Some Under Appreciated Connections Between Constitutional Change and National Economic

William Pettigrew

Corpus ChristiCollege, Oxford

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Debating the ‘National Interest’: Some Under Appreciated Connections between Constitutional Change and National Economic Growth in England, 1660 - 1720

Celia Fiennes’ journeys around England in the 1690s provide one of the earliest, comprehensive descriptions of England’s national economy at work. For Fiennes, forming an ‘Idea of England’ at a time when the nation’s economic landscapes were changing was ‘requisite’ especially for ‘those that serve in Parliament’. Informing ‘themselves ye nature of Land, ye Genius of the Inhabitants’ would assist MPs in what Fiennes believed to be their primary role: ‘to promote and improve Manufacture and Trade suitable to each and encourage all projects tending thereto.”[1] Fiennes imagined a national economy and expected the post-1688 Parliament to work to expand that economy. Few historians of the period between the Civil War and the Industrial Revolution have shared Fiennes’ expectation of an instrumental relationship between Parliament and economic growth. This essay seeks to place political and constitutional changes at the centre of Britain’s 18th century economic growth by examining the economic consequences of passing the initiative for state regulation of the economy from the Privy Council to Parliament. It connects this altered regulatory mechanism to the changing structure and pattern of economic growth in this period.

Several economic historians have charted the growth of Britain’s national economy during this period. Deane and Cole’s influential account charted a 200% increase in the size of Britain’s economy between 1688 and 1770, at a time when the national population increased by just 57%. Others have supported this view.[2] Although Dean and Cole’s narrative begins in 1688, a year typically highlighted in political and constitutional rather than economic histories, the ‘Glorious Revolution’ played no part in their discussion. Deane and Cole, however, explained their concentration on economics by referring to the primacy of observation over explanation in economic history.[3] Such observation, can only offer a starting-point for the historian, whose principle concern is with causation. Here the economic history of 18th century national economic growth fails to deliver. In asserting the importance of economic theory as an explanatory device, economic historians fail to appreciate how historically specific such theory is and how economic activity, especially at the macro-economic level, has always been embedded within institutional frameworks that exhibit an important political aspect.[4]Economic historians’ views of the nexus between political institutions and the market range from those who deny its existence to those who characterise politics as epiphenomenal or chaotic, or ‘interrupting’, ‘polluting’ or ‘frictional’ within economic systems.[5] Economic historians typically view economic liberalism as a determinant of political liberalism.[6] The relationship between constitutional change at the turn of the 18th century and economic growth in the 18th century at least complicates this view and comes close to suggesting a reversed formulation.

Historians of politics have also tended not to examine the economic effects of constitutional change. Attributing some connection between the Glorious Revolution and economic growth would seem intuitive according to the assumptions of Whig history, that great celebration of politics. Like economic history, Whig history assumes progress; narrates in a linear, teleological fashion, and subscribes to a timeless notion of human nature; but Whig historians did not implicate constitutional changes in their accounts of economic growth. Whig historians’ desire to fetishise all things political instead led them to brand economic phenomena as predictable. Thomas Macaulay, the most eloquent of Whig historians and rarely one to downplay the importance of political phenomena, described England’s economic growth as an organic and spontaneous process that had often been jeopardised by the intrusions of government:

“…profuse expenditure, heavy taxation, absurd commercial restrictions, corrupt tribunals, disastrous wars, seditions, persecutions, conflagrations, inundations, have not been able to destroy capital so fast as the exertions of private of private citizens have been able to create it. …in our own land, the national wealth has, during at least six centuries, been almost uninterruptedly increasing; This progress, became at length, about the middle of the 18th century, portentously rapid, and has proceeded, during the nineteenth, with accelerated velocity. In consequence, partly of our geographical and partly of our moral position, we have, during several generations, been exempt from evils which have elsewhere impeded the efforts and destroyed the fruits of industry.”[7]

Whig history’s ambitions for politics did not extend to demonstrating how economic outcomes hinged on political changes. Instead political influences on the economy remained ‘evils’ to be guarded against.

Historians of the 17th and 18th century Parliaments have, keen to deviate from Whiggish interpretations, concentrated on the content of disputes within the chambers; as well as Parliamentary personnel and procedure. These historians have rightly conceived of Parliament as a group of individuals responding to different concerns at different times. Few historians have considered Parliament as a constitutional form whose changing status within the English constitution during the second half of the 17th century had macro-economic ramifications. These concerns have, perhaps unsurprisingly, remained the prerogative of political scientists and economists themselves.[8]

