful in opening opportunities to groups who had previously been blocked by the remnants of the medieval class system. Also, the Protector Oliver Cromwell was a believer in property rights, quelling those of his colleagues who weren’t. However, it was the intellectual and economic dynamism of the Restoration, led by the Earl of Clarendon and the Tories, that changed everything. The Royal Society was the first scientific institution of its kind, establishing Francis Bacon’s Scientific Method among British scientists, speeding progress through their interactions and producing an amazing burst of creativity that in 1687 was to lead to Isaac Newton’s Principia.

Commercial and social avenues opened also, with Britain establishing trading empires in tea, coffee, sugar, tobacco, and chocolate that were to revolutionize British tastes, world markets, and state finances. The East India Company’s early expansion also brought an entrepot market for Indian textiles that boosted state revenues and expanded British textile know-how and capabilities. At the top, Prince Rupert of the Rhine, with a past career as general, admiral, and pirate, invented Prince Rupert’s Drops and founded the Hudson’s Bay Company. Finally, the scrivener-banker Sir Robert Clayton’s Clayton, Morris founded true domestic deposit banking and mortgage finance, while the goldsmith-bankers went belly-up lending to the state when it partially defaulted in 1672.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of "sell" recommendations put ...

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