Those economists (rather than economic historians) who have sought to trace economic growth back to celebrated political milestones, especially the Glorious Revolution, have, however, committed the related historiographical sins of national exceptionalism and linearity. Douglass North and Barry Weingast argued, in a hugely cited article, that the key to British power in the modern era lay in the Glorious Revolution’s cementing of property rights. The ‘sovereignty of Parliament’ prevented the monarch from arbitrarily trampling upon its subjects’ economic interests.[9] This greater security for the economy helped to lower the national rate of interest, which stimulated economic growth over the 18th century.[10] For North and Weingast, the national economic significance of Parliament after 1688 lay in its foiling previous monarch’s rights to default on state loans. The creation of the Bank of England by statute and the representation of its creditors in Parliament and that Parliament’s so-called ‘sovereignty’ within the state’s regulatory apparatus created an environment in which the macro-economic benefits of a credit-based economy could be enjoyed. The Glorious Revolution has become the founding myth for a new breed of Whig economist historians whose broader historiographical targets connect them to a nationalistic and occasionally culturally supercilious ‘rise of the West’ tradition.[11] For economists, who often regard the premises of economic theory as timeless and universal, political institutions have too often provided a prop for exceptionalist narratives.[12] The desire to attribute a similarly fixed constitutional form to the events of the late 1680s and 1690s as political scientists can more satisfactorily attribute to the United States constitution and the convention that led to it has encouraged these ‘New Institutional Economists’ to deploy a simplistic historical narrative to explain the superior economic performance of ‘Western’ states with reference to constitutional forms.[13] Similarly, political scientists have sought, as so many economists and deductive thinkers have with reference to historical phenomena, to lift constitutional ideal types out of their historical contexts and have them solve the problems facing contemporary developing economies.[14] Their belief in the inevitable, linear relationship between certain constitutional forms and certain beneficial economic outcomes has idealised constitutional change and removed contingency from the historical narrative. The Glorious Revolution formed a part of a much longer process of political and economic change and its implications, as historians have long known, were not always liberalising and ‘Whiggish’.

Similar accusations of linearity and idealisation can be levelled at historians of early capitalist ideology and economic thought in the 17th and early 18th centuries.[15] These historians of liberalism have typically expressed caution about the Glorious Revolution as a reforming moment, preferring to concentrate on a reaction against liberal economic thought based on that thought’s socially levelling implications and a hardening of economic restrictions as the power of the state increased in the early years of the 18th century and the political and economic nexus became more and more oligarchic in implication. In doing so, their accounts become collapsible into the rhetoric of the country party opposition ideology of the first half of the 18th century and they have become apologists for liberalism. Such historians have sought merely to test the progressive implications of Whig narratives without, with the exception of John Brewer, formulating new, non-Whiggish means, of analysing the period. These historians of ideology have not sought to test the connections between that ideology and institutional changes’ whose structural impact can be more easily documented.

Any attempt to reduce the economic thinking of the period into a catchall ideology runs profound interpretive risks.[16] Donald Coleman and Tim Keirn have understood how Parliamentary pamphleteering on economic matters in this period sought to weigh up the respective merits of discrete policy proposals from the state or from individuals.[17] Economic historians have, however, long lampooned the principles of mercantilists as erroneous and have therefore assumed that any economic growth before Adam Smith must derive from forces beyond human control. But Parliamentary pamphleteers fixated on schemes that would generate economic growth without the need to speculate about theory. Historians ought to take them more seriously.

The current literature on economic growth and constitutional change is, then, either subjected to the unfortunate intellectual apartheid that separates both political and economic history and history from political science, political economy, and economics or it remains restrained by a series of reductive dichotomies in which the narrative is either Whiggish of non-Whiggish[18]; the state is either regulating or deregulating, protectionist or free trade, reactive to private interests or unresponsive.[19]

Faced with these fault lines in the literature, this essay attempts to formulate a more agile conceptual framework in which I shelve the polarities of the literature and the economic aspects of statecraft are judged as contemporaries increasingly judged them: according to their ability to deliver national economic growth, as crucial components of what pamphleteers called ‘the national interest’. The primacy of Parliament as the regulator of the burgeoning national economy after 1688 assisted the realisation of this national interest. With their inadequacies in mind, but inspired by the ambition, range, and eloquence of all the historians I have cited, I seek to propose a new means to approach the political and economic history of this period, without collapsing all into a discreet political turning point – ‘the Glorious Revolution’; and focusing on the interactions between political and economic change.[20] This approach will celebrate the Whig historians’ commitment to a broad field of view, as well as the efficaciousness of human agency, volition, and, indeed, intention via the political process, without resorting to the Whigs’ presentist and exceptionalist ideological concerns about liberal capitalism as the potential nails in historical enquiry’s coffin.[21] This approach admits the timelessness of economic rationality at the micro-economic level but will assume the contingency of macro-economic growth to the vagaries of political phenomena.[22]

This paper offers a preliminary and exploratory account of some of the ways in which the rising importance of Parliament changed Britain’s national economy. It concentrates on a single problem – the economic consequences of the constitutional changes often fallaciously labelled: ‘Parliamentary sovereignty’. It will examine that problem’s political and economic aspects: first, what were the economic connotations of political reform and, conversely, what were the political determinants of economic growth at the turn of the 18th century in England? We have excellent studies of post 1688 state-building, party systems, financial, and commercial revolutions. But we have no real appreciation of how that pillar of the Whig theory of history, the so-called sovereignty of Parliament, affected the evolution of the British economy. When it comes to assessing the economic implications of the Glorious Revolution, the sovereign Parliament makes an unlikely elephant in the room. Unlike North and Weingast, I consider the ways in which the post-1688 Parliament enfranchised and expanded new economic interests.

The phrase ‘Parliamentary sovereignty’ is often deployed to describe the situation in England after 1688 in which the King and Parliament shared sovereignty.[23] The phrase nevertheless captures the legislature’s improved power within the constitution after 1688: the Bill of Rights’ presumed power to dictate to William III that the monarch could no longer overrule statutes; but, as important, the Parliament’s control of the monarch’s wealth and spending. In no real sense, however, was Parliament sovereign within England’s constitution after 1688. The need for an executive branch of the constitution was rarely doubted and Parliament was not tolerated to act as a sovereign, arbitrary power.[24] Older executive institutions did not die out. Although Parliament began to meet every year after 1688, the monarch retained the right to dissolve its meetings. The King’s Privy Council continued to meet regularly and the King’s courts continued to administer justice. In this period, the executive expanded its powers perhaps more dramatically than the legislative. The treasury and the cabinet provide the two most important institutional expressions of the expansion of executive control. Prior to 1688 (and to a lesser extent afterwards) Parliament appealed to the Privy Council to help resolve issues that had become too complex and because Parliament’s more deliberative format prevented a sound judgement on the issue.[25] The Privy Council met throughout the year. Despite having to meet regularly and for longer stretches of time, the Parliamentary calendar prevented it from being in a position to respond to economic grievances and suggestions throughout the year. The King in Council often responded to requests for proclamations to regulate the economy once bills to the same affect had failed and the Parliamentary session had ended.[26] Interested parties often turned to the Privy Council to help enforce statute. Prior to 1688, nearly one fifth of Royal Proclamations about the economy sought to support statutory regulations.[27]

Nonetheless, Parliament began, after 1688 to gain more experience of the business of government to add to its traditional remits as a vehicle of representation and as a forum for the execution of justice. In the national economic sphere, Parliament’s significance grew. Parliamentary statutes began to compete more successfully with Privy Council orders and Royal Proclamations as state-sponsored means to regulate the national economy.[28] From the Restoration to the arrival of William III, the Privy Council issued on average 4 royal proclamations about the economy a year. By the 1690s, however, the Privy Council began to concentrate on routine business to do with the Channel Islands, as well as some judicial and personnel issues, leaving the business of macro-economic regulation largely to Parliament. Accordingly, from 1689 to 1714 the average annual number of royal proclamations concerning the economy reduced to less than 1. By the early 18th century, the Privy Council focused on ships passes, judicial disputes in the colonies, and personnel and probate issues and almost abandoned its traditional control over economic regulation.

Much of the Privy Council’s withdrawal from national economic concerns in this period has to do with the career of its sub-committee on commercial matters - the Lords of Trade and Plantations. Founded in 1675, the Lords of Trade, was designed to assist in enforcing the Navigation Acts and impose Royal government on the proprietary and charter governments. As a committee of the Privy Council, the Lords of Trade could ‘command the respect, attendance, or opinion’ of the Admiralty and Treasury.[29] From 1696, the reformed Board of Trade, without access to the constitutional means to act unilaterally, became an information gathering body. Although it had been designed to preserve the monarch’s traditional control over overseas trade revenues, the Board became almost from its inception, effectively a sub-committee of the House of Commons, which regularly called upon the Board’s commissioners, many of whom were MPs, to write reports and present them to the House and its various committees.[30] When the Board attempted to initiate reform, as with regards to its proposed reform of the Poor Law in the 1690s, the legislature refused to cooperate.[31] The Treasury and Parliament habitually ignored the board’s suggestions about customs duties before the board’s commissioners began to cease to make such recommendations.

As the Privy Council disengaged from economic regulation, Parliament became more heavily involved. Parliament achieved 4 economic statutes on average per year from 1660 to 1688 and 11 per year after the Glorious Revolution and before 1714. Before the Glorious Revolution, the Privy Council, via Royal Proclamations maintained, on average, a 68% control over state attempts to influence the national economy. After 1688, that proportion of control had reduced to just 7% (at a time when the average yearly total state attempts to influence the national economy increased by 54% across the periods 1660 – 1688 to 1689 – 1713). The increased number of Parliamentary statutes accounts for the majority of this increase in state interest in the national economy (yearly averages of statutes either side of the Glorious Revolution increased by 166% while the decrease in proclamations was 79%). The success rate of legislative attempts in Parliament also improved. All legislative attempts benefited from an improved success rate after 1688 from 20% between 1660 and 1688 to 50% from 1689 to 1714. The success rate of economic initiatives, according to my own definition, was less impressive, but nevertheless improved from 22% to 36%